The Mastermind

How Rich Cho Rescued the Bobcats from Salary Cap Hell

The Carolina Panthers’ offseason of pain – fueled by a half decade’s worth of cap mis-management – reminded me of just how great a job Bobcats general manager Rich Cho has done in cleaning up the Bobcats’ books. Though Cho has struggled somewhat in the Draft, the guy is an undeniable Salary Cap Genius. And when I say undeniable, I mean UNDENIABLE. Have a look at the Bobcats salary chart as of July of 2010, the summer before Cho arrived (click for a larger image):

The miserable story behind these numbers is another post for another day. For now let’s just fast forward to July 2014:

Look at those gorgeous books! It took the team four long and mostly gruesome seasons but they finally did it. Gone are the days of the Gana Diop mid-level monstrosities and the Eduardo Najera “14th Men for $5 million” deals. Gone are the five year, $40 million contracts for perpetually enigmatic weirdos (T-Time). Outside of maybe the relatively minuscule miscues of Brendan Haywood and Bismack Biyombo (slightly overpaid $3.8 million), there isn’t a bad contract on the roster.

Whereas Larry Brown and Rod Higgins would’ve traded for over-priced role players in years past, Cho instead scoops up under-valued guys on the NBA’s fringe. Chris Douglas-Roberts and Anthony Tolliver were barely in the league last season and Charlotte’s paying them a combined $1.4 million to be key rotation players on a Playoff team. I’ll take that over $18 million of Gana Diop any day.

Check out these cap beauties:

The team’s three key upcoming free agents, Kemba Walker (2015), MKG (2016) and Cody Zeller (2017) are all on restricted rookie scale deals so they won’t be going anywhere unless the team wants them to. Added bonus: Unlike many past Cats’ draft picks, all three are solid prospects worth re-signing.
The team’s highest paid guys, Henderson and Big Al, are playing above their salary numbers.
The team’s 6th man, Gary Neal, makes just north of $3 million – or about a million less than the Cats were paying Matt Carroll to guard the Gatorade just four years ago.
In 2010, Charlotte paid Tyrus Thomas, Diop and Nazr Mohammed a combined $20 million to do whatever it was that they did. Next season the Hornets will pay the same amount for the collective services of Henderson, Kemba, MKG, Cody and Neal.

The team’s strategy has been simple: 1.) invest in cheap rookie contracts, 2.) dump attractive assets on long-term deals for picks and expirings, 3.) don’t sign free agents above market value (especially your own) and, finally, 4.) let father time take care of the rest.

Breaking the third rule is what got the Panthers into their current mess and what ultimately led to the Bobcats cap problems back in 2010. Charlotte bid against itself when the Cats re-signed Emeka Okafor in ’08 and the enormous contract ultimately led to them dumping Tyson Chandler for nothing two seasons later. By contrast, Cho strong-armed Henderson’s agent last summer – fully aware that as a restricted free agent, Gerald had little leverage in the negotiations. Presto! Hendo signed to a very reasonable three year deal.

Cho’s management of the cap has given Charlotte a tremendous amount of flexibility going forward. If Josh McRoberts opts out of his player option this summer (basically a given) and the Cats renounce his rights, they’ll be able to throw up to $12 million at a key free agent or absorb one via trade. If, for instance, the Wolves make Kevin Love available, Charlotte has the juice to trade Minnesota a prospect (Cody), a lottery pick (Detroit’s) AND cap space. That’s a Godfather offer difficult to trump.

Of course, there’s probably a better chance that neither K-Love, Luol Deng, Gordon Hayward or any other marquee free agent or disgrunteld vet make their way to the QC. In that case, Charlotte’s still fine. They can #BringBackMcBob on a front-loaded deal and save a little cash once Kemba’s extension kicks in the following summer. They could use the rest of their cap space to sign a decent backup PG to a short-term contract (the return of Ramon Sessions?) and bring back at least one of the Tolliver/CDR duo for wing/frontcourt depth.

Should that scenario play out, the Hornets could enter into next season as a Playoff team with upside AND tidy books:

A few notes on the chart:

I’m budgeting a three year, $15 million deal for McRoberts. He’ll turn just 29 during the contract’s final year, the timing of which coincides with Cody’s eventual extension.
Ramon would probably like a little more long-term security but it’s reasonable to think he’d take $4 million to play close to home with his old pals.
For Kemba’s extension, I just copied and pasted Ty Lawson’s contract – though I think there’s a chance Walker doesn’t get quite that much cash. Maybe 90%-95% of what Ty got. Still, it’s a decent comp going forward.
It’ll be very interesting to see what Cho does with his three first round picks over the next two Drafts. Should the team uncover a diamond in the mid to late round – say a TJ Warren or a Kyle Anderson – it would only improve their rosy cap situation going forward.

In summary: We may question the selection of Biz in the Lottery. We may ponder what Bradley Beal, Damian Lillard or Andre Drummond would’ve looked like in teal & purple. But when it comes to mastering the salary cap and wrangling the teams’ once wild books, Rich Cho has proven infallible.

-ASChin

@BaselineBuzz

Max Players Vs. Max Contracts

Where Have All the Superstars Gone?

James Harden, a 23 year old wing player with zero All-Star appearances, who was the third best player on his team last season, fought for and will receive the NBA’s maximum salary. And he deserves it. Here’s why:
The league’s current CBA contains a structural curiousity at the top; one that brings to mind European-style social policy more so than “Gots ta get mine” good-ol’-American capitalism: The five to ten best basketball players on planet earth are capped at how much they can earn.

Cut to Fox News: “That’s why they call it a ‘collective’ bargaining agreement! I wanna see Hasheem Thabeet’s birth certificate!”

In a world without maximum contracts, Lebron James would earn more than half his team’s payroll. Same goes for CP3, D12, D-Rose, Durant or any other transcendental, once in a generation talent. Not so under the current CBA, where a max player like Rose commands an average of $18 million a season, around one quarter of his team’s pre-tax payroll.
This is why “true max” superstars are the absolute best value in the NBA. They’re playing far below what they’re worth. Second best market value? Rookie scale contracts. Which is why any GM worth their salt is actively trying to build the bulk of his roster around 1-3 true max/superstar players and a bunch of rookies (sound familiar? *cough* OKC *cough*)
The problem is that at any given time, the league only has eight to ten guys who are bonafide supes.

Let’s do some simple math:

30 NBA Teams x $56 million (salary cap) = $1.68 billion in available salaries.
10 Superstars (generous) x $18 million (average max salary) = $180 million.

This leaves a whopping $1.5 BILLION to pay out to Non-Superstars and that’s before we add any cap exceptions or tax penalties.
The money has to go somewhere, right?

Cue Jim Ross voice: “OHMYGAWD, that’s Joe Johnson’s music!!!”

This, ladies and gentlemen, is exactly why guys like James Harden, Eric Gordon and Brook Lopez get offered max deals. At least 20 of the league’s 30 franchises will not have access to a true max superstar but are still obligated to field a competitive team while hitting the league mandated salary floor. Under these circumstances, it is without doubt that Harden is a max guy. Whether or not he is a superstar is a mutually exclusive argument.
–ASChin

Post-Chandler Trade: Is Iverson the Answer?

By signing Allen Iverson, the Bobcats could salvage the upcoming season

Could Iverson salvage the Bobcats season?

I did a little math last night. Nothing complicated like you’d see over at 82games.com, Queen City Hoops or with John Hollinger. I’m not mathematically brilliant like those guys. Just some basic addition.

If you take the Bobcats current top eight players Point Per Game averages from last season and add them up, you get 90.6 points per game. Last season, the Bobcats finished 30th out of 30 teams in scoring at 93.6 (The League average was around 100 per game).

The Bobcats leading scorer from last season, Gerald Wallace, averaged 16 and a half points a game. Diaw put up a career high 15.0 ppg after the trade from Phoenix. Those are your two top offensive threats, Bobcats fans. Are you as worried as I am?

It’s pretty obvious that the Bobcats could benefit from A.I.’s scoring presence and we’ve talked about that here before at length. What a lot fans might not understand is how precariously close the team is to this year’s $69.92 million luxury tax level.
After the Chandler trade, the team stands at $59.84 million and this is BEFORE re-signing Raymond Felton and shoring up their backup PF position. And since there’s no way Bob Johnson is paying luxury tax this year, the Bobcats will basically have to choose between re-signing Raymond or bringing in Iverson.

With such a dearth of scoring on the roster, I’m not sure if it’s even a choice. The Bobcats need a scorer and Iverson is the last one out there on the open market.

Now, you could argue that Detroit, San Antonio and New Orleans all made the playoffs last season scoring less than 97 points per game. The only difference is is that all of those teams have guys on their rosters who could drop 30 on any given night. As much as I love Gerald and Boris, I wouldn’t put them into the scoring class of Rip Hamilton, Chris Paul, David West, Tim Duncan, Tony Parker or Manu just yet.

TURNING FELTON INTO AN ASSET

Would Golden State take Raymond Felton for Brandon Wright?

Signing A.I. to a two year full mid-level deal starting at $5.85 million would leave a little less than $2 million (via bi-annual exception) this offseason to sign a dependable backup PF.

Since Felton is a quality player who the Bobcats invested four seasons in, you wouldn’t want to just withdrawal the qualifying offer and renounce his rights when you could get something out of him in a sign-and-trade.

Of the three or so NBA teams that are currently without a decent starting PG, perhaps the best fit for Raymond would be Golden State. Would Don Nelson be interested in dealing his least favorite Tarheel (Brandon Wright) for Felton? The Warriors don’t have a “pure” PG and instead have two shoot-first, smallish SGs in Monta Ellis and Steph Curry (as well a roster full of guys who need shots). Maybe Nellie would be interested in a team-oriented, super-quick point for his run-and-gun offense?

As long as Raymond doesn’t sign for anything above 20% of last year’s salary, he sheds the Base Year status and could be either dealt straight-up for a player like Wright (if the Warriors have a trade exception — I couldn’t find a definitive answer) or packaged with Mohammed or Radmanovic for Speedy Claxton’s dead weight contract.

What do you guys think? How would you improve team scoring? Is there a trade or two out there that could bring in a better scorer than Iverson while enabling the Bobcats to retain Felton?

-ASChin

The RaymondHater Manifesto

A couple of notes before we get started: 1) I originally started writing this as a comment to my colleague’s “RaymondHater” post from earlier today, which itself was a comment on Rick Bonnell’s weekend story from the Charlotte Observer that briefly ran down the different options for dealing with Raymond Felton. But my comment quickly got way too long, so I just decided to keep going and make it a post of its own. Be sure to check out that original post, especially for the awesome photoshopped banner pic.

And 2) Please be assured that I am not really “hating” on Raymond. I use the term facetiously. As discussed earlier this week by Simmons, the word has been beat into the ground. Anyways, I really like Raymond. His heart, durability, and overall “good-guy-ness” are off the charts, yet don’t show up in any statistics. A strong argument could easily be made that we’d have been better served drafting Brook Lopez, clearing a little cap space this year (instead of adding salary) and resigning Felton to be the long-term point guard.

Alas, that hasn’t happened, so we’ll now proceed with my long-winded defense of trading Raymond.

————————————————————–

It must suck to be Bonnell and have to write these pithy articles aimed at the mainstream/casual fan about really complicated decisions. (Then again, it must be pretty cool to be Bonnell and get to cover basketball for a living.)

Though the long term salary cap ramifications are THE MOST IMPORTANT FACTORS underlying the decision about what to do with Raymond, there is precious little mention of them in the article.

The fact of the matter is that, between Wallace, Okafor, Diaw, Diop, Mohammed and Radmanovic, this team has tied up a trememdous amount of their salary cap for the next several years. Go ahead, click on that link — it takes you to the Bobcats salary page on HoopsHype. Then tool around a bit and sample some other team’s payrolls. Not many teams have so much money committed that far out in the future. And if they do, they are playoff teams with superstars.

The economics of the NBA, especially for a small market team trying to avoid the luxury tax, dictate that young players on their rookie deals who show signs of panning out be given every opportunity to develop and contribute. Simply put, such players are cost-effective and locked in to the team that drafted them for four seasons. The Bobcats have such a player: DJ Augustin — he’s making 2.2 million this year, and gets incremental increases up to 3.2 million in his fourth year, 2011-12.

Statistically, the rookie Augustin is already a better player than Raymond: DJ’s Assist Ratio (percentage of a player’s possessions that result in an assist) is only slightly lower than Raymond’s: 23.5% to 28.4%. DJ’s Turnover Ratio (percentage of a player’s possessions that result in a turnover) is better than Raymond’s (though only nominally): 11.4% to 11.7%.

More importantly, DJ’s True Shooting Percentage (which takes into account FG, FT and 3PT shooting) is SIGNIFICANTLY better than Raymond’s: 57.2% to 47.2%. And by overall PER (Player Efficiency Rating, which takes into account these and other advanced metrics), DJ is better than Raymond: 14.45 to 13.20.

Keep in mind, DJ has accumulated these stats as a rookie, and almost always playing either with the second unit, or out of position as an undersized 2 guard with the first unit (i.e., when DJ and Raymond play together, DJ generally guards the other team’s PG on defense, but more often functions as the 2 on offense). We can only speculate how much better he’s going to get.

DJ needs to be given the reins. Keeping Raymond around will not only kill our cap, it will impede DJ’s progress; just like having Brevin Knight and Jeff McInnis around in recent years likely impeded Raymond’s development a bit. Let’s not make the same mistake again, people.

It would be great to be able to keep Raymond around as a backup — maybe as a 6th man who can play the 1, or the 2 against smaller lineups. But on the open market, he will demand a starter’s salary (probably 8-9 million per) from a team desperate for a decent PG. He should and will take it, and the Bobcats shouldn’t match. Doing so would give us a ridiculous fifth player (in addition to Okafor, Wallace, Diaw and Diop) making 7 million plus in 2011-12; or to look at it another way, 3/4 of our cap would be taken up by five guys, 2 of them (Felton and Diop) non-starters and none of them superstars. That’s not how you build a playoff team.

The only thing that gives me pause is that we’re learning more and more about how much financial trouble some teams and owners are in. The salary cap will likely be reduced in the coming years, as opposed to the incremental raises we usually see. It means that this is a pretty miserable time to be a free agent.

Might we be able to keep Raymond for significantly less than we figured at the start of the season (maybe like 6 million per)? And maybe for a shorter deal than otherwise would be customary? What we’ll likely see is that young veterans, like Raymond, will be looking to sign shorter deals than usual, in hopes that the economy will have turned around in time for their next contract year. So I suppose it’s a possibility. But in the spirit of “either shit or get off the pot” I think it’s a bad idea.

What I would rather see the Bobcats do is to improve the long-term prospects of the franchise by trading Raymond now. Not only will DJ benefit, but we might be able to pick up some cap relief, and extra draft pick or two, or even a reasonably priced rotation player. This is obviously contingent on finding a team that is somewhat desperate for a short-term solution at PG; or a team that wants to audition him before bidding major money on him in free agency.

Orlando (ready for a playoff run, but with their PG Jameer Nelson likely done for the year) or Dallas (in need of some depth behind an aging Jason Kidd and an injured Jason Terry) might fit the bill.

What would/should we be looking for in return? Ideally, we package Nazr Mohammed and his awful contract (2 more years remaining after this one, at 6.5 and 6.9 million, respectively) with Raymond for cap relief and flexibility. If a team was willing to take Mohammed, all the Bobcats would likely be happy to take back a pu-pu platter of expiring contracts and draft picks in return.

If no one is desperate enough to take on Mohammed (very likely in this economic climate), we’d probably do good enough to just get back a rotation player who’s signed to a nice deal.

I think Orlando might be the most likely partner here. All indications are that Jameer Nelson will have surgery on his busted shoulder and be done for the year. That leaves Orlando with Anthony Johnson and Tyronn Lue at PG. Now they certainly could just roll into the playoffs with that, and risk getting embarrassed in the first round, but wouldn’t Raymond be better for them? At least they get to the second round with Raymond, and everyone benefits from the playoff experience.

But would Orlando be willing to part with enough to do this? Raymond Felton for rookie SG Courtney Lee (plus Brian Cook to balance the salaries) works, but it’s hard to imagine Orlando giving up their promising rookie.

What about Raymond for Mickael Pietrus (Charlotte would have to add in Alexis Ajinca for this to work). Orlando has already shown that they are fine without Pietrus, as they played well when he was out with an injury earlier this year. And for Charlotte, he’d be a great option to take over at SG for Raja Bell, who is aging and getting brittle, and only singed through next year. Pietrus is signed to a very reasonable deal (5.3 per through 2011-12) and would be a perfect long defender to pair with DJ in the backcourt for years to come.

So there you go; thanks for reading. And if you can make a more convincing case for tying up our cap with Raymond for 4-5 years at 6-9 million when we have a better option available in DJ at less than half that… please do.

-E