Briefing: Knicks 2019 Salary Cap
Everything you need to know about the Knicks cap situation as they head into free agency
Good Morning,
As the Knicks head into one of the most important summers in franchise history, let’s take a deep dive into their 2019 salary cap outlook.
The Knicks offseason can be broken down into two significant timeframes as far as accounting is concerned: before July 1 and after July 1.
Before July 1, the Knicks are operating over the cap. They are approximately $443,439 below the tax line. Since they used their mid-level exception to sign Mario Hezonja, they are hard-capped at the apron of $129.8 million.
After July 1, the Knicks can create between $70.3 million and $73.6 million in cap space, assuming a projected $109 million cap, given their current roster, and depending on where they end up in the draft.
Knicks need $70.85 million to sign Kevin Durant and another 7-9 year veteran free agent to max contracts. Durant is eligible for 35% of the salary cap on a max contract as a 10+ year veteran. That equates to $38.15 million on a $109 million cap. Kyrie Irving (or any 7-9 year veteran) is eligible for 30% of the salary cap on a max contract, which equates to $32.7 million.
Before July 1
Knicks can't waive a player on an expiring contract to create a roster spot. Since they have 15 players under contract, this means they can't waive a player to sign a new player or add an extra player in a trade before July 1.
Knicks can't trade a player on an expiring contract. However, they can exercise their team options on the likes of Trier, Ellenson, and Jenkins to make them tradeable (Billy Garrett has a team option, but can’t be traded until July 2).
A loophole was closed from the previous CBA that allowed teams to artificially inflate outgoing salary by including non-guaranteed contracts in trades. Under the new CBA, only guaranteed salary is counted as outgoing salary in trades. If a player is traded between the end of the season and July 1, the outgoing salary counts as the lesser amount of the guaranteed salary in the current season and the guaranteed amount in the next season. Therefore, if the Knicks trade Damyean Dotson without guaranteeing his 2019-20 salary, his outgoing salary would count as $0. Since Lance Thomas was signed under the previous CBA, the Knicks can still use his full $7.1 million salary as outgoing salary in a trade before July 1 (under the new rules, they would only be able to use $1 million).
Draft picks count as $0 in outgoing salary if traded before the player is signed. In other words, if the Knicks traded their lottery pick before the draft, they couldn’t use the rookie scale of that draft pick as outgoing salary.
After July 1
Before we get into the details, this is important: the Knicks control their own destiny in creating two max spots for Kevin Durant and one 7-9 year veteran. Ok, that said, let’s get into the nuance.
The key thing to focus on in the graphic above is the box that shows the To preserve 2 max slots, Extra Space Available. This shows you how much breathing room the Knicks have to bring back existing players or sign new players while preserving enough space to sign Kevin Durant and one max sidekick. The column on the right shows the club options and cap holds the Knicks would need to decline or renounce in order to create the space calculated in the Extra Space Available box. If they want to exercise or preserve any of the associated Bird rights (cap holds) in the right column, while maintaining two max slots, they would need to end up with a lower pick in the draft, or move one of their guaranteed contracts to open up more space.
For purposes of calculating the maximum amount of cap space available to the Knicks given their current roster, I assume they waive Lance Thomas to reduce his cap obligation to the $1 million in 2019-20. It has not been reported if this $1 million is already owed, or if it triggers on a future date. If triggered on a future date, the Knicks could waive him before that date without incurring any cap cost.
Until we know where the Knicks will pick in the draft, we must use a scale for their available cap space. New York’s lottery pick carries a cap hold of 120% of the rookie scale. There is about a $3.35 million difference in the cap hold for the 1st overall pick versus the 5th overall pick.
Put simply, given the current roster and space requirements for two superstars, the Knicks would only have enough extra space to exercise Allonzo Trier’s option if they land the 5th pick in the draft. Otherwise, they will need to move some additional salary to make room for Trier. As for Dotson, his non-guaranteed salary could fit if the Knicks land the 3rd overall pick (remember, each signing is offset by the min roster charge). Of course, cap projections could change (the Knicks could end up with a little more wiggle room).
If you’re focused on the $565,704 number that shows the Knicks short of two max slots if they land the 1st overall pick, don’t be. They could make up that amount by asking each max player to take a little less, or by simply stretching the $1 million owed to Lance Thomas (assuming the $1 million is already owed and not triggered on a future date). Of course, the Knicks could also move another salary, such as Frank Ntilikina’s (as has been rumored), and that would give them plenty of breathing room to sign two max players and also bring back a player like Allonzo Trier, even if they own the first pick.
Keep in mind: Each signing the Knicks make up to 12 players is offset in cap savings by the minimum roster charge of $897,158 (based on $109M cap). It’s a timing issue: they are charged a min roster charge until they fill their open roster spots, and then when they do, they are essentially credited that amount back. To explain using an example, the Knicks would be $565,704 short of two max spots if they land the 1st pick (given their current roster), but after (and only after) signing those two players, they would gain $1.8 million in extra space.
*Note: If the Knicks waive Lance Thomas and don’t reduce his guaranteed amount in a buyout or stretch his cap hit, they can later re-sign him. Thomas would earn the $1 million guaranteed in his contract plus his new salary amount. Since Thomas is an 8-year veteran, he could sign a minimum contract for $2.3 million (even if the Knicks are over the cap), which equates to a $3.3 million pay day next season, which isn’t a bad deal. Thomas would also be eligible to negotiate a no-trade clause as an 8-year veteran with at least four years played on the Knicks.
Salary Cap Exceptions
If the Knicks max out their cap space this summer, they will have limited exceptions available to them to add additional players. Once the Knicks drop far enough below the cap to sign top-paid free agents, they lose their mid-level exception. They would also lose their bi-annual exception, but they lost that anyway since they used it this past season on Allonzo Trier.
Under this scenario, the Knicks would gain the Room Exception of ~$4.8 million. They could split up this exception to sign multiple players, each for up to two years in contract length with 5% annual raises.
Of course, they can always add players on minimum contracts.
Unlike first round draft picks, there is no cap hold or exception specific to signing second round picks. If the Knicks want to sign the 55th pick in this year’s draft, they will need to do so as they would with any free agent, using cap space or an available exception. Late second round picks are usually signed to a minimum contract, anyway.
Cap Holds
Cap Holds count against team salary until the team renounces them. By renouncing the cap hold, the team still maintains the right to sign the player, but loses any associated Bird rights. The idea is that cap holds prevent a team from clearing cap space, signing a bunch of new players, and then using the Bird rights on their own players to exceed the cap. They must maintain the cap hold of their Bird players in order to exceed the cap in re-signing them.
If the Knicks land Kevin Durant and another max star, they will need to renounce all of their cap holds to create the requisite space, unless they trade some of their guaranteed contracts to open up a sliver of space to bring back someone like Luke Kornet using his Early-Bird rights.
DeAndre Jordan and Mario Hezonja are non-Bird free agents, meaning preserving their cap holds would only allow the Knicks to make modest increases on their 2018-19 salaries, which would price both players well above their market value, anyway. The Knicks will almost certainly renounce both cap holds. If they end up signing either player, they would do so using space or an exception.
Noah Vonleh has an extremely low cap hold of $1.6 million based on the amount of his minimum salary that is not reimbursed by the league. However, he probably played himself into a more lucrative contract than the modest 120% increase the Knicks could offer him by maintaining his non-Bird rights.
Restricted Free Agents
Emmanuel Mudiay and Luke Kornet are eligible to become restricted free agents this summer. If the Knicks decline the options of Allonzo Trier, Henry Ellenson, or Billy Garrett, they would all become restricted free agents. The Knicks must submit a qualifying offer by June 29 to make any of these players restricted and gain the right-of-first-refusal on potential offer sheets.
Mudiay’s qualifying offer is $5.75 million. However, his cap hold remains at $12.88 million.
Kornet’s qualifying offer is $2.02 million, but his cap hold is $2.11 million as an Early-Bird free agent.
If the Knicks decline Allonzo Trier’s option and extend him a qualifying offer of $4.23 million, they could be on the hook for that amount, which is greater than the $3.51 million he is owed in his club option.
If the Knicks decline Henry Ellenson and Billy Garrett, their qualifying offers would be $1,876,700 and $1,643,842, respectively.
Isaiah Hicks is discussed in the next section.
Two-Way Players
Isaiah Hicks and Kadeem Allen are on two-way contracts. I have not seen it officially reported whether they are both on one-year or two-year deals; however, I believe Hicks is ending his one-year deal and Allen is signed through next season.
Assuming Hicks is on a one-year contract, he is eligible to be a restricted free agent (with Early Bird rights) given he spent 15 days with the Knicks this past season. We know Hicks played in 3 games, but it is impossible to know how many days he actually spent practicing with the big club. Hicks’ qualifying offer would be the minimum salary of $1.4 million since he has played two seasons as a two-way player under the Knicks. He is only eligible to play on a two-way for one more season. The Knicks can sign him to another two-way to keep him on the team without any salary cap impact.
Assuming Kadeem Allen is signed through next season on a two-way contract, he has no impact on the Knicks salary cap this summer.
Important Dates
May 14: NBA Draft Lottery
May 21: John Jenkins can be traded if club option exercised.
June 2: Henry Ellenson can be traded if club option exercised.
June 20: Allonzo Trier's club option
June 20: NBA Draft
June 29: John Jenkins, Henry Ellenson, Billy Garrett club options
June 29: Emmanuel Mudiay, Luke Kornet, and Isaiah Hicks (if RFA) qualifying offers due. If options declined on Allonzo Trier, Henry Ellenson, and Billy Garrett, qualifying offers also due.
July 1: Free agency begins
July 2: Billy Garrett can be traded if club option exercised.
July 15: Damyean Dotson's $1.6 million contract guarantees
October 31: Frank Ntilikina and Dennis Smith Jr’s 2020 club options
Trade Restrictions
Who can't be traded?
DeAndre Jordan, Mario Hezonja, Noah Vonleh, Emmanuel Mudiay, and Luke Kornet are on expiring contracts without team options that can be exercised, so they cannot be traded.
If Luke Kornet or Emmanuel Mudiay eventually sign qualifying offers with the Knicks, both players would be granted de-facto no-trade clauses as they would need to approve any trade. This is by rule of the current CBA which requires consent on trades from players on one-year deals leading to Bird or Early-Bird rights. If the Knicks simply sign either player to a new one-year contract, the same trade consent rule applies.
If the Knicks bring back DeAndre Jordan, Mario Hezonja, or Noah Vonleh on one-year deals (including with a team or player option), they would each need to consent to any trade since they all would be playing on one-year deals leading to Early-Bird rights. If the Knicks decline Allonzo Trier’s option and bring him back on a new one-year contract, the same would apply to him (as it would for Ellenson, Jenkins, and Garrett).
Something needs to happen to trade these players...
The Knicks can trade their draft picks without restriction until the player is signed, after which they must wait 30 days. Draft picks count as $0 in outgoing salary until the player is signed.
Knicks must wait 90 days to trade players they signed to NBA contracts after December 15, 2018. John Jenkins can't be traded until May 21, Henry Ellenson can't be traded until June 2, and Billy Garrett can't be traded until July 2. None of these players can be traded unless the Knicks exercise their 2019-20 options.
Allonzo Trier can only be traded if the Knicks exercise his 2019-20 team option.
Who can be traded?
Damyean Dotson can be traded, but if he is traded before his contract is guaranteed, his outgoing salary would count as $0.
Lance Thomas was signed under the previous CBA, so he is allowed to be traded using his full salary amount, instead of only the guaranteed portion ($1 million) owed to him next season.
Mitchell Robinson, Kevin Knox, Frank Ntilikina, and Dennis Smith Jr. have no trade restrictions.
Ok, I think that does it for now. Thanks for reading!
Drop me any questions you might have (or corrections, if I somehow missed something).