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Can the Bulls Bring Over Nikola Mirotic?

Nikola Mirotic is Europe’s best player. Can the Bulls negotiate his buyout and their own cap position to add him next year?

Nate Duncan

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One enormous benefit of Phil Jackson’s hiring by the New York Knicks is that it has quelled the breathless speculation of Carmelo Anthony joining the Chicago Bulls this summer as a free agent. Assuming Anthony does not join the Bulls, their prime addition this summer would likely be Real Madrid power forward Nikola Mirotic. The 23-year-old Mirotic was the Spanish ACB League MVP in 2012-13 and has only improved this season. Much ink has been spilled elsewhere on his game (including my own after an in-person scouting trip last June), but it will suffice to say that his combination of shooting, skill, agility and feel are top-notch for the power forward position.

The video below provides an excellent view of the type of player he is and could become.

https://www.youtube.com/watch?v=JjaHc9Vp9wU

Mirotic would strike particular fear into the heart of opposing defenses running the pick-and-roll with Derrick Rose. His defender would have to stay relatively attached to him to prevent his popping for a three-pointer, while Rose is of course deadly on the play without a big man to deter him from getting into the lane.

Mirotic’s Buyout Complicates the Bulls’ Task

The Bulls face a number of issues bringing over Mirotic starting with his massive 2.5 million Euro buyout, which translates to $3.475 million at current exchange rates.

Buyouts from European teams are an extremely tricky business in the NBA. The Collective Bargaining Agreement prevents teams from spending more than what is known as the Excluded International Player Payment to buyout international players without it counting against the salary cap. This amount is $600,000 in 2014-15 (it has and will go up $25,000 each year of the CBA). Beyond that, any buyout amount is paid by the player. It was this buyout that prevented the Bulls from having a realistic chance to bring him over before this summer. Mirotic was the 23rd pick in the 2011 draft, and therefore was prescribed such a low salary that there is no way it would have made financial sense for him to come to the Bulls before this summer.

This summer, two things will have changed. Most importantly, the Bulls are no longer bound by the rookie wage scale, which previously would have limited Mirotic to a starting salary of a little over $1 million per year and locked him in to team control for up to four years. After three years have passed, a team has the option of signing a draftee to whatever contract it has room for via either cap room or exceptions to the cap. Such a contract must be for at least three years, exclusive of any option years.

The second new development is that the Bulls will have access to either the $5.305 million mid-level exception or cap room, which will allow them to pay Mirotic enough to entice him to come over. Here though, is where it gets even more difficult. Mirotic will have to pay the $2,875,000 remaining on his buyout after the Bulls pay the maximum $600,000 Excluded International Player Payment. Normally, this amount would count as a signing bonus.

However, paying the buyout as a signing bonus has important consequences for the size of Mirotic’s overall contract because of another rule that limits signing bonuses to 15 percent of the overall contract value. If the buyout were paid entirely as a signing bonus, that means the minimum overall value of Mirotic’s contract would be $19.2 million. On a three-year deal, this would require a first-year cap number of approximately $6.1 million, about $800,000 above the mid-level exception amount. The amount of the buyout/bonus allocable to the first (and each successive) salary cap year would be $958,333, or one third of the bonus.* If the Bulls do not amnesty Carlos Boozer to open up cap space greater than the MLE, or would simply like to pay Mirotic less, this would cause problems because they would not be able to give Mirotic a contract starting at less than $6.1 million if the entire buyout were paid as a bonus.

*For cap number purposes, the signing bonus is spread over the guaranteed years of the contract in proportion to the percentage of each contract year that is guaranteed (not the dollar amount paid in that year). Since all of the years of the contract would be fully guaranteed in this scenario, the bonus would be spread equally over the years of the contract.

This leaves two potential solutions. The first would be offering Mirotic a four-year contract. This would allow a cap number of about $4.5 million in the first year. However, Mirotic would be unlikely to take such an offer; a big part of the incentive for him to come to the NBA is to get past his first contract as soon as possible. If he is as good as it appears he will be, his second contract could be into eight figures per year.*

*One idea to make coming over more palatable, as suggested to me by Danny LeRoux, would be for Mirotic to have a fourth-year player option on his contract. This would at least allow him a larger guarantee if he is injured or underperforms. The bonus could not be spread over the fourth year because it is an option year, but it would at least make the offer slightly more appealing to Mirotic. Edit: As I wrote here (scroll down) it is not clear whether the contract could legally contain an option or not.

The second potential solution would allow the Bulls to fit Mirotic within the mid-level exception while still providing him enough cash at signing to pay his buyout. If Mirotic were to sign for the full MLE amount, his signing bonus would be limited to about $2.47 million.* This would result in a shortfall of about $397,000 to pay his buyout. However, he and the Bulls could take advantage of a provision in the CBA that allows the advance payment of salaries for a given season starting on July 1. Up to 25 percent of a player’s base compensation (i.e., not including bonuses) may be paid before October 1, and another 25 percent may be paid before regular checks start on November 15. The first 25 percent could easily cover this, as that amount would be a little over $1.1 million. Therefore, Mirotic could be given almost $3.6 million immediately upon approval of the contract, more than enough to pay the buyout.

*This is slightly less than 15 percent of the overall contract, for reasons explained by Larry Coon.

Of course, such gyrations very well might not be necessary. I am not a specialist in the Byzantine world of European basketball contracts, but it is often the case that European teams are willing to negotiate a buyout down as a reward for excellent service and/or to maintain a reputation as a good place to play. It also is not necessarily the case that all of the buyout would be due immediately, or that it could not be paid over time. But this approach would guarantee that Mirotic could meet any draconian buyout terms, if needed. In fact, that might assist in the effort to negotiate it down.

The Mirotic Negotiations Will be Fascinating

On the other hand, if the Bulls do amnesty Boozer (as appears likely), an intriguing negotiation could develop. Rare is the situation where both sides have so much leverage and yet so much incentive to get a deal done.

From Mirotic’s standpoint, he makes a reported 3.5 million Euros per year from Real Madrid, or about $4.8 million.* Contrast that with his buyout amount of $3.475 million. Considering his buyout, he will be taking a paycut over the next three years if he signs for the MLE. This would be taken out of his contract, although an international tax lawyer I consulted stated that the buyout expense should be deductible against income. Mirotic is by all accounts very happy in Spain, and plays for a dominant team. Moreover, he is really good. The Bulls desperately need the offense he would bring, and given his European performance he might merit a contract of almost eight figures right away if he were on the open market. Ryan Anderson is in the midst of a four-year, $34 million contract, and Mirotic projects to be at least his equal as a player. All of these tend to favor him getting a larger salary from the Bulls.

*Edit as of April 30, 2014: I have had multiple sources tell me that there is no way Mirotic makes anywhere near $3.5 million Euros, and in fact that they would be shocked if it is over 1 million Euros per year. That changes the calculus for him significantly.

On the other hand, the Bulls have Mirotic’s exclusive draft rights. While he is no longer bound by the rookie scale, it is not the same as if he were on the open market. Back before the rookie scale, rookies still were not paid quite as much as they would have been as veteran free agents because they can only negotiate with one team. Perhaps more importantly, Mirotic will want to get to free agency as soon as possible so that he can truly maximize his earnings over the course of his career with two big contracts that he could never hope to match in Europe. At age 23 and forced to take a minimum three-year deal to start, he needs to get to the league now. Mirotic also faces the risk that his demands will be so steep that the Bulls will decide to use their cap space on someone else, retain his rights, and go through the whole dance again next year. Mirotic is so appealing precisely because the Bulls have his exclusive draft rights and can expect to get him on a value contract. If he totally eliminates that appeal, they could go in another direction and push back the clock on his potential big payday another year.

The timing issue will also be fascinating. If the Bulls get under the cap, Mirotic will need to convince them that their cap space is worth using on him during the fast-moving free agent market. The Bulls will fear missing out on free agents and being stuck with a ton of cap space and nobody to use it on except Mirotic. That, of course, would increase his leverage. Yet by waiting, Mirotic takes the risk the Bulls will settle on someone else and be left with minimal or no cap space to offer him a deal.* This would be a bitter pill to swallow indeed and also likely lead to his remaining in Europe for another year.

*A previous version of this article stated that the Bulls could offer Mirotic their $2.7 million Room Exception for teams under the cap. However, Room Exception contracts are limited to two years. Because any Mirotic deal in excess of the Rookie Scale must be for three years, the Room Exception cannot be offered to Mirotic.

I expect a deal to get done, because both sides ultimately have the incentive to make it happen. But each also has powerful leverage on their side to push the numbers in their direction. Either way, the negotiations between Mirotic and the Bulls promise to be absolutely enthralling.

Noah and Gibson’s Incentives: The Gifts That Keep On Giving

Others have previously reported on the luxury tax ramifications incentives for Joakim Noah and Taj Gibson might have for the Bulls this season. To refresh, Noah is due a $500,000 bonus if he makes first-team All-NBA, while Gibson will earn $250,000 for making the All-Defensive Second Team and another $250,000 ($500,000 total) for making the All-Defensive First Team.  While the last of these is likely out of reach for Gibson, there is a good chance these players combine to add $750,000 to their ledgers this year.

Reaching these incentives this year would also have cap ramifications for next year, assuming the players have similar incentives in 2014-15. The general rule is that incentives are included as a part of team salary if they were earned the previous year. So, any incentives earned by Noah and Gibson in 2013-14 would by default be included in the Bulls’ team salary for next season. This could lower the available cap room for the Bulls by the amount of those incentives for 2014-15, presumably $750,000 again.

Although these incentives would be included in team salary by default, there is still a procedure by which this could be challenged by the NBAPA, which theoretically has an incentive to create more cap room so that other players can get paid more. The Players’ Association can request that a basketball expert jointly selected by it and the NBA determine whether it is very unlikely that the bonus will be earned.*

*The full procedure:
1. The expert conducts a hearing within five business days, and renders a determination within five business days after that.
2. The party initiating the proceeding has the burden of proof.
3. To grant the challenge, the expert must find that player is very unlikely to earn the bonus (in the case of an NBAPA challenge) or very likely to earn bonus (in the case of an NBA challenge).
4. No party can mention whether the bonus would or wouldn’t be included under the default rule.
5. The expert’s opinion is unappealable.
6. The costs of the expert are borne equally by the parties.

In practice, however, the NBAPA has rarely challenged such designations, and seems unlikely to now when they still lack a union leader (although that will hopefully be rectified by July). Note that there is no procedure for the Bulls themselves to challenge the likely or unlikely designation of the incentives; although the team might like to do so the NBA and the NBAPA are the only parties that may initiate the procedure.

Nate Duncan is an NBA analyst and attorney. He writes regular features for Basketball Insiders and chats weekly at 11 Eastern on Tuesdays.

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2018 NBA All-Star Sunday Recap

Michael Petrower recaps the All-Star Game from Sunday in Los Angeles.

Basketball Insiders

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The 2018 NBA All Star Game had some added appeal this year, with Captains LeBron James and Stephen Curry selecting playground style from the pool of All-Stars. Although it was not televised, it drew a lot of interest to say the least.

Team Lebron was headlined by Kevin Durant (the alleged first pick), Anthony Davis, Russell Westbrook, and Kyrie Irving. Sadly, Team Lebron suffered big losses with John Wall, Demarcus Cousins, Kevin Love and Kristaps Porzingis going down with injuries. Team Stephen was led by Giannis Antetokounmpo, James Harden, Joel Embiid and Demar DeRozan.

NBA fans were ready to indulge on the highlight real of plays to commence…That was, until the NBA inflicted a marathon-like performance that seemed a bit unnecessary, to say the least. Kevin Hart was at the center of theatrics that had NBA fans scratching their heads questioning what was on their television screen. Fergie topped off the saga with what was one of the more questionable national anthems we’ve seen in recent years. However, if you stuck around long enough, the game started at 8:40 PM EST and the flashy plays that we hoped for, began.

Joel Embiid made his first A;l-Star game appearance and kicked off the scoring festivities for Team Stephen with a ferocious and-one dunk. Team Stephen led all of the first quarter and won the quarter 42-31. Karl Anthony Towns led the first quarter scoring with 11 points. Team LeBron, however would storm back and cut the lead to two, 78-76 at half. LeBron came into his 14th straight All-Star game and lead his team at the half with 15 points. Klay Thompson also lead Team Stephen with 15 points at half.

The second half ensued and after some back and forth between the two teams, Team Stephen was leading by three going into the fourth quarter, 112-109. Team Stephen grew their lead to 11 while LeBron and KD got some rest. But after the two came back in, the 11-point deficit was erased after a LeBron three and the teams were now tied at 144 with 1:16 left in the fourth quarter.

DeRozan would make a free throw to put Team Stephen up one point, but Lebron followed with a strong two-pointer to put his team up one. DeRozan tried to answer, but threw away a pass which resulted in an easy two points for Russell Westbrook to ice the game. Team LeBron was the 2018 All Star Game winner with a score of 148-145.

LeBron James went on to win his third All Star MVP after finishing with 29 points to go along with 10 rebounds, eigh assists and a steal on 12-17 shooting. DeRozan and Damian Lillard lead Team Stephen with 21 points each.

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Rest Assured, the 1-16 NBA Playoff Format Is Coming… Kinda

Based on Adam Silver’s comments, it’s safe to assume that the NBA will soon reformat the playoffs.

Moke Hamilton

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If there’s one thing Adam Silver has proven in his four years as the NBA’s Commissioner, it’s that he isn’t afraid to do things his way.

And if Silver has his way, the league will eventually figure out how it can implement a system that results in a more balanced playoff system. On Saturday, though, he revealed that it’s probably closer to a reality than many of us realize.

During his annual All-Star media address, Silver admitted that the league will “continue to look at” how they can reformat the playoffs to both ensure a better competitive balance throughout and pave the way for the league’s two best teams to meet up in the NBA Finals, even if both of those two teams happen to be in the same conference.

“You also would like to have a format where your two best teams are ultimately going to meet in the Finals,” the commissioner said on Saturday night.

“You could have a situation where the top two teams in the league are meeting in the conference finals or somewhere else. So we’re going to continue to look at that. It’s still my hope that we’re going to figure out ways.”

Since Silver took over the league, he’s been consistent in implementing dramatic changes to improve the overall quality of the game. Although Silver didn’t take over as the league’s commissioner until 2014, he was instrumental in getting the interested parties to buy into the notion that the “center” designation on the All-Star ballot was obsolete.

As a result, beginning with the 2013 All-Star Game, the Eastern and Western Conference teams have featured three “frontcourt” players, which essentially lumps centers in with forwards and eliminates the requirement that a center appear in the All-Star game. That wasn’t always the case.

From overhauling the league’s scheduling to reducing back-to-back games to implementing draft lottery reform to, this year, eliminating the traditional All-Star format which featured the Eastern Conference versus the Western Conference, it’s become clear that Silver simply “gets it” and isn’t afraid to make revolutionary changes if he deems them to be in the overall best interest of the league.

At this point, everyone realizes that something needs to be done about the league’s current playoff system.

Last season, for example, the Western Conference first round playoff series featured the Houston Rockets and Oklahoma City Thunder squaring off against one another. Only one series—the Los Angeles Clippers versus Utah Jazz—went seven games.

Meanwhile, in the Eastern Conference, the first round series that were contested weren’t exactly compelling.

The Cleveland Cavaliers steamrolled the conference to the tune of a 12-1 run to their third consecutive trip to the NBA Finals. It wasn’t the first time that the public questioned the wisdom behind separating the playoff brackets by conference, but the dominance of the Cavs and LeBron James specifically (who is expected to win the Eastern Conference for the eighth consecutive time this season) has caused renewed scrutiny.

The most common solution offered to this point has been to simply take the 16 best teams across the league, irrespective of conference, and conduct the playoffs as normal.

From afar, this solution seems simple enough, but the obvious concerns are twofold.

First, if the Celtics and Clippers, for example, were pitted against one another in a first round series, the travel would be considerable. Private charter flight or not, traveling is taxing, and the prospect of having to make five cross-country trips over the course of a two-week span would certainly leave the winner of such a series at a competitive disadvantage against the opponents they would face in subsequent rounds, especially if the future opponent enjoyed a playoff series that was contested within close proximity.

Atlanta to New Orleans, for example, is less than a one-hour flight.

Aside from the concerns about geographic proximity, the other obvious issue is competitive balancing of the schedule, which seems to be an easier issue to fix.

Using the Pelicans as an example, of the 82 games they play, 30 are played against the other conference—in this case, the Eastern Conference. The other 52 games would all be played within the conference. If playoff seedings were going to be done on a simple 1-16 basis, the scheduling would have to be realigned in a way to essentially pit all teams against one another evenly. It wouldn’t be fair for a team like the Celtics to be judged on the same standard as the Pelicans if the Celtics faced inferior teams more often.

On Saturday night, Silver revealed that the league’s brass has been thinking about this and is trying to find a solution, and in doing so, he may have tipped his hand.

* * * * * *

As a multinational conglomerate, the NBA values the inclusion of as many markets as possible. Wanting to improve the overall quality of the product, though, there are interests that may not align fully.

What’s obvious with this year’s All-Star game is that the NBA has found a way to balance the two.

Rather than eliminating the conference designations altogether and simply choosing the “best” 24 players to be in the All-Star game, the league still chose All-Stars based on their conference, but then distributed them within the pool to allow for better competition.

That’s exactly what Silver revealed the NBA is considering doing with the playoffs. It makes perfect sense, and it’s probably just a matter of time before it’s implemented.

A report from ESPN notes that the idea that the league is kicking around would essentially do exactly what the league did with the All-Star selections with the playoff teams: choose the best from each conference, then disburse them in a way that allows for competitive balance. 

The proposal would have the league’s teams compete as they normally do and would still feature the top eight teams from each conference getting into the playoffs.

Once the teams are qualified, however, they would be re-seeded on a 1-16 basis and crossmatched, on that basis.

It’s not perfect, but compromises never are. The travel issues would still persist, but the league would accomplish two goals: the less dominant conference wouldn’t be underrepresented and discouraged from competing, but the two best teams would still be on opposite ends of the bracket.

An NBA playoffs that featured 11 or 12 teams from the Western Conference would be a ratings nightmare for the league. Eastern Conference cities are less likely to stay up past midnight during the week to watch playoff games, and less competitive markets would frown at the prospect of having to compete against the other conference for a playoff spot. For many small market teams, the millions of dollars generated from a single playoff game often has a significant impact on the team’s operations, so there would naturally be discord.

This system would at least eliminate that contention.

On the positive side, it would allow for the Rockets and Warriors, for example, to meet in the NBA Finals. In both the NFL and MLB, geography hasn’t been a determining factor on which teams battle for the league’s championship.

Why does it have to be in the NBA?

* * * * * *

With the league having begun regular season play earlier this season, at the All-Star break, most teams have played about 57 games. A lot can change over the final 25 games of the season, but if the seeds were frozen today and the league took the top eight teams from each conference and then crossmatched them, the Los Angeles Clippers would be the team that got the short end o the stick.

Although the Clippers have the 16th best record in the league, they would be the ninth-seeded Western Conference team and would thus be eliminated from postseason contention by the Miami HEAT. The HEAT have the 17th best record in the league but are the eighth-best team in the Eastern Conference, so to preserve the conference weight, the HEAT would win out.

This is what the seedings and matchups would look like…

(1) Houston Rockets versus (16) Miami HEAT

(2) Golden State Warriors versus (15) New Orleans Pelicans

(3) Toronto Raptors versus (14) Philadelphia 76ers

(4) Boston Celtics versus (13) Portland Trail Blazers

(5) Cleveland Cavaliers versus (12) Denver Nuggets

(6) San Antonio Spurs versus (11) Oklahoma City Thunder

(7) Minnesota Timberwolves versus (10) Milwaukee Bucks

(8) Washington Wizards versus (9) Indiana Pacers

Here, the Celtics would face the nightmarish scenario of having to travel to and from Portland for their playoff series, while virtually every other series would feature much more friendly travel (especially the Spurs-Thunder and Raptors-Sixers).

The Cavs would have a very tough road to the Finals, having to beat the Nuggets, Celtics and Rockets if the seeds held. The Celtics would have a similarly tough road, as they’d have to get past the Blazers, Cavs and Rockets.

At the end of the day, the Rockets and Warriors would be aligned in such a way as to avoid one another until the championship, but each of the two would face daunting competition. The Rockets would have to go through the HEAT, Wizards and Celtics, while the Warriors would have to face the Pelicans, Timberwolves and Raptors—again, assuming the seeds held.

It would be a benefit to all observers.

One of the unintended consequences of implementing this system would be to make every single game count. If the Celtics were able to move up to the second seed, for example, their road to the Finals, in theory, could become much much easier, comparatively speaking.

The end result would be less resting of players during the course of the season and certainly less instances in which star players take the final week of the regular season off in other to be fresh for the postseason.

Everyone wins.

No, there’s no perfect solution, but just as the league has found a clever way to serve multiple interests as it relates to the All-Star game’s competitiveness, Silver has revealed that the league is at least considering following suit with the playoffs.

Best bet?

It’s only a matter of time before we see it actually see it happen.

It simply makes too much sense, and if there’s one thing the commissioner has already proven, it’s that he isn’t afraid of changing tradition.

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NBA All-Star Saturday Recap

Brian Slingluff recaps All-Star Saturday from Los Angeles.

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Basketball Insiders is here to recap an eventful All-Star Saturday that led to three first-time champs in the various skills contests. Let’s get right to it.

Taco Bell Skills Challenge

In Saturday night’s Taco Bell Skills Challenge, the “Bigs” team, boasting 3 All-Stars, set out to claim a third straight title. The competition kicked off with Joel Embiid coming from behind to best Al Horford, and sharpshooter Lauri Markkanen swishing his first 3 point attempt to eliminate Andre Drummond. On the Guard side, Buddy Hield had an early lead before losing out to Spencer Dinwiddie, and Jamal Murray upset hometown favorite Lou Williams.

In the semifinals, Markkanen was able to dispatch Joel Embiid, who struggled with the pass portion of the competition, and Dinwiddie topped Jamal Murray by making his first 3 pointer for the second consecutive round.

In the Final round, Dinwiddie finally missed a 3 pointer, but it did not matter as he finished with a wire to wire victory over Lauri Markkanen. Dinwiddie, competing in front of his friends and family, was able to end the Bigs’ two year win streak in impressive fashion.

JBL Three Point Contest

The event started off with Tobias Harris scoring a solid 18 points. Wayne Ellington was next, sporting the hot new alternate Miami Vice jersey. Ellington started off cold and heated up on his last three racks, ending up with a score of 17. Devin Booker and former three-point champion Klay Thompson tied for a round-high 19 points. Paul George, Bradley Beal, and Kyle Lowry struggled from the start and never found a rhythm, falling short of making the championship round. Defending champion Eric Gordon never got it going, and would not defend the title, scoring only 12 points.

In the Championship round, Tobias Harris was on fire through the first 3 racks, but quickly got cold, scoring 17 points. Devin Booker was next and could not miss, scoring 28 points, leaving Klay Thompson a high number to match. Thompson fell just 3 points short, and Devin Booker was crowned the 2018 JBL Three Point Champion.

Verizon Slam Dunk Contest

The final and most anticipated event of the night started with Donovan Mitchell bringing out a second hoop, bouncing it off the second backboard and finishing with an impressive windmill dunk, scoring a 48. Victor Oladipo followed with a difficult look-away alley oop dunk attempt that he was unable to complete, totaling 31 points from the judges. Dennis Smith Jr. had a nice reverse double pump that got 39 points and Larry Nance Jr., in a throwback Phoenix jersey, payed homage to his father’s cradle dunk, nailing it almost exactly for a score of 44 points.

Oladipo started the next round of dunks by borrowing Chadwick Boseman’s Black Panther mask, and scoring 40 points with a tomahawk windmill dunk. Smith Jr. hit a seemingly impossible reverse 360, through the legs, switching hands dunk for a perfect score of 50. Nance Jr. pulled off a Vince Carter level windmill, nearly missing a perfect score. Mitchell jumped over comedian Kevin Hart to advance to the finals against Larry Nance Jr.

In the Finals, Nance started things off with a windmill alley-oop with some help from Larry Nance Sr., garnering a score of 46. Mitchell completed the difficult one handed alley-oop he had attempted in the previous round, scoring a perfect 50. Nance Jr. answered with an incredible double pass off the backboard dunk, scoring yet another 50 points.  Mitchell ended the contest with a Vince Carter tribute dunk, coming out on top by just two points. It capped off an exciting Saturday night, setting things up for the main event on Sunday, Team LeBron versus Team Stephen.

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