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Understanding Harden’s Restructured Contract

Eric Pincus explains restructuring contracts, which has implications for players like Russell Westbrook & Derrick Favors.

Eric Pincus

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On July 9, the Houston Rockets took advantage of one of the many quirks of the Collective Bargaining Agreement, renegotiating and extending the contract of All-Star guard James Harden.

As detailed in May, Harden was one of almost 30 players who have qualified (or will qualify this summer) to have his contract restructured — available only to players with four or five years contracts, at least three years following their original signing date.

Additionally, renegotiation cannot lower salary; and teams must have enough cap-salary space to take advantage of the rule.

Others who may still restructure include Derrick Favors (Utah Jazz), Russell Westbrook (Oklahoma City Thunder) and Paul George (Indiana Pacers).  Naturally, both sides need to consent to a deal.

Restructuring isn’t common, but the Denver Nuggets used their cap room last summer to re-work the contracts of Danilo Gallinari and Wilson Chandler.  But Harden is unique in that he had two seasons left on his deal – paying $16.8 million for 2016-17 and $17.8 million for 2017-18.

Under his new contract, Harden will receive the following:

2016-17 — $26,540,100
2017-18 — $28,299,399
2018-19 — $30,421,854 (estimated)
2019-20 — $32,703,493 (estimated; player option)
Total — $117,964,846 (estimated)

The odd raise structure, year-to-year jumping by $1,759,299, $2,122,455 and $2,281,639 looks like a mistake, but it’s the proper application of a myriad of rules.  Harden’s actual salary over the last two years of his deal won’t be set until the 2017-18 salary cap is officially announced.

Why wouldn’t Harden receive raises of $1,990,508 each year — 7.5 percent of his 2016-17 salary?

2016-17 — $26,540,100
2017-18 — $28,530,608
2018-19 — $30,521,115
2019-20 — $32,511,623 (player option)
Total — $118,103,445

The key is that Harden’s original contract covers the 2016-17 and 2017-18 seasons.  His extension doesn’t actually start until 2018-19.

By the rules of extensions, Harden is eligible for a raise of 7.5 percent in 2018-19 over the final year of his original contract (2017-18, after it is renegotiated).  Once the extension starts, the 2018-19 season is the basis for any subsequent raises, limited again to 7.5 percent, which determines his salary for 2019-20.

Technically, Harden and the Rockets could have agreed to an extension with a sizable pay-cut in 2018-19 — down by 40 percent from his 2017-18 salary — but Harden’s actual agreement is listed as a “maximum contract.”

(UPDATE: This next two paragraphs are flawed in regards to Harden’s 2017-18 salary, in that raises are not subject to the next season’s maximum salary.  It does apply to his potential salary in 2018-19.  Further explanation to follow.)

If that’s not already complex enough, there’s yet another wrinkle to the equation.  In a memo distributed to teams earlier in the month, the NBA updated its salary cap projection for 2017-18 to $102 million, down from $107 million.  With that, the maximum salary Harden is eligible to receive next year shrunk from roughly $29.7 million to the league’s current middle-tier max, or $28,299,399.

This matters because Harden is only eligible for a 7.5 percent raise over his 2016-17 salary if the resulting amount is no higher than the maximum salary.  Harden may still earn that $28,530,608, but to get it he’ll need the salary cap to climb higher than $102 million.  In fact, his actual salary could further shrink if the cap comes in lower than the current projection.

(UPDATE: The basis for Harden’s raise is actually 7.5 percent of the additional amount of $9,756,068 he received in renegotiated salary for 2016-17, which is $731,705.  Harden’s original salary of $17,811,626 for 2017-18 is increased by both the same raise he received in 2016-17 ($9,756,068) and $731,705 to reach $28,299,399.  Hat tip to cap expert Albert Nahmad of HeatHoops.com for his breakdown of Harden’s 2017-18 figure.)

Westbrook, in the final year of his deal, would be eligible for a three-year extension, after renegotiating his salary up to the same number Harden will receive for 2016-17.

2016-17 — $26,540,100 (2016-17 middle-tier maximum)
2017-18 — $28,530,608 (7.5 percent raise, first year of extension)
2018-19 — $30,670,403 (7.5 percent raise, $2.1 million raise based on first year of extension)
2019-20 — $32,810,199 (same $2.1 million raise)
Total — $118,551,310

As a free agent next summer, Westbrook won’t be able to earn more than the maximum, once set next July.  If his future is in Oklahoma City, then restructuring gives the team a clear path forward.  If not, the Thunder are probably better off looking for a trade.

Westbrook would be able to restructure and extend on a new team, provided they have the necessary cap room after a trade.  Without that commitment from the All-Star guard, teams will be hesitant to give up as much to the Thunder for Westbrook.

The Boston Celtics are well-positioned to give the Oklahoma City a rich offer, with the cap space to renegotiate and extend Westbrook’s salary.  The Los Angeles Lakers have held off signing players like second-overall pick Brandon Ingram, Tarik Black and Marcelo Huertas, protecting their remaining cap space, in case a trade opportunity should arise.

A number of teams would line up with offers, but that list shortens considerably without Westbrook agreeing to sign to a long-term deal immediately — and that may simply be a non-starter.  Westbrook may want a Hamptons-like moment, similar to the one recently experienced by former teammate Kevin Durant.

Meanwhile, Favors has six years of NBA experience, and is eligible for the bottom tier max of $22,116,750.  Currently he is set to earn $11,050,000 for 2016-17, but the Jazz could earmark their $11 million of cap space (available upon waiving the non-guaranteed Christapher Johnson) to give Favors a restructured and extended four-year deal starting at the maximum salary.

(UPDATE: Minor tweaks made to Derrick Favors’ figures, based on the logic applied from James’ Harden’s renegotiation.)

The following is the maximum restructured contract potentially available to Favors:

2016-17 — $22,116,750 (2016-17 bottom-tier maximum)
2017-18 — $23,896,756 ($11.1 million raise, plus 7.5 percent, in final year of original contract)
2018-19 — $25,689,013 (7.5 percent raise in first year of extension)
2019-20 — $27,615,689 (7.5 percent raise, based on first year of extension)
Total — $99,318,207

Extensions can also start at the maximum salary, but with a descending salary in subsequent seasons.  The following is the minimum the Jazz can offer Favors, provided they start at the current season’s maximum:

2016-17 — $22,116,750 (2016-17 bottom-tier maximum)
2017-18 — $22,236,744 (7.5 percent decrease in final year of original contract)
2018-19 — $13,342,046 (40 percent maximum decrease in first year of extension)
2019-20 — $12,341,393 (7.5 percent decrease, based on first year of extension)
Total — $70,036,933

Should Favors finish out his contract, signing a new deal in 2018-19 at a projected max of $30.5 million (based on a projected cap of $108 million), he would earn a maximum of approximately $86.3 million from 2016-17 to 2019-20.

Why would Favors accept a renegotiation?  At a maximum salary over four years, the easy answer is a lot more money, immediately.  Even with lower raises, Favors stands to make more over the next three seasons than he would by finishing his contract, and then signing a maximum contract after the 2017-18 season.

The Jazz would benefit in locking in a young, core piece for two additional years.

A player option in the final year would allow Favors to hit free agency sooner, but then the Jazz are paying a lot for the next couple of seasons to lock in one more year with Favors.

Finding the exact sweet spot between $70.0 million and $99.3 million would be a negotiation between the team and Favors’ agent, provided both sides are open to lengthening their partnership.

Since Favors would be eligible for a similar renegotiation next summer, the Jazz might want to wait to lock him in for the maximum of four seasons, through 2020-21, but there’s no guarantee the same rules will be in place beyond the current Collective Bargaining Agreement, which is likely to be renegotiated after the 2016-17 season.

Qualifying Offer Deadline

Saturday is the deadline for teams to unilaterally withdraw outstanding qualifying offers to restricted free agent.

After July 23, the teams can rescind a qualifying offer — provided the player gives their consent.  If so, the player is also renounced — the team losing Bird rights.

The following eight players remain restricted:

  • Tyler Zeller — Boston Celtics — $3.6 million qualifying offer (QO)
  • Donatas Motiejunas — Houston Rockets — $4.4 million QO
  • Tarik Black — Los Angeles Lakers — $1.2 million QO
  • Marcelo Huertas — Los Angeles Lakers — $1.1 million QO
  • Miles Plumlee — Milwaukee Bucks — $3.1 million QO
  • Mo Harkless — Portland Trail Blazers — $3.5 million QO
  • Nando De Colo — Toronto Raptors — $1.8 million QO
  • Bradley Beal — Washington Wizards — $7.5 million QO

Half of the list (Black, Huertas, Plumlee and Beal) have already agreed to terms to re-sign.  De Colo will spend the season overseas — Toronto holding onto his restricted rights for down the road.

The players to monitor closely include Zeller, Motiejunas and Harkless.

Even if their qualifying offers are rescinded before the deadline, each can still re-sign with their respective teams — but they would immediately become unrestricted free agents.

Unsigned First-Rounders

On Friday, the New Orleans Pelicans announced the signing of Buddy Hield, the team’s sixth overall pick in June.

“We could not be more excited to add a player and person like Buddy Hield to the New Orleans Pelicans,” said General Manager Dell Demps in a statement.  “He embodies all the traits we care about in our organization. His work ethic, energy and confidence have been on full display since he stepped foot in New Orleans. We look forward to helping him grow as a player as he will help us become a better team.”

The following eight 2016 first-round picks have yet to sign contracts:

  • Brandon Ingram (2nd) — Los Angeles Lakers
  • Jaylen Brown (3rd) — Boston Celtics
  • Thon Maker (10th) — Milwaukee Bucks
  • Donatas Sabonis (11th) — Oklahoma City Thunder
  • Juancho Hernangomez (15th) — Denver Nuggets
  • Guerschon Yabusele (17th) — Boston Celtics
  • Ante Zizic (23rd) — Boston Celtics
  • Furkan Korkmaz (26th) — Philadelphia 76ers

Some, like Yabusele, Zizic and Korkmaz will play overseas.  The Lakers, Celtics, Bucks and Thunder are likely waiting to maximize their salary cap space before inking their respective lottery picks.  Hernangomez is also expected to join the NBA this season.

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NBA Daily: What’s Next For Chris Paul

Left in the lurch, there are few feasible options for Chris Paul headed into the 2019-20 season, writes Shane Rhodes.

Shane Rhodes

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It’s official, we have hit the dog days of the NBA offseason.

What began at such a frenetic pace has inevitably sputtered and slowed, as deals have been made, unmade and some of the biggest names in the NBA have moved house. Everything that could have happened seems to have and now, with Summer League over, basketball is left with almost nothing to occupy the seemingly infinite amount of time between today and training camp.

And, unfortunately for Chris Paul, it may feel even longer than that.

Despite the Houston Rockets’ declaration to the contrary, Paul has since been traded, stranded on an Oklahoma City roster that has no business competing in a stacked Western Conference next season.

Between his contract – more than $124 million over the next three seasons – and his regression a season ago, Paul’s removal from the Rockets’ roster was a necessity; it’s a business, and the point guard was a hinderance to Houston’s championship aspirations.

But the situation hasn’t changed for Paul – he is still unwanted, a (very) pricy veteran miscast on his current roster.

So, where does that leave him? There are but a few teams that could afford to take on the massive amount of money owed to Paul and even fewer that would want to. There is no doubt that, given a clean bill of health, Paul could recapture some of his prior form next season but, still, would it be worth his price tag?

Probably not. And that should only limit Paul’s options further.

The Thunder reportedly want to get a deal done “as soon as they can” according to Adrian Wojnarowski, but discussions are “parked” for now. They could always opt to retain him; who better to serve as a mentor for the young Shai Gilgeous-Alexander than the Point God himself?

But would Paul want to serve in that role? There would be a clear opportunity to rebuild some value and open up potential landing spots. But, Paul, 34, is a soon-to-be 15-year veteran with a single Conference Finals appearance to his name. Surely, if he were to step back into a secondary role, he would rather do so for a contender.

And, of course, the money would be an issue as the Thunder, despite the recent roster reconstruction, are still expected to pay a heavy luxury tax penalty next season. Given their current situation, it should be obvious that keeping Paul on his current deal isn’t the best move.

The Lakers serve as another potential destination — don’t forget, Los Angeles tried to acquire Paul back in 2011, but the deal was subsequently nixed by then-commissioner David Stern.

While there is almost no connection between that iteration of the Lakers and the current one, it is still an interesting option. Los Angeles is an obvious fit because, for lack of a better option, the Lakers are set to start LeBron James at point guard next season. With Paul in the fold, James could serve in his normal role and reduce his workload with time off the ball.

The prior relationship between James and Paul could also serve to benefit the Lakers’ chemistry and may allow for an easier roster transition.

But, again, Paul’s contract looms large. The Lakers opened a max-slot in their salary cap earlier this summer, hoping to land recently-minted champion Kawhi Leonard. When Leonard spurned them for their in-house neighbor, the Clippers, they made use of that space to fill out the rest of the roster with complementary players.

Now, a buyout would be necessary to facilitate any deal before the start of the season. Otherwise, the Lakers would have to wait until December, when those players that signed new contracts would become eligible to be traded.

And then, of course, there are the HEAT. Miami is almost always mentioned when a big-name is available, whether as a free agent or via trade, and the rumors proved true this offseason in the case of Jimmy Butler.

Despite the awkward fit in Philadelphia alongside other stars such as Ben Simmons, Joel Embiid and Tobias Harris, Butler proved his worth and, at times, looked like the 76ers’ best player during the postseason.

Now in Miami, Butler should almost certainly bolster their future outlook, but they are far from done with the roster. Without a subsequent move, they aren’t a championship contender — could Paul be the one to take them a step further?

The reported mutual interest, according to Brian Windhorst, should only fuel the flames, but a deal involving Paul could be as much of a necessity for Miami as it was for Houston.

The HEAT were the 10th seed in the Eastern Conference a season ago and Butler is a major upgrade, but the rest of the roster is underwhelming at best. While Butler and Paul could prove an awkward fit basketball-wise, there is no doubt that the two of them together would significantly elevate the HEAT’s ceiling above that level. Miami, unlike many of his other potential suitors, would also have the salary to match Paul’s incoming deal.

But a dispute over draft compensation seems to have tabled discussions until further notice.

Beyond those scenarios, it’s hard to imagine Paul anywhere else next season.

In fact, it’s hard to imagine a scenario in which Paul is anywhere other than Oklahoma City to start next season, barring a change of heart (either from Paul regarding a buyout or the HEAT and Thunder regarding potential compensation), anyway.

And so, the long wait for Paul will continue. It would be foolish to doubt him now, after 14 seasons in the NBA, but it’s hard to imagine that Paul will come close to providing adequate value relative to his contract. Ultimately, a potential move may be out of his hands, left up to the teams to determine whether or not Paul is an asset worth acquiring.

So far, it would seem the NBA has deemed him not worth it.

But, it is the NBA and if the offseason thus far is anything to go by, anything could happen.

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NBA Daily: Grading The Offseason – Chicago Bulls

David Yapkowitz continues Basketball Insiders’ “Grading The Offseason” series by taking a look at the Chicago Bulls.

David Yapkowitz

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With summer league over and the big name free agents all signed, we’re now approaching the doldrums of the NBA offseason. Most big moves have all been made, and we shouldn’t expect to too much movement between now and the start of training camp.

Most teams probably have an idea already of what the bulk of their roster will look like come training camp, and as such, we’re starting a new series here at Basketball Insiders taking a look at each team’s offseason to this point.

Next up in our series is the Chicago Bulls.

Overview

The Bulls are a team clearly in rebuilding mode. After this offseason, they’ve done a pretty solid job at filling out the roster with young talent at every position. It’s obvious now that they were clear winners of their trade with the Minnesota Timberwolves two years ago that netted them Zach LaVine, Lauri Markkanen and Kris Dunn.

LaVine continued his ascent to stardom this past season. There may have been initial concerns when he was traded to Chicago as to how he would respond after his torn ACL, but since then, he’s showed no lingering limitations. He’s well on his way to becoming one of the elite shooting guards in the league. Few can match his scoring prowess whether he’s slashing to the rim or shooting 37.4 percent from the three-point line.

Markkanen has emerged as one of the top young big men in the NBA. He made some strong steps forward in his second year in the league. He’s moving closer to becoming a double-double threat every night. He’s exceeded projections from when he was drafted that pegged him as little more than a three-point shooting big. He has shown a lot more versatility to his game.

One major addition the Bulls made last season was the trade deadline acquisition of Otto Porter Jr. When he arrived in Chicago, he quickly played some of the best basketball of his career, fitting in seamlessly with the team and solidifying himself as part of their future core.

They’ve also got Wendell Carter Jr. in the fold. Their top draft pick last offseason, Carter quickly established himself a great defensive complement to Markkanen. An injury cut his rookie season shorter than expected, but he still showed flashes of being a capable around the rim scorer.

They do have some other decent rotation guys in Antonio Blakeney, Chandler Hutchinson and Ryan Arcidiacono. Blakeney is an instant offense scoring guard for the second unit, and Hutchinson was showing flashes of his talent before he too went down with an injury during his rookie season. Arcidiacono was re-signed by the Bulls after being one of their most consistent outside shooters last season.

Offseason

The Bulls came into draft night with the seventh overall pick. It might have seemed like a disappointment seeing as how the Bulls probably had a shot at a top three pick considering their record. But ultimately, Chicago might have gotten what it wanted in the end. Point guard has been an area of need for the Bulls for quite some time, and they used their pick on North Carolina’s Coby White.

White is a little more in the mold of a scoring guard, but if you could take away one thing from his performance in summer league, it’s that he can thrive as a playmaker as well. It’s unlikely that White will get to start right away, but he’s got the makings of developing into the Bulls eventual starter at the point.

Chicago also picked up Daniel Gafford in the second round. The Bulls needed frontcourt depth after losing Robin Lopez in free agency, and they may very well have found their answer with Gafford. Summer League isn’t always a great indicator of how a player will translate to the NBA, but Gafford was solid as a finisher around the rim and a shot blocker in the paint. He may end up becoming one of the steals of the draft.

In free agency, the Bulls made some rather solid moves. On a team full of young players, it’s necessary to have a couple of key veterans for the young guys to lean on and to provide leadership and stability in the locker room. Thaddeus Young certainly fits that bill. Entering his 13th year in the league, Young played in 81 games last season and was a key guy on a Pacers team that made the playoffs. He’ll provide the Bulls with consistency on and off the court.

They also made a big step to addressing their point guard woes. They acquired Tomas Satoransky in a sign and trade with the Washington Wizards. He’ll provide a perfect stop-gap as the starting point guard while White develops. He proved himself as a facilitator with the Wizards, and he’s one of the better three-point shooters in the league, He’s a versatile guy who can play and defend multiple positions.

The Bulls also picked up Luke Kornet who spent last season with the New York Knicks. Kornet is relatively young and gives the Bulls a solid stretch big man on a decent contract. He’s also a solid shot blocker and should compete with Gafford for minutes off the bench.

Chicago also picked up an intriguing prospect in Adam Mokoka. The French combo guard initially declared for the draft a year ago but ultimately withdrew. He re-entered the draft this summer but went undrafted. In summer league, he showed flashes of playing both wing positions and being a capable defender who can shoot from three. He’ll be on a two-way contract so he’ll see significant time with the Windy City Bulls, Chicago’s G League affiliate.

PLAYERS IN: Adam Mokoka (two-way), Coby White, Daniel Gafford, Luke Kornet, Thaddeus Young, Tomas Satoransky

PLAYERS OUT: Brandon Sampson, Rawle Alkins, Robin Lopez, Shaquille Harrison, Timothe Luwawu-Cabarrot, Walt Lemon Jr., Wayne Selden

What’s Next

The Bulls roster currently stands at 15 guaranteed contracts and one two-way contract. They’re likely done with any roster additions unless they find someone to take that second two-way contract slot. They’d most likely move Cristiano Felicio if they could find a taker for his contract, but it’s probably unlikely.

With the additions of Satoransky and White, that likely spells the end of the Kris Dunn experiment in Chicago. If Dunn remains on the roster through the season, and the Bulls aren’t able to move him, it’s highly unlikely Chicago tenders him a qualifying offer. In all likelihood, this is his final season in the Windy City.

The Bulls have done a decent job at filling the roster out with good, young talent. Making the playoffs, even in the Eastern Conference, is still likely a few seasons away. But there is reason for optimism for the Bulls future.

OFFSEASON GRADE: B

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NBA Daily: Grading The Offseason – Cleveland Cavaliers

Spencer Davies opens Basketball Insiders team-by-team “Grading The Offseason” series with an overview of the Cleveland Cavaliers.

Spencer Davies

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On Monday night in Las Vegas, the 2019 NBA Summer League champions will be crowned. The Minnesota Timberwolves and Memphis Grizzlies are set to square off at the Thomas & Mack Center as the last teams standing over the course of the 10-day period.

Once that winner is determined, the world will be without NBA basketball for quite some time. Though the FIBA World Cup will be fun to watch, it’s not until late September that the association returns for training camp.

In order to hold you over until that date, Basketball Insiders has begun a “Grading The Offseason” series, featuring in-depth analysis on how each franchise has done during this wild summer.

To start things off, we’re going to break down arguably the quietest team of them all regarding roster turnover—the Cleveland Cavaliers.

Overview

It’s no secret that, on the floor, the season didn’t go quite as expected. Following the second departure of LeBron James, the organization felt it had enough remnants of the conference championship team to move forward and compete while developing young talent under head coach Tyronn Lue. A detrimental injury to Kevin Love changed that quickly.

Lue was fired six games into the 2018-19 campaign and then the wheels fell off pretty quickly. Top assistant Larry Drew pushed for a raise to take the interim role, due to the mixed bag inside of the locker room, and he was granted one. But as the losses piled up, the internal battle between the veterans and the younger players grew. Most of the criticism shaded toward upstart rookie Collin Sexton, yet he later proved what he was capable of to some of those teammates later down the road.

There were bright spots when Love re-entered the picture around February and played until late March, as he helped steer the inexperienced youngsters like Sexton, Cedi Osman and Ante Zizic in the direction of winning basketball. When all was said and done, the final record was ugly. However, the energy surrounding the group was clearly in a much more positive light than it had been beforehand.

What shouldn’t be lost in the shuffle is the job Cavaliers’ general manager Koby Altman and his staff did to revamp the team’s salary cap situation. Entering the year with inflated contracts, via veterans that didn’t want to sit through a rebuild, moves had to be made to tighten up the locker room and lower the cap a significant amount. Ultimately, they were successful in doing so.

Cleveland was able to move Kyle Korver, George Hill, Sam Dekker, Rodney Hood and Alec Burks (acquired in the Korver trade) and turned that into Brandon Knight, Matthew Dellavedova, John Henson, Nik Stauskas and a boatload of future draft picks. Altman’s been in asset accumulation mode since he took over during LeBron’s last season, and he’s done wonders with the opportunity to chop down those loud figures on the cap sheet, even adding future capital in the process.

Not only has Altman done a great job in obtaining that, but he’s also turned “good” into “great” often—i.e. turning Korver into Burks which he then flipped for a 2019 first-round pick, using the second-rounders to acquire another first-round pick. Even landing Larry Nance Jr. and Jordan Clarkson at the 2018 trade deadline to kickstart a new direction was impressive.

Offseason

After parting ways with Drew at season’s end, the Cavaliers set a new course with the hiring of John Beilein in mid-May. Over the span of these past few months, he’s constructed a fresh coaching staff with former Memphis Grizzlies head coach J.B. Bickerstaff as his associate, University of California women’s head coach Lindsay Gottlieb and five-year Utah Jazz assistant Antonio Lang in complementary roles.

Beilein’s graduate assistant at Michigan, Jay Shunnar, is also a part of the staff. Team favorites Mike Gerrity and Dan Geriot are staying on as well to continue developing the players they’ve worked with.

All in all, the people assembled to take on this task of changing a culture are entrenched in teaching and doing hands-on work. It’s the on-court product with an extremely inexperienced group of coaches—three of which are coming from the collegiate level—that could be a challenge.  Luckily, the process seems to be about a collective group with an open-mindedness that won’t allow for egos to get in the way.

Despite the lottery results going south (Cleveland had the second-best odds in the top three and dropped to five), draft night was a smashing success for the organization. The wine and gold came out with a trio of highly touted rookies—Darius Garland, Dylan Windler and, after trades were officially cleared, Kevin Porter Jr. Adding talents to the roster was the top priority for the front office — today, that stands as the most noise from what’s been a mostly silent offseason.

With a lack of roster spots and an understanding that there would be little money to spend in a chaotic, competitive free-agent market, the Cavaliers have had to stand pat with what they have. JR Smith’s contract had reportedly fielded some offers between NBA Draft Combine time and around the draft, but the team didn’t like the idea of taking back a bad contract. Instead, they found an easier way to get a third pick in the 2019 first round by using the plethora of second-rounders acquired in the past to flip for Porter.

Chris Fedor of Cleveland.com reported Monday that Cleveland plans on waiving and stretching Smith’s contract for $1.4 million each over the next three years. The move will allow the team to stay under the luxury tax, avoid the repeater tax penalty and also provides a full mid-level exception amount at its disposal. Fedor does mention the front office won’t likely use it heading into the season to remain flexible financially and to keep a roster spot open.

Smith not being traded came as a surprise to many, especially knowing the salary relief his previously-grandfathered CBA deal offered to a team searching to clear space for a big free agency offer. The summer moved fast, though, and other franchises with similar predicaments acted quickly. The Cavaliers could’ve facilitated a few trades to get more future draft assets in return, but they didn’t feel like taking on an albatross contract that would’ve been worth paying the extra tax this upcoming season.

The only other real decision to make was whether or not to retain David Nwaba, who, when healthy, displayed flashes of defensive excellence and aggressiveness on the offensive end, Cleveland did not extend the qualifying offer to Nwaba before the deadline, making him an unrestricted free agent. He recently signed with the Brooklyn Nets on a two-year deal.

This move was not so surprising as Basketball Insiders reported at the beginning of June that Nwaba’s representation would be looking for a multi-year deal. A league source said that last summer’s one-year agreement between the Cavaliers and Nwaba was with the understanding that he’d be strictly looking for a newly re-structured multi-year contract with no qualifying offer in his 2019 plans.

The latest addition the franchise made was inking Dean Wade, an undrafted rookie from Kansas State, to a two-way contract. He played in five NBA Summer League games for the organization between Salt Lake City and Las Vegas.

PLAYERS IN: Darius Garland, Dylan Windler, Kevin Porter Jr., Dean Wade (two-way)

PLAYERS OUT: JR Smith, Marquese Chriss, David Nwaba, Channing Frye

What’s Next

Following the waiving of Smith, the Cavaliers roster will be at 13 players. You’d imagine they wouldn’t keep two roster spots open, so seeing a free agent signing or even nabbing a player from a summer league team could be in the cards.

Per Fedor, the franchise will be above the $109 million salary cap by $22 million once the Smith news is made official by the team. It’s a much healthier number than they’ve been at in years past — so, going into next summer, that cap sheet is going to be as clean as it’s been in quite some time.

Cleveland is going to have numerous attractive contracts on its hands as five players on the roster are on deals set to expire following this year. Tristan Thompson ($18.5 million), Brandon Knight ($15.6 million), Jordan Clarkson ($13.4 million), John Henson ($9.7 million) and Matthew Dellavedova ($9.6 million) are all trade chips that Altman can move to stockpile the future even more. Depending on what offers come their way, it could be yet another busy season regarding roster turnover.

There’s plenty of speculation that the team should trade Love to a contender to both satisfy the player and allow the team to get out of his sizable deal. What people are forgetting is that the Cavaliers want to have a championship-caliber player in the locker room as a guiding voice. Remember, this team has one person that is at least the age of 30, and it is the All-Star big man. The next guys up are 28 years old—Henson, Dellavedova and Thompson—and who knows how long they’ll be around.

Cleveland will have to be blown away to take back what it thinks it should receive in return for Love. No deal will be made just to make a deal. The organization values him too much as a person and a player.

On the court, the focus is going to be on player development, mainly in watching how Sexton and Garland play off one another. Different looks and combinations with the frontcourt of Love, Nance Jr., Zizic, Windler and Osman will be available for Beilein to tinker with. A new coaching staff with a freshly enthused group of players should be intriguing to watch.

OFFSEASON GRADE: C-

Stay tuned to the rest of Basketball Insiders “Grading The Offseason” series over the next few weeks.

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