The Indiana Pacers are expected to apply for a Disabled Player Exception (DPE) after Paul George suffered a brutal leg injury playing for Team USA.
The NBA will presumably grant the Pacers’ request, giving the team an additional $5.3 million in spending power to sign a player to a one-year deal. Indiana could instead use the exception to trade for a player in the final year of their contract, making up to $5.4 million.
Most teams have limited spending power this summer, by the rules of the 2011 Collective Bargaining Agreement.
The Pacers are one of 10 teams with a hard cap of $80.8 million this season (33.3% of the league). Indiana’s payroll of $74.8 million should leave just enough room, should they find a use for their potential DPE.
A hard cap is triggered when a team uses over $3.28 million of their Mid-Level Exception (MLE), acquire a player via sign and trade or use any of their $2.08 million Bi-Annual Exception (BAE).
The Pacers were hard-capped after spending $4.2 million on C.J. Miles.
Other teams with hard caps include the Atlanta Hawks (Thabo Sefolosha sign and trade), Golden State Warriors (Shaun Livingston MLE), Los Angeles Clippers (Jordan Farmar BAE), Memphis Grizzlies (Vince Carter MLE), Minnesota Timberwolves (Mo Williams MLE), Portland Trail Blazers (Chris Kaman MLE), Sacramento Kings (Darren Collison MLE), Phoenix Suns (Isaiah Thomas sign and trade) and Washington Wizards (Kris Humphries sign and trade).
The league’s highest spending teams do not have hard caps but have limited tools to add salary. Both the Brooklyn Nets and New York Knicks have committed their Taxpayer Mid-Level Exception of $3.3 million to Bojan Bogdanovic and Jason Smith, respectively.
Now the Nets and Knicks can only add players through trade and/or minimum contracts. Neither franchise can execute a sign and trade.
Teams that have dipped under the salary cap of $63.1 million are rarely able to climb to the luxury tax line in the same season.
In total, 14 teams have gone under the salary cap this summer, renouncing their MLE ($5.3 million), BAE and any traded player exceptions (TPE): Atlanta Hawks, Charlotte Hornets, Chicago Bulls, Cleveland Cavaliers, Dallas Mavericks, Detroit Pistons, Los Angeles Lakers, Miami HEAT, Milwaukee Bucks, New Orleans Pelicans, Orlando Magic, Philadelphia 76ers, Utah Jazz and Suns.
Of the 14, the 76ers (near $30 million), Suns ($20.2 million without Eric Bledsoe), Pistons (about $11.1 million without Greg Monroe), Bucks (up to $9.5 million), Hawks (up to $9.4 million), Magic (potentially $8.4 million) and Jazz (approximately $6.2 million) are the only teams with real spending power remaining.
The Houston Rockets are an exception, currently over the salary cap but still able to drop under if needed. Houston may be better off over the cap with an $8.4 million TPE (Jeremy Lin), most of their MLE ($4.8 million) left and their BAE available.
Under the cap, the Rockets might get to $8.4 million in cap room with a $2.7 million room exception, but that is still less than their means while over the cap.
Of the teams over the cap but under the tax threshold, the San Antonio Spurs have yet to dip into their MLE. The Boston Celtics are expected to spend a portion of their MLE on Evan Turner — while the Denver Nuggets still have $4.8 million remaining.
After Denver, the next closest team would be the Toronto Raptors with $2.8 million of their MLE available.
While teams are running of spending power, 15 franchises have trade exceptions. Houston’s Lin exception stands out but no other TPE exceeds $4.6 million.
A free agent cannot sign for a TPE, not without a sign and trade that in turn locks in a hard cap.
With teams running out of money to spend, the saving grace is that there may not be many free agents worthy of a large contract — although Monroe and Bledsoe would beg to differ.
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