Implications
of the Eric Bledsoe Trade for the Milwaukee Bucks
On November 7, 2017, the
Milwaukee Bucks traded Greg Monroe, a protected first round pick, and a second
round pick for Eric Bledsoe. This is an unsurprising move by the Bucks given
that they Eastern Conference may be more open than originally thought and the
emergence of Giannis Antetokounmpo as an MVP candidate. Eric Bledsoe is in the
middle of his prime and a solid NBA point guard that will undoubtedly
strengthen the Bucks back court, a necessity in a league going small. The
important question is how this affects the Bucks salary cap situation. Taking a
look at the current situation below, the Bucks are currently below the
$119,266,000 tax threshold, but have cap space.
(Graphic credited to Basketball Insiders)
The issue is that the Bucks
traded Greg Monroe’s $17,884,176 expiring contract and absorbed Eric Bledsoe’s
2 year $29,500,000 contract, increasing the Bucks 2018-2019 salary by
$15,000,000, for a total of $114,430,231. That figure assumes Malcolm Brogdon won’t be
waived and that the Bucks make the qualifying offer to Jabari Parker and he
accepts it. Admittedly, Jabari Parker will likely test the market, but his
value largely depends on how he recovers from his second ACL injury.
Had the Bucks not executed the trade
for Bledsoe, the team would have likely had cap room in the 2018-2019 season.
However, the 2018-2019 salary cap projection is $101,000,000, so at $99,430,
231, the Bucks would have had very little cap space.
Since the Bucks are over the cap,
the only way for the team make a move would be through the use of a cap
exception. This creates a tax issue for the Bucks though, which is a slight
concern given that Milwaukee is a smaller market and that the Bucks were in the
red last season even after revenue sharing.[1]
Some have
said cap problems for the Bucks, so let’s take a look and see what issues there may
be.
The major issue is whether the
Bucks will resign Jabari Parker. The Bucks have his bird rights meaning he
would qualify for a cap exception. Jabari’s camp is pursuing a maximum contract[2],
which 25% of the salary cap in the first season of the contract (He will not
qualify for the 5th year 30%). It could be 5 years in length and the
maximum raises could be 8% of the salary in the first season, resulting in a
five year $146 million deal. Assuming a $103 million cap for next season, and
assuming Parker resigns for the max, the Bucks would be at $131,329,210, about
$6 million above the estimated cap. It is tough to argue that Parker will get a
maximum contract given that he has torn his left ACL twice. But his numbers at
his age are undeniable. At this pace, he is no doubt a
strong contributor to what many believe to be an eastern conference competitor,
and makes a solid one-two punch with Antetokounmpo.
Evaluate, Submit Qualifying Offer, and Determine
Whether to Match
Parker may be available to play by
February, but likely not until after the NBA trade deadline on February 8,
2018. Thus, the realistic option for the Bucks would be to evaluate Parker’s
play this season, submit the qualifying offer over the summer, and then decide
whether to match his offers. At that point, the Bucks decision to sign Parker would
depend on two factors:
1.
Whether
Parker is healthy
2.
Whether
Parker gets the maximum contract
If Parker is unhealthy and
doesn’t have the explosiveness he once had, then the Bucks could benefit by
letting Parker go as a free agent. The Bucks could use their non-taxpayer mid-level
exception that summer to add a piece. However, this would hard cap the team for
that season at the apron limit, which may be about $131 million. This is an
issue, but it may not be of much practical concern. If the Bucks decide to let
Parker go, then they may potentially work out a sign and trade deal to absorb another
more veteran free agent. However, this also is unlikely because Parker would
not be allowed to actually sign a true maximum contract as it would be limited
to 4 years and a maximum increase of 5%.
If Parker looks healthy, and
given his youth there is a solid chance that he will be, then the team should
resign Parker. Ultimately, a team, especially if in a small market, has to protect
its drafted players. While this would place the team in a tough short term cap
situation at approximately $131 million, the Bucks would have $25 million in
expiring contracts for the 2019-2020 season between Eric Bledsoe and Mirza
Teletovic. The Bucks could also still use a cap exception to resign Malcolm
Brogdon, the 2016-2017 NBA rookie of the year since they own his Bird rights. Furthermore,
the Bucks have a logjam at the point guard position between Eric Bledsoe,
Matthew Dellavedova, Malcolm Brogdon, so the team may be able to decrease
salary in dumping Dellavedova (who is likely the odd man out) for an expiring
contract prior to the deadline. Take a look below at the cap sheet:
This cap sheet assumes a 5 year
fully guaranteed contract for Parker with the maximum 8 % raises made every
year. From 2019-2022, the 8 % raises are both a max increase and decrease,
which is important to use to its advantage if the Bucks are on the fringe of being
a taxpayer. Keep in mind that the first-year salary is fixed and cannot be
changed. As you can see, the MLE
(Taxpayer) would still be available to the Bucks for the 2018-2019 season, but
it may not be the best decision to execute it as that thrust the team into a
higher tax bracket. Luckily, the team would not be a repeat tax offender, which
is good news because they can then escape the higher tax rate.
The team could still try to dump
salary this season, but it will be a tall task. They could dump one or any of
John Henson, Tony Snell, Mirza Teletovic, or Dellavedova (collectively
$41,292,119 in contracts) at the deadline for an expiring contract, but that is
easier said than done. The team also should not sacrifice key role players that
play crucial positions only for the sake of gaining about $13,000,000 in cap
space. They should only do so if they can get an impact player with an expiring
contract. Some realistic options may be, DeAndre Jordan, DeMarcus Cousins,
Derrick Favors, or Jahlil Okafor. These trades must compute with the CBA’s
trade restrictions, so the Bucks would likely have a third team involved if it
wants any of these players. These are interesting options because they all
potentially fill a void at the center position if need be, especially if John
Henson is traded. Furthermore, they can generally help to stretch the floor a
bit, with the exception of DeAndre Jordan. It is difficult to project who will
be available in trade discussions, but a more complete picture will develop as
the season progresses. In any event, from a pure salary cap perspective, the
team could find a way to add talent this season, decrease its salary
obligations, and feel less of a crunch when it resigns Parker to the near max.
Conclusion
In sum, the Bucks should submit
the qualifying offer to Jabari Parker in June and then likely match any
contract offer he signed if he is averaging statistics similar to what he was
prior to his injury. If there is a significant drop off in play, then I would
be more cautious of matching a max contract, but would still likely match in
the end because the team cannot afford to lose him for nothing. Parker is a
young player and shows promise with a core that is ready to compete now.
The Bucks have limited cap
flexibility, but are highly competitive and can be creative with its salary
obligations. The good news is that Parker can be re-signed to an exception and
there are other moves such as trading for expiring contracts or using the
appropriate amount of decrease/increase change percentages in the salary to
limit tax liability.
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