The Cavaliers And The Salary Cap

It was confirmed over the weekend that the Cavaliers renounced their free agents rights to Wally Szczerbiak, eliminating his cap hold from their books. Although Szczerbiak hasn't played for the Cavs (or anyone else) since 2008/09, his presence still loomed large when it came to Cleveland's salary cap situation.

A cap hold is a hypothetical figure for free agents that have yet to sign with any club. Cap holds are added to current-player salaries, essentially to prevent teams from using cap room to sign free agents, then using Bird rights to re-sign their own free agents. Since a team doesn't actually have to pay out the amount of its cap holds, the figures are only used for cap purposes, not luxury tax purposes.

Because Szczerbiak's salary was so high in his final season, the amount of his cap hold was a staggering $18MM+. Knowing they weren't going to bring him back, the Cavaliers could have renounced their rights to Szczerbiak at any time. By doing so, however, they risked losing the flexibility that being an over-the-cap team provides. Any cap exceptions the Cavs held, such as the mid-level exception, the bi-annual exception, and traded player exceptions, would have been lost if the team's total salaries fell too far below the cap.

So why did the Cavs renounce Szczerbiak when they did? GM Chris Grant and the team haven't definitively made that clear, but we can take a few guesses.

The move happened on March 16th, immediately after the Cavs traded away Ramon Sessions and before they signed Donald Sloan and Manny Harris to multiyear deals. None of those moves should have impacted the cap situation much — while the Cavs gained some future cost certainty by moving Sessions and his 2012/13 player option, they added $6MM+ in salary to next year's cap by taking on Luke Walton in the trade. And Sloan and Harris are assumed to have signed minimum-salary contracts, so the team shouldn't have needed to clear any cap room to add either player.

It appears the timing of renouncing Szczerbiak just reflects the Cavs getting ready for the summer, since the club seems unlikely to use its newfound cap space this season. With big long-term contracts like Antawn Jamison's and Baron Davis' on their books heading into 2011/12, the Cavs never had a chance to gain much cap room, even by renouncing Szczerbiak. But with Jamison's contract expiring and Davis having been amnestied, the Cavs will head into the summer with only about $28.5MM in guaranteed money on next year's cap. That's not to say Cleveland will have nearly $30MM in cap space — the team will need to sign a pair of first-round picks on rookie contracts, and new cap holds wil chew up some more of the cap. But the Cavs should still have plenty of cap room to pursue and sign free agents, a flexibility they haven't had in years.