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2018 Free Agent Stock Watch: New Orleans Pelicans

February 23rd, 2018 at 6:08pm CST by Austin Kent

The Pelicans opted to zig while the rest of the NBA zagged, effectively doubling down on big men in the throes of the Small Ball Era. Unfortunately, before anybody could see whether the unconventional approach would bear any fruit, it all came crashing down in the form of DeMarcus Cousins‘ torn Achilles.

The Pels rolled the dice when they acquired Cousins at the trade deadline last season and will now finally get the opportunity to find out whether they can lock him up long term.

Since Cousins’ unrestricted free agency impacts the course of the franchise in both the short- and long-term, the fact that he’ll be sidelined, perhaps even into the 2018/19 campaign, is the biggest Pels storyline heading into the offseason.

Ian Clark, SG, 27 (Down) – Signed to a one-year, $1.6MM deal in 2018
The Pels landed an intriguing depth piece with winning experience when they inked the ex-Warriors guard last offseason. But while he’s shown the occasional glimpse of promise on the wings, Clark hasn’t exactly put himself in position for a big payout this summer. On a frontcourt-heavy roster, there isn’t much need for a wing player who shoots 29.1% from beyond the arc, but he could be a cheap rotation piece for the soon-to-be cash-strapped franchise.

DeMarcus Cousins, C, 27 (Up) – Signed to a four-year, $63.5MM deal in 2013DeMarcus Cousins vertical
Cousins’ value has changed in a few ways over the course of the past 12 months. While he was once perceived as a fickle star putting up lofty but hollow numbers for a perennial loser, he’s now a major part of an intriguing organization with enormous ambitions. The catastrophic Achilles injury that cut his 2017/18 season short will have but a little impact on his stock heading forward. Given that the relationship between Cousins and the franchise appears to be on good terms, it seems well within reason that the club would offer the max allowable and then find a way to make the numbers work. Sure, the Pelicans could take the opportunity to pull the plug on the experiment before seriously hamstringing their payroll, but it could be years, if not decades, before they have as high a ceiling as they do with Cousins and Anthony Davis on the same roster. Don’t expect the injury to impact much, except, perhaps, the list of other franchises tripping over themselves trying to poach Cousins’ services.

Rajon Rondo, PG, 32 (Up) – Signed to a one-year, $3.3MM deal in 2018
It’s not often that a 12-year-veteran on a minimum contract with his fifth team in four seasons would be considered a must-add, but that’s exactly what Rondo is heading into the summer. After three seasons bouncing around the league, Rondo performed admirably alongside Cousins, a former teammate and fellow Kentucky product. The Pelicans need all the affordable help they can get and a motivated Rondo, who dropped two points and 25 assists in one of the most fascinating NBA statlines of all time earlier this season, is a bargain worth chasing. Given that the surly vet hasn’t exactly been a good fit in Dallas, Sacramento or Chicago, there may not be much of a market for the Pels to compete with.

Photo courtesy of USA Today Sports Images.

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Hoops Rumors Glossary: Luxury Tax Penalties

February 23rd, 2018 at 12:22pm CST by Luke Adams

Although some NBA teams can become hard-capped during a given league year if they use certain exceptions or make certain transactions, the NBA doesn’t have a set hard cap for all teams. In addition to its soft cap though, the league does have a luxury tax threshold, which serves to discourage excessive spending. When a team’s total salary ends up over that tax line at season’s end, the NBA charges a tax for every extra dollar the club spends.

The formula to determine the luxury tax line is a complicated one, related to the NBA’s projected basketball related income (BRI) and projected benefits. Generally though, it comes in around 20-22% above the salary cap line. For instance, in 2017/18, the league’s salary cap was set at $99.093MM, while the luxury tax threshold is at $119.266MM. So any team whose total ’17/18 salary exceeds $119.266MM on the last day of the regular season is subject to a tax bill.

The NBA’s luxury tax system is set up so that the penalties become more punitive if teams go further beyond the tax line. Here’s what those penalties look like:

  • $0-5MM above tax line: $1.50 per dollar (up to $7.5MM).
  • $5-10MM above tax line: $1.75 per dollar (up to $8.75MM).
  • $10-15MM above tax line: $2.50 per dollar (up to $12.5MM).
  • $15-20MM above tax line: $3.25 per dollar (up to $16.25MM).
  • For every additional $5MM above tax line beyond $20MM, rates increase by $0.50 per dollar (ie. $3.75 for $20-25MM, $4.25 for $25-30MM, etc.).

For instance, if a team is over the tax by $14MM, its tax bill would be $26.25MM — $7.5MM for the first $5MM over the tax, $8.75MM for the $5-10MM bracket, then $10MM for the final $10-14MM increment.

While those are the rates that apply to most taxpayers, including the Warriors, Thunder, and Wizards this season, a team can become subject to a “repeater” penalty if it paid the tax in three of the previous four seasons. This scenario currently applies to Cleveland — the Cavaliers were a taxpaying club in 2015, 2016, and 2017, which means they’ll be a repeat offender this season. Here are the penalties that apply to repeat taxpayers:

  • $0-5MM above tax line: $2.50 per dollar (up to $12.5MM).
  • $5-10MM above tax line: $2.75 per dollar (up to $13.75MM).
  • $10-15MM above tax line: $3.50 per dollar (up to $17.5MM).
  • $15-20MM above tax line: $4.25 per dollar (up to $21.25MM).
  • For every additional $5MM above tax line beyond $20MM, rates increase by $0.50 per dollar (ie. $4.75 for $20-25MM, $5.25 for $25-30MM, etc.).

If the team described above, over the tax by $14MM, was a repeat taxpayer, its bill would increase to $40.25MM.

Generally speaking, luxury tax penalties are calculated by determining a team’s total cap hits at the end of the regular season. So a team that starts the year above the tax line could get under it before the end of the season by completing trades or buyouts. The Trail Blazers did just that when they sent Noah Vonleh and his $3.5MM salary to Chicago in a deadline deal earlier this month, slipping below the luxury tax threshold.

However, team salary for tax purposes is calculated slightly differently than it is for cap purposes. Here are a few of the adjustments made at season’s end before a team’s tax bill is calculated:

  • Cap holds and exceptions are ignored.
  • “Likely” bonuses that weren’t earned are removed from team salary; “unlikely” bonuses that were earned are added to team salary.
  • If a player with 0-1 years of NBA experience signed a minimum-salary free agent contract, the minimum-salary cap charge for a two-year veteran is used in place of that player’s cap charge.
  • If a player with a trade bonus is acquired after the final regular season game, that trade bonus is added to team salary.

So let’s say that five teams finish the season owing a total of $50MM in taxes. Where does that money go? Currently, the NBA splits it 50/50 — half of it is used for “league purposes,” while the other half is distributed to non-taxpaying teams in equal shares. In that scenario, the 25 non-taxpaying teams would receive $1MM apiece.

As cap expert Larry Coon explains in his CBA FAQ, “league purposes” essentially covers any purpose the NBA deems appropriate, including giving the money back to teams. In recent years, the NBA has used that money as a funding source for its revenue sharing program. Coon also notes that the CBA technically allows up to 50% of tax money to be distributed to non-taxpaying teams, but there’s no obligation for that to happen — in other words, the NBA could decide to use 100% of the tax money for “league purposes.”

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

An earlier versions of this post was published in 2012 by Luke Adams.

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Cap Hits, Salaries For 10-Day Contracts

February 22nd, 2018 at 1:43pm CST by Luke Adams

No NBA games have been played so far this week, but the league’s transactions wire has been active. Since Sunday’s All-Star Game, the Hawks, Cavaliers, Trail Blazers, Pelicans, Suns, Pacers, Knicks, and Magic have all signed players to their rosters — and all of those deals have been 10-day contracts.

This is a prime time of the season for teams to take advantage of 10-day contracts. For rebuilding teams, they’re a great tool for getting a brief look at multiple prospects and identifying which one(s) could be capable of sticking with the club through the offseason. For contenders, 10-day deals can represent an opportunity to get a look at potential playoff contributors without committing to them for the rest of the season.

Of course, since they only last 10 days, these deals are also cheaper than rest-of-season contracts. How much cheaper? We break that down in the chart below.

While 10-day contracts don’t have to be worth the minimum salary, they nearly always are. Listed below are the actual salaries a player earns on a minimum-salary 10-day contract, along with the cap hit a team would assume for that same deal.

These figures are based on a player’s years of NBA experience coming into the 2017/18 season. So a player like Antonius Cleveland, who signed a 10-day contract with the Hawks, would be counted as having zero years of NBA experience, despite playing for the Mavericks earlier this season, since he hadn’t played in the NBA before ’17/18.

Here are the cap hits and salaries for standard 10-day contracts:

Years in NBA
 Cap Hit
 Salary
0 $46,080 $46,080
1 $74,159 $74,159
2 $83,129 $83,129
3 $83,129 $86,119
4 $83,129 $89,109
5 $83,129 $96,584
6 $83,129 $104,059
7 $83,129 $111,534
8 $83,129 $119,010
9 $83,129 $119,602
10+ $83,129 $131,562

A few additional notes on those 10-day contract figures:

  • As is the case for one-year minimum salary contracts, the NBA reimburses teams for a portion of a player’s salary if the player has more than two years of NBA experience. That rule is designed to prevent teams from avoiding older players because they’d be more expensive. It’s also why most of the cap charges listed above are the same.
  • For tax purposes, all minimum salary 10-day contracts are considered to be worth $83,129. So for a team looking to keep its tax bill in check, there’s no added benefit to signing a rookie.
  • For a limited number of 10-day contracts that ran through the All-Star break, these figures will look slightly different. A 10-day contract must cover at least three NBA games, so a deal like Emeka Okafor‘s with the Pelicans is actually worth $157,875 with a cap hit of $99,755, since it’s technically a 12-day pact.
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Community Shootaround: What Should Knicks Do With Noah?

February 21st, 2018 at 12:58pm CST by Luke Adams

Earlier today, we relayed the latest comments from Knicks head coach Jeff Hornacek on exiled center Joakim Noah. Hornacek sounded like someone who doesn’t expect Noah to return to the team this season, suggesting that the Knicks have “moved on” and adding that the veteran big man may be ready to seek an opportunity elsewhere.

While those comments made it sound like Noah’s release may be imminent, Hornacek’s answers to other questions made it clear that’s not necessarily the case. The Knicks head coach didn’t rule out the possibility of Noah returning to the team, suggesting that decision would ultimately be up to president Steve Mills and GM Scott Perry. Ian Begley of ESPN also heard from sources that the Knicks have shown no desire yet to waive Noah outright.

Hornacek’s comments and Begley’s reporting raise several questions about what exactly the Knicks’ plan is for Noah. For starters, would the team would be willing to bring back Noah this season and get him some playing time down the stretch in an effort to at least slightly improve his trade value for the offseason?

With Willy Hernangomez out of the picture, getting Noah some minutes at the expense of veterans Enes Kanter and Kyle O’Quinn wouldn’t be the worst thing for a tanking team. However, there may be lingering concern about Noah’s impact on the locker room. He was last seen getting into a practice altercation with Hornacek, so the club may not want to risk further incidents along those lines.

If Noah doesn’t return to the Knicks and he’s not interested in discussing a buyout, would the club be willing to just waive him? If so, when? As we outlined in December, if the Knicks don’t mind keeping Noah’s full $18MM+ cap hit for 2018/19 on their books, waiting until after August 31 to waive and stretch the veteran could make sense. Noah’s future cap hits in that scenario would be less expensive – and would end a year earlier – than if he’s waived and stretch before the end of August. Still, either approach would involve cutting into New York’s cap space until at least 2022.

What do you think? What’s the next step for the Knicks? Assuming Noah doesn’t suddenly show a willingness to give up money in a buyout, is there any path that doesn’t involve the Knicks compromising future cap flexibility or giving up important assets to part with him?

Jump into the comment section below to share your thoughts!

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Pro Hockey Rumors: Your Source For NHL Trade Deadline Coverage

February 19th, 2018 at 2:59pm CST by Luke Adams

There’s just one week remaining until the February 26th NHL Trade Deadline, and our sister site Pro Hockey Rumors is the best place to stay up to date on the latest news. The Chicago Blackhawks started selling off their expiring contracts today—will it continue? Are the Anaheim Ducks a good fit for Thomas Vanek? Which prospects will the New York Rangers be able to acquire?

Visit Pro Hockey Rumors today and be sure to follow us @prohockeyrumors on Twitter!

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Hoops Rumors Glossary: Gilbert Arenas Provision

February 19th, 2018 at 1:46pm CST by Luke Adams

Gilbert Arenas hasn’t played in the NBA since 2012, but his legacy lives on in the NBA’s Collective Bargaining Agreement. The NBA introduced the Gilbert Arenas provision in the 2005 CBA as a way to help teams retain their restricted free agents who aren’t coming off standard rookie scale contracts.

While Arenas isn’t specifically named in the CBA, the rule colloquially known as the Arenas provision stems from his own restricted free agency in 2003. At the time, the Warriors only had Early Bird rights on Arenas, who signed an offer sheet with the Wizards starting at about $8.5MM. Because Golden State didn’t have $8.5MM in cap room and could only offer Arenas a first-year salary of about $4.9MM using the Early Bird exception, the Warriors were unable to match the offer sheet and lost Arenas to Washington.

The Arenas provision limits the first-year salary that rival suitors can offer restricted free agents who have only been in the league for one or two years. The starting salary for an offer sheet can’t exceed the amount of the non-taxpayer’s mid-level exception, which allows the player’s original team to use either the mid-level exception or the Early Bird exception to match it. Otherwise, a team without the necessary cap space would be powerless to keep its player, like the Warriors were with Arenas.

An offer sheet from another team can still have an average annual salary that exceeds the non-taxpayer’s mid-level, however. The annual raises are limited to 5% between years one and two, and 4.5% between years three and four, but a team can include a significant raise between the second and third years of the offer.

As long as the first two years of a team’s offer sheet are for the highest salary possible, the offer is fully guaranteed, and there are no incentives included, the third-year salary of the offer sheet can be worth up to what the player’s third-year maximum salary would have been if not for the Arenas restrictions.

Based on a projected $101MM cap for 2018/19, here’s the maximum offer sheet a first- or second-year RFA could receive this coming summer:

Year Salary Comment
2017/18 $8,567,770 Value of non-taxpayer’s mid-level exception.
2018/19 $8,996,159 5% raise on first-year salary.
2019/20 $27,775,000 Maximum third-year salary for a player with 1-2 years in NBA.
2020/21 $29,024,875 4.5% raise on third-year salary.
Total $74,363,804 Average annual salary of $18,590,951.

In order to make the sort of offer outlined above, a team must have enough cap room to accommodate the average annual value of the contract. So a team with $19MM in cap space could extend this offer sheet to a first- or second-year RFA. But a team with only $15MM in cap space would have to reduce the third- and fourth-year salaries in its offer sheet to get the overall average salary of the offer down to $15MM per year.

The application of the Arenas provision is infrequent, since first- and second-year players who reach free agency rarely warrant such lucrative contract offers. First-round picks sign four-year rookie deals when they enter the NBA, so the Arenas provision generally applies to second-round picks or undrafted free agents whose first NBA contracts were only for one or two years.

One notable recent example of the Arenas provision at work was Tyler Johnson‘s restricted free agency in 2016. The Heat had Early Bird rights on Johnson, who had only been in the NBA for two seasons. The Nets attempted to pry him away with an aggressive offer sheet that featured salaries of $5,628,000, $5,881,260, $19,245,370, and $19,245,370. It wasn’t the maximum that Brooklyn could have offered Johnson, but the massive third-year raise was a tough pill for Miami to swallow.

Overall, the deal was worth $50MM for four years. If the Heat had declined to match it, the Nets would have flattened out those annual cap hits to $12.5MM per year, the average annual value of the deal. However, due to the Arenas provision, Miami was able to match Brooklyn’s offer sheet with the Early Bird exception, even though the Heat wouldn’t have been able to offer Johnson a four-year, $50MM contract using the Early Bird exception outright.

When a team matches an Arenas-provision offer sheet, it also has the option of flattening those cap charges. However, that option is only available if the team has the cap room necessary to accommodate the average annual value of the deal. Otherwise, the club has to keep the unbalanced cap charges on its books. That’s why Johnson’s cap hit for the Heat will jump from $5,881,260 this season to an eye-popping $19,245,370 in 2018/19.

This coming summer, there aren’t many restricted free agents who will be candidates for an Arenas-provision offer sheet. Top RFAs like Aaron Gordon and Clint Capela have four years of experience, so the rule won’t apply to them. Patrick McCaw looked like a potential Arenas-provision candidate coming into the season, but he has struggled and his value has declined. The best candidate for an Arenas-provision offer sheet may be Raptors guard Fred VanVleet, who has played a key role for Toronto’s excellent second unit. Still, I’d be pretty surprised if VanVleet gets an offer worth more than the standard non-taxpayer’s MLE.

Finally, just because a club is given the opportunity to use the Arenas provision to keep its restricted free agent doesn’t mean it will necessarily have the means. Here are a few situations in which the Arenas provision wouldn’t help a team keep its restricted free agent:

  • If the team only had the taxpayer mid-level exception or room exception available, it would be unable to match an offer sheet for a Non-Bird free agent if the starting salary exceeded the taxpayer mid-level or room exception amount.
  • A team would be unable to match an offer sheet for a Non-Bird free agent if it used its mid-level exception on another player, including another one of its own Non-Bird free agents. A team could use Early Bird rights to match if those rights are available, however.
  • If the player is a Non-Bird or Early Bird free agent with three years of NBA experience, the Arenas provision would not apply — only players with one or two years in the league are eligible.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Earlier versions of this post were published in 2012 and 2015 by Luke Adams and Chuck Myron.

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Weekly Mailbag: 2/12/18 – 2/18/18

February 18th, 2018 at 12:55pm CST by Arthur Hill

We have an opportunity for you to hit us up with your questions in this, our weekly mailbag feature. Have a question regarding player movement, the salary cap or the NBA draft? Drop us a line at HoopsRumorsMailbag@Gmail.com.

Who will the Cavaliers go after on the buyout market? — MrNutt34

With Kevin Love injured and Channing Frye traded to the Lakers, Cleveland could use a big man who can shoot from the outside. Among the rumored buyout candidates, the one who best fits that profile is Ersan Ilyasova of the Hawks. The 30-year-old is averaging 10.9 points per game and shooting .359 from 3-point range this season. He has previous playoff experience with Milwaukee and Atlanta and would help the Cavaliers spread the floor. Marreese Speights could be another candidate with a similar skill set if the Magic decide to part with him. Cleveland still has two roster spots open, so expect the Cavs to be among the league’s most active teams when the buyouts resume.

What the heck are the Magic trying to do because it doesn’t look like they are trying to win or get better? Let me be GM. — Donald Raby, via Twitter

It may be hard to accept after so many years of losing, but the Magic are in another transition phase. New GM John Hammond and team president Jeff Weltman took this season to evaluate a roster they inherited from the previous regime. Trading Elfrid Payton to Phoenix last week was the first major move, but more are sure to follow. Aaron Gordon‘s free agency is the next step, with Orlando likely to match any offer. The Magic have a lot of contracts that expire after next season and may have another high lottery pick in June, so don’t be surprised to see them attempt an extreme roster makeover this summer.

Do you think the twin tower version of Andre Drummond and Blake Griffin will make the Pistons a championship contender in the East? — Greg Dizon

The early returns were promising as Detroit won its first four games with Griffin in the lineup, but the team has cooled off, dropping three of four. A good parallel for the Griffin-Drummond partnership would be the Pelicans after acquiring DeMarcus Cousins a year ago to team with Anthony Davis. Expectations were that New Orleans would turn into a playoff team, but it takes time for two big men to figure out how to co-exist. The Pelicans’ duo was much better after working together through the offseason, and that should be true in Detroit as well. The Pistons have too many other needs to be an immediate title contender, but if they both avoid injury, Griffin and Drummond provide a strong foundation to build around.

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Community Shootaround: Fixing The All-Star Game

February 17th, 2018 at 9:41pm CST by Arthur Hill

The NBA All-Star Game has always been more about scoring and showmanship than defense and fundamentals. But after watching last year’s 192-182 contest in New Orleans, which resembled a glorified layup line, there was a feeling in the league that things had swung too far in the wrong direction.

Among those unhappy with what they saw on TV was Chris Paul, who wasn’t chosen for the game last season. He called commissioner Adam Silver the next morning and discussed the need to make changes.

Particularly egregious, according to Ken Berger of Bleacher Report, was a play where Giannis Antetokounmpo had a fast-break dunk and Stephen Curry fell to the ground and covered his ears rather than try to play defense. Paul decided the game had turned into too much of a show, with not enough competition.

“For the first time, he actually just sat at home and watched it like a fan would watch it,” someone close to Paul told Berger. “I got the sense that he thought what everybody else thought; there’s very little competition. He’s an ultra-competitive guy. … I think he viewed it from a different perspective and was like, ‘We’ve got to do something.'”

Silver was glad to see the players adopt that position, and was even happier when Hornets owner Michael Jordan and NBPA executive director Michele Roberts added their support.

The first steps were to scrap the traditional East vs. West matchup in favor of two captains picking players from a pre-selected roster. Also, the prize money for each member of the winning team has been increased from $50K to $100K to provide more incentive.

We’ll find out tomorrow if these changes made a difference or if more needs to be done. But tonight we want your input. What should the NBA do to make its All-Star Game a better product? Jump into the comments section below and give us your opinion.

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Hoops Rumors Originals: 2/10/18 – 2/17/18

February 17th, 2018 at 2:41pm CST by clarkcrum

Every week, the Hoops Rumors’ writing team creates original content to complement our news feed. Here are the original segments and features from the past seven days:

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2018 Free Agent Stock Watch: Milwaukee Bucks

February 16th, 2018 at 9:17pm CST by Austin Kent

For the first time in over a decade, the Bucks have an enviable core with an ambitious ceiling. That they’re on track for a second consecutive playoff berth with one of the game’s hottest young stars is a testament to the principles put in place under the franchise’s new regime.

Of course the Bucks didn’t win the lottery over night. The club that they’ve assembled – a merry band of overachievers who have overachieved so much they may actually just be regular achievers we’ve been underestimating all along – is deep and talented.

The small-market Bucks have committed to guys who work for them and necessarily so, but while that’s all fun and games when your team has Khris Middleton and John Henson locked into team-friendly contracts because they saw value, it stings a little when there’s $20.1MM tied up between Matthew Dellavedova and Mirza Teletovic, with the luxury tax looming large.

Don’t get it twisted, the Bucks have tactfully leveraged their organization’s strength while minimizing environmental challenges outside of their control. The only downside? Now that the Bucks have a core worth hanging onto – players that they’re committed to and reliant upon – managing finances becomes that much more important.

Sean Kilpatrick, SG, 28 (Up) – Signed to a one-year, $0.8MM contract in 2018
Kilpatrick showed that he could put points on the board in an extended stay with the Nets between 2015 and 2017. While he hasn’t had much of an opportunity to showcase his scoring skills so far in Milwaukee, you can bet the organization knows what he’s capable of when given a chance to fill reserve minutes out of the backcourt. Given the team’s financial constraints, it would be wise to lock in an affordable depth piece like Kilpatrick when given the opportunity.

Jabari Parker, PF, 23 (Down) – Signed to a four-year, $22.2MM contract in 2014Jabari Parker vertical
A pair of ACL injuries have cast doubt on Parker’s value as a pending restricted free agent. While once it seemed extremely plausible – if not borderline inevitable – that the forward would draw a max contract out of somebody, that’s no sure thing in 2018. We wrote earlier this month that the Bucks seemed reluctant to offer Parker any more than $18MM per year. If Parker’s play from now until the end of the 2017/18 campaign justifies more than that, the franchise would need to get creative in order to bring him back in a scenario that’s financially palatable for ownership. Expect Parker to land an offer sheet from one of the few teams with cap space this summer, and for the Bucks to shed salary in order to comfortably match it and avoid the tax, even if it costs them an asset to do so. While Parker can’t be credited for much of Milwaukee’s recent success, he’s a big reason why they have such an intriguing ceiling.

Jason Terry, SG, 40 (Down) – Signed to a one-year, $2.3MM contract in 2017
There’s no doubt that having veteran leadership in the locker room is beneficial to young players. Still, while Terry could conceivably present as an affordable option for rounding out the depth chart next summer, his on-court value is minimal.

Photo courtesy of USA Today Sports Images.

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