How to sign Lebron in 2018 – salary cap discussion

Lots of discussion on the board and media around Lebron coming to Houston in the summer. Just thought I would try and see how this can be done from a cap perspective.

Because of the Rockets cap situation, signing Lebron in the summer will require careful cap management and salary sacrifice by Paul and Lebron.

The first step the Rockets need to take is open up cap space. This can be done by:
1. Trading Anderson, Onuaku, cash and picks without getting salary back (eg to Sacramento or other teams under the cap)
2. Renounce any expirings that have cap hold (Black, Brown)
3. Renounce Paul’s bird rights to remove his $39m cap hold and then sign him at a maximum of $18.6m per year for 5 years

Then Houston needs to fill up the rest of its roster:
4. Sign 3 UFAs at vet min (eg Wade, Green, Frye). Vet min players get a salary of $2.3m, but only $1.47m counts towards the cap
5. Sign 1 2nd-round rookie at minimum ($815k)

At this point the Rockets reach $101m in salary and have no cap room left. Next moves:
6. Re-sign Capela and Ariza to long-term deals. The value of those deals will determine whether Houston goes into luxury tax territory. I have assumed annual salary of $17m for Capela and $12.75m for Ariza
7. Trade Gordon and Tucker to the Cavs for Lebron. Lebron signs a sign-and-trade contract before getting traded for $26.9m per year. $26.9m is the maximum salary the Rockets can receive from the Cavs in this trade, as it is 125% of Gordon + Tucker salary plus $100k.
8. Sign Mbah a Moute at the taxpayer MLE ($5.3m a year based on current salary cap projections)

The cap situation before and after trade would look as follows:



The team would look as follows:
Starters: Paul, Harden, Ariza, Lebron, Capela
Rotation: Wade, Moute, Green, Frye, Nene
3rd string: Troy, Qi, rookie

Scenario 2: We could offer Lebron more if we add one of Ariza or Capela in a trade with the Cavs. Eg if we offer them Gordon and Ariza, then Lebron could sign for up to $33m. In this case Moute would start in Ariza’s place next to Paul, Harden, Lebron and Capela. Bench would be Wade, Green, Tucker, Frye, Nene. Of course, that would require Ariza to accept a sign and trade, and it is uncertain he would agree to do that.

Scenario 3: If Paul wants more money we would also need to sacrifice Tucker. Ie we would send Tucker and Anderson out in trades without getting salary back, then we would trade Gordon and Ariza for Lebron. In this scenario we could offer Paul up to $25m and Lebron $33m. Due to sending an extra player out, we would need to sign an additional FA (eg Johnson) to have the minimum of 13 players in the roster. Starting line-up would be the same as previous scenario with Wade, Johnson, Green, Frye and Nene completing the rotation. The salary cap situation would be as follows:



Scenario 4: If Ariza does not agree to a sign and trade with the Cavs, we could renounce him, which would allow us to offer Paul up to $31.5m. We would then trade Gordon and Tucker to the Cavs for Lebron. In this case Lebron would be able to re-sign for up-to $26.9m.

Scenario 5 (under the cap): If we trade Anderson, Gordon and Tucker, and then renounce Ariza, we would have around $53m in salary cap to offer to Lebron and Paul (after filling up 13-spot roster at vet min and rookie salary), eg $30m for Lebron and $23m for Paul. We would still then be able to go over the cap to resign Capela, plus sign Moute at MLE.

Scenario 6 (opt-in): Credit to Reeko for suggesting this. Under this scenario we would never go under the cap. We would start by trading Gordon and Anderson (plus picks) for LeBron (after LeBron has opted-in into the final year of his current contract). We would then re-sign our 3 key FAs (Paul at say $25m, Ariza at $12.75m, Capela at $17m), perhaps even Brown for fun. In this scenario we would always be over the cap, so we would not be able to bid for other teams' free agents. We would be able, however, to sign Moute with the taxpayer MLE as in the other scenarios. We would also end up at least $20m over the luxury tax, but that's our owners problem. The cap situation would look like:



Other veterans that could be available at minimum are: Felton, Devin Harris, Johnson, Afflalo, Ilyasova, Tolliver, Pachulia, Black, Speights. I assumed it would make sense for Lebron to carry some of his Cavs friends to the Rockets, that’s why I have gone with Wade, Green and Frye. Depending on Zhou Qi’s development, the team may decide he can be the 3rd center. In this case, the team could sign Johnson or Tolliver instead of Frye. Wade and Green, outside of being Lebron’s buddies, are perhaps the best Gordon/Tucker replacements you can find with vet min salary. Wade can replace Gordon’s playmaking and scoring, while Green has Tucker’s athleticism and ability to guard multiple positions. If above players get better offers, we should still be able to sign 2-3 decent players at vet min to complete the rotation.

Possible alternatives for taxpayer MLE are difficult to predict, as it is unknown who would accept that salary level. Belinelli should also be available there, and I wouldn’t be surprised if better players like Barton or Evans accepted that offer. I have gone for Moute for continuity purposes, plus he fits the 3&D role perfectly.

Conclusions
a) It is possible to sign both Paul and Lebron in the summer to high offers, but they would both need to leave money on the table. The best way to get there is via Lebron opting-in in his final year
b) We would lose at least 2 of Anderson, Gordon, Tucker and Ariza, and in worst case all of them depending on how much Paul and Lebron are willing to sacrifice. In the best scenario we keep Ariza, Tucker, Moute and replace Anderson/Gordon with Lebron.
c) If we do a sign-and-trade we could fill the bench with 3-4 decent players at vet min and 1 at the taxpayer MLE. The Cavs expirings would be a good place to complete the roster and some of them would be happy to follow Lebron
d) The logistics of getting this done are very tricky. We would need to find a trade partner for Anderson, hold off Ariza/Capela from signing offer sheets, get Paul/Lebron to sacrifice salary, get the Cavs to play ball, and find suitable FA replacements at vet min (if needed). All at the right timing and sequence
e) Given we would be gutting our roster, I would only do this if Lebron signed for a minimum of 2 years without player option. 2 years of Paul, Lebron, Harden, Capela and role players should guarantee us at least one title. In the opt-in scenario the loss of players is smaller, in which case even a year of Lebron would be worth it.
f) Sign-and-trade with the Cavs or Lebron opting-in would allow us to pay Lebron more, plus offer us a chance to keep Ariza. Both require the Cavs' help. Hopefully Lebron has built enough goodwill with the Cavs franchise, and they will be open to facilitating his exit. It will be difficult to make this happen without the Cavs playing ball.
g) Assuming we keep Capela, the actual amount we pay him does not affect our chance of getting Lebron. The only constraint is how much luxury tax our owner is willing to pay. I have assumed $17m for this exercise.

Cap experts, feel free to correct any wrong assumptions I have made and add suggestions on how we can bring Lebron to Houston. I have edited to add an opt-in scenario.

 

This could be one way around it. Not sure if Paul would go with the minimum for a year. But we would only be able to offer Paul 4 years in 2019, as that would take him to age 38. Same situation as Nene last year.

 

4 of the 5 scenarios above are exactly that. Lebron signing with Cavs and then getting traded to Houston. There is a limit to how much he could sign for, based on how much salary we can send out. Sending Gordon and Tucker would allow Lebron to sign a $26.9m per year contract with the Cavs before getting traded to us.

 

I see what you are saying. Yes, that would work. Gordon+Capela or Gordon+Anderson would get it done. Lebron would make $35m.