Maybe there is a way that would allow Chris Paul (left) and Dwight Howard (right) to team up on the Orlando Magic (Phelan M. Ebenhack, Associated Press)
No simple solution exists for the critical question that looms over the Orlando Magic. How does the franchise re-sign superstar Dwight Howard if he, as expected, opts out of his current contract in the summer of 2012?
As the Orlando Sentinel has written many times before, most salary-cap experts see no realistic way the team can free-up enough money to make a run at either Chris Paul or Deron Williams when, and if, they become free agents next summer. The contracts of Gilbert Arenas and Hedo Turkoglu are albatrosses that will restrict the team’s maneuverability as the franchise enters its most critical offseason since Shaquille O’Neal signed elsewhere during the summer of 1996.
But there is at least one scenario in which the Magic could free-up enough money to make a legitimate free-agent run at either Paul or Williams and, in the process, give Howard the superstar running mate I believe Howard so desperately desires.
I’ll say this upfront: This is a highly unlikely scenario that would require one unwise financial move by one of the team’s most visible players. But it is a potential scenario that bears watching.
According to the websites HoopsWorld, HoopsHype and ShamSports, the Magic currently are committed to pay somewhere between .7 million and .5 million to players for the 2012-13 season. Those figures assume all players on the roster will exercise their player options to remain with the Magic and that the team will pick up its team options to retain other players. Those figures also don’t account for salary rollbacks that could occur on existing contracts in a new collective bargaining agreement.
The key for the Magic as they enter the summer of 2012 would be to free-up enough cap space to offer Paul or Williams a max deal and leave enough money to re-sign Howard to a max deal.
The Magic better hope that the new CBA — whether it’s reached within days or weeks or months — contains a provision that will allow them to release a player and have that player’s remaining salary come off of future salary-cap and luxury-tax totals. The team still would have to pay the remainder of the contract, but at least the team would gain some critical payroll flexibility.
Orlando then could use this amnesty clause to release Turkoglu, who, at 32 years old, is coming off of a couple of lackluster regular seasons and subpar performances in the 2011 NBA playoffs and the 2011 EuroBasket tournament.
Turkoglu is due to receive .8 million in 2012-13, so let’s subtract that from the Magic’s total.
.5 million – .8 million = .7 million
You will notice something shocking: that I didn’t suggest the Magic use the amnesty clause on Arenas, the team’s highest-paid player.
Well, Arenas does figure into this — and this entire scenario is contingent on him making a remarkably unwise financial decision.
According to all the salary databases I referenced earlier, Arenas can opt out of his deal next summer, become a free agent and forego the .8 million he’s due in 2012-13 and the .3 million he’s due in 2013-14.
From a strict financial sense, opting out would make no sense for Arenas. If he were to forego .1 million in salary, there would be almost no chance that he’d could recoup that money over the rest of his career. He will turn 30 next January, and his surgically repaired knee gave him significant problems last season, robbing him of his explosiveness and his quickness.
In essence, he’d be throwing money away. And if I were advising Arenas, I’d advise him to stand pat.
But what if Arenas has another bad season in 2011-12 (if there is a 2011-12 season)? Is it possible that he will consider his longstanding friendship with Magic General Manager Otis Smith and decide that the best way to save Smith’s job and help the franchise that took a chance on him is to opt out? Probably not.
Still, these are interesting questions to ponder.
Some conspiracy theorists out there might wonder if Smith took the risk of trading for Arenas last December on one condition: that Arenas opt out of the final two seasons of his deal. After all, no other team would’ve traded for Arenas given his off-court baggage and his injury history.
Again, it is highly, highly unlikely that Smith had this in mind when he traded for Arenas or that he even would’ve posed this to Arenas as a condition for the trade.
When I posed this question to Smith toward the end of last regular season, he said the concept was absurd and laughed it off. Indeed, there would be no financial reason for Arenas to do this.
All that said, let’s remember that Arenas is one of the most enigmatic players in the NBA. Would opting out of a deal be any more bizarre than, say, his decision to bring guns to the Washington Wizards locker room back in Dec. 2009?
So, let’s assume for a moment that Arenas does opt out. Where would that leave the Magic?
.7 million – .8 million = .9 million
Voilà! The Magic could become players in the 2012 free-agent market if they make wise additional moves.
Now, remember this: Howard’s 2012-13 contract would be coming off of the books, too, because he’d be becoming a free agent.
But the team probably wouldn’t be able to subtract his .5 million salary for 2012-13, then sign Paul or Williams and get around the cap rules by then re-signing Howard.
Instead, Howard’s space on the Magic roster could be taken up by what is known as a “cap hold,” phantom money that’s aplied to the team’s cap total that prevents teams from circumventing the cap rules. Without a cap hold, teams could sign free agents right up to the salary cap and then re-sign their own free agents using the Bird exception.
Heck, we don’t know what the new CBA will look like. But let’s assume that cap holds still exist in the new CBA and that the same manner for computing them is used. Then, Howard’s cap hold would be about million.
So, let’s update the totals, accounting for Howard’s expected free agency:
.9 million – .5 million + million = .4 million
Again, we simply don’t know what the new CBA will look like. What will the maximum salaries be? Will there be a hard salary cap? Will advantages be built into the system to help teams re-sign their free agents?
I’m attempting to be as conservative as possible as I’m calculating these figures, which is why I assumed there will be cap holds in the new agreement.
Indeed, rollbacks on all existing contracts could be coming into play in the next CBA, and my calculations here do not account for them. And, remember, the new salary cap total probably will be much smaller than the .044 million it was in 2010-11.
So, it’s difficult to say how much remaining money the Magic would have to free-up from this point in order to sign Paul or Williams and re-sign Howard and then fortify the rest of the roster.
But there should be some intriguing opportunities available to the Magic — opportunities that would be unpleasant but might be necessary if the team wants to ramp-up its chances of signing Paul or Williams and keep Howard.
According to both HoopsWorld and ShamSports, the final year of guard J.J. Redick’s contract — about million for the 2012-13 season — is completely unguaranteed. So, if necessary, the Magic could release Redick after the 2011-12 season and free-up another million.
Also, I haven’t even mentioned two of the Magic’s top young assets.
Power forwards Ryan Anderson and Brandon Bass are relative bargains and could help most teams.
Anderson is on track to become a restricted free agent after the 2011-12 season. The Magic could trade him to another team in the months ahead, and that team could either re-sign him through free agency or free-up money on its own cap by letting him go elsewhere. Or the Magic simply could keep Anderson for 2011-12 and let him sign elsewhere during the summer of 2012.
Bass holds a million player option for 2012-13. He could choose to become a free agent or he could decide to remain with the Magic. If he becomes a free agent next summer, the Magic would have even more cap space available. But he, too, could be traded sometime during the 2011-12 for an expiring contract.
Point guard Jameer Nelson holds a .8 million player option for 2012-13. He’ll likely decide to remain with the Magic. But he does have some trade value to other teams. Aside from being a capable, gritty player, his contract is set to expire after the 2012-13 season, which makes him even more valuable.
And, finally, the Magic are due to pay 2010 first-round draft pick Daniel Orton about .2 million in 2012-13. But the team hypothetically could choose not to invoke its team option on Orton for 2012-13; such a move that would make Orton an unrestricted free agent.
So perhaps the future isn’t as dire as it might seem for the Magic.
Admittedly, this scenario would require a selfless — or some would say “bizarre” — decision by Arenas. And the new CBA would have to include an amnesty provision.
But maybe, just maybe, things will fall the Magic’s way.
If nothing else, though, I hope this blog post has illustrated how much would have to go the Magic’s way for the team to free-up money to make a run at Paul or Williams.
There will be a new CBA eventually.
It’s impossible to tell at this point whether it will help or hurt the Magic. Remember, if the new CBA contains provisions that would help the Magic keep Howard, then those same provisions would help the New Orleans Hornets keep Paul and the New Jersey Nets retain Williams.
Follow Josh Robbins on Twitter at @JoshuaBRobbins and e-mail him at jrobbins@orlandosentinel.com. Subscribe to our Orlando Magic newsletter at OrlandoSentinel.com/joinus.
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