NBA Amnesty Clause

The current Collective Bargaining Agreement (CBA) between the NBA and the NBA Players' Union is set to expire this year. There has been talk of a new agreement including an Amnesty Clause like the last CBA did. The last amnesty provision allowed teams to eliminate one contract. The teams still had to pay the entire amount on the contract and the contract still counted against the salary cap. The benefit to the team is that the salary no longer counted towards the luxury tax. The luxury tax in the NBA is a penalty for team salaries that are too high. If the team salary is above the luxury tax line, the team has to pay a $1 tax for each $1 it is above the tax line. Using the Amnesty Clause a team could eliminate a $20m contract from their luxury tax calculations and save $20m. If the NBA brings back the Amnesty Clause, which player contracts are the likeliest targets?

As the exact details of the new Amnesty Clause--and whether it will even exist--are unknown I am going to make a few assumptions.

Assumption #1: There will be a hard salary cap. The last CBA has a "soft" cap. Teams could go over the salary cap by taking advantage of certain exemptions. Under a hard cap scenario, no team can go over the salary cap (or at least there will be much fewer exemptions that allow a team to). Under the hard cap scenario, an eliminated contract would no longer count against the salary cap. I have no insider information about whether there will or will not be a hard cap, it is just my opinion about what I believe the likeliest outcome will be from what I have read.

Assumption #2: Teams will keep a bad contract if they believe they can win a championship, and teams will eliminate a bad contract--even if keeping the contract will make the team better--if they do not have a reasonable shot at winning the championship. For example, a 55+ win team like the Miami Heat will keep a bad contract if it only makes the team slightly better (since the Heat are good enough to win a championship) while a mediocre team like the Milwaukee Bucks will eliminate a contract since they do not have a reasonable shot at winning a championship (even if the player they cut will make them a few wins per year better).

Assumption #3: Clearing cap space is often worth doing even if it makes the team worse in the short term. This was evident last year when teams like the Knicks, Bulls, and Heat basically gave away serviceable players and draft picks in order to clear cap space. They became a worse team in the short term in order to maximize cap space. The cap space--in theory--could then be used to sign or trade for coveted players.

I will split my analysis of which player contracts should get the Amnesty Clause into multiple posts. I will shun tradition by starting in the Western Conference Pacific Division. All salary data is from HoopsHype.com . All PER and Win Shares (WS) data is from Basketball-Reference.com. I looked at each players' contract, PER and WS from the past two seasons, their current age, and the team's current salary cap situation when doing my analysis. I also made a rough tool based on prior WS and future age that calculated how much $ per WS the team was projected to pay that player over the life of the contract.


Golden State Warriors

Andris Biedrins (3 years, $27m), Monta Ellis (3 years, $33m), and David Lee (5 years, $69m) have the largest contracts on the team. All three are young but Biedrens is the only one with below average PER and Win Shares the past two seasons. I would consider eliminating Biedrens unless the Warriors believe he will improve enough to justify his contract.

Contract to Eliminate: Andris Biedrins


Los Angeles Clippers

Ryan Gomes (2 years, $8m) and Mo Williams (2 years, $17m) are both coming off of bad seasons. Gomes is more useless but Williams has the larger deal. I lean towards eliminating Gomes' contract hoping that Williams will return to respectability but do not feel strongly either way.

Contract to Eliminate: Ryan Gomes


Los Angeles Lakers

If the salary cap remains at its current level, the Lakers are already over the cap through the 2013-2014 season. Eliminating a contract would not give the Lakers more cap space; it would simply lessen the amount the team is over the cap. Eliminating a contract would either be a money saving move--if the luxury tax remains--or used to clear up a roster spot. Ron Artest (3 years, $21m, age 31), Derek Fisher (2 years, $7m, age 37), Steve Blake (3 years, $12m, age 31), and Luke Walton (2 years, $12m, age 31) would be decent choices to save money. All had PER well below average each of the past two seasons. However as Walton is the least useful of the bunch and the Lakers have a chance to win a championship, his contract is the best to eliminate. On a side note, Odom may be the only decent contract on the Lakers.

Contract to Eliminate: Luke Walton


Phoenix Suns

Josh Childress (4 years, $27m) and Channing Frye (4 years, $25m) are both coming off of seaons with below average PER. Frye had a decent Win Shares (4.7) while Childress did not (1.4) and only played 54 games. I'd lean towards showing Childress the door but didn't Phoenix just sign the guy?

Contract to Eliminate: Josh Childress


Sacramento Kings

Beno Udrih and Franciso Garcia are the only King's players with more than one year on their contract. Udrih was around average the past two years while Garcia had a poor PER and mediocre Win Shares the past two years.

Contract to Eliminate: Francisco Garcia