23 June 2023, at 11:58
As we’re so often guilty of, it’s time to quickly turn the page from a very fun NBA Draft night to what’s next.
What’s next for the Toronto Raptors are a number of important decisions in free agency. While a few things have changed a bit since our first summer primer dropped, the big question remains: What direction are the Raptors headed, and what does that mean for the futures of Fred VanVleet and Jakob Poeltl? The Raptors have given slight indications that a run-it-back-adjacent strategy might be most likely, but these players control their own futures.
Before the June 30 news frenzy, let’s take a look at some of the small changes in the Raptors’ situation that have evolved and reset how the free agency situation looks. I would refer you to the full introductory primer for explanations of the rules and mechanics; this piece will simply update the situation.
The Raptors select Gradey Dick No. 13 in the NBA Draft
Who the Raptors selected at No. 13 was unlikely to affect the team’s financial picture. Almost every player accounts for 120 percent of the rookie scale, so unless the Raptors drafted an international player they wanted to stash overseas, the pick was always going to hit their books with a $4.77 million hit.
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Raptors choose not to add an extra choice
The Raptors declined to trade or buy into the draft to secure an extra pick on draft night.
While people sometimes equate second-round picks with free agents without drafting corresponding values, there are two CBA-related reasons why a second-round pick is slightly more valuable.
The first is that a second-rounder counts for his actual salary against the tax, whereas any free agent (even an undrafted rookie) bears the tax burden of a two-year veteran (assuming they make the minimum, a safe assumption for an undrafted rookie) . For purposes of the luxury tax line, your second-round pick saves you an extra $900,000 or so under the tax.
The second is that the new CBA includes a second-round pick exception, which allows you to sign your second-rounder to long-term contracts more freely than an undrafted free agent. Previously, any second round or undrafted rookie was limited to a two-year contract unless a team used cap space or one of their exceptions to sign them to a longer deal. That’s still true for undrafted rookies, but second-round picks can now be signed for up to four years without dipping into their exceptions.
This is not one huge share. For a team trying to get back to finding and developing elite-level young talent, and for a team trying to navigate an offseason close to the luxury tax line, it’s a slightly of an agreement.
On a side note, the Raptors did not use the $6.36 million in cash they are allocated to include in trades for the 2022-23 league year (this is not uncommon, this is just a procedural note). This amount resets on July 1 with a 2023-24 cash award of $7 million.
Trent picks up opportunity
Gary Trent Jr. picking up his player option for the 2023-24 season was less of a surprise, given how thin the free agent class looks and what players like Trent tend to earn. Even turning down the option to sign a multi-year deal at the same annual value would have been justified, securing Trent significantly more guaranteed long-term money.
Instead, Trent will make $18.56 million this year and either become an unrestricted free agent in 2024, work out an extension (he’s eligible to do so on July 7, and the new extension rules make that far more likely than it would have been under the old CBA), or become a potential trade piece as challengers look to add young shooting.
Trent’s option is a positive for the Raptors in terms of their 2023-24 cap sheet situation, as the $18.56 million cap hit (with $250,000 in unlikely incentives) is less than we expected Trent to secure on a new deal.
If the Raptors try to re-sign Trent, VanVleet and Poeltl, it’s a little easier to do so and stay under the tax with Trent’s decision locked in.
VanVleet declines the option, Porter picks up his
We have long expected Otto Porter Jr. wanted to pick up his $6.3 million player option for 2023-24, which he did shortly before the first primer came out. He’ll now add the veteran shooting depth he hoped he could add last year (assuming he’s healthy), with a relatively low cap hit. With Porter’s money, it’s more about opportunity cost and room under the luxury tax, to the extent that I’d imagine the Raptors at least asking around the league if anyone is interested in a vet with championship experience on an expiring deal.
VanVleet declining his $22.82 million player option was also a near certainty. He’s sliding in near the top of the free agent class, and while the Raptors will have every opportunity to re-sign him, he’ll be a popular target for contenders in sign-and-trade scenarios.
It’s also worth noting that some teams could play for VanVleet without sending assets out in a sign-and-trade simply by clearing cap space. Some of the cap-space teams might not make sense, timeline-wise, but a few teams on the fringes have the flexibility to maneuver into cap space if needed.
VanVleet is arguably the biggest swing piece in Toronto’s offseason, whether as a win-now piece to keep or as someone who can return real assets on the way out. Losing a player of VanVleet’s caliber for nothing in an outright signing scenario would be difficult to recover from an asset-management standpoint.
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New salary cap and luxury tax lines
The NBA updated the salary cap and luxury tax lines for 2023-24 this week, and they’ve come in higher than even the robust initial protections. The most important number for the Raptors is that the luxury tax line jumped from $162 million to $165 million.
For a team that would be razor-sharp close to paying the luxury tax just by keeping their free agents — before using the mid-level exception or adding in other ways — the extra $3 million in cap space makes sense.
And yes, the Raptors able to use in the tax, they have just chosen not to do so previously, unless they were in a title dispute situation. The impact of real money can be significant, as non-taxpaying teams this year received an estimated $15 million each from taxpaying teams. It’s a situation where you can’t escape the tax at all costs, but if you’re close, you might as well do what you can to stay under it.
Teams can also enter the season above the tax and come under it later; your tax is based on your cap sheet on the last day of the season, not the beginning of the season.
New exemption amounts
With the cap and tax increasing, the value of exemptions has also increased.
• Two-year exception: $4.51 million first year salary, up to two years and $9.25 million total
• Exception for mid-level taxpayers: $5 million first year salary, up to two years and $10.25 million total
• Exception for mid-level room: $7.72 million first year salary, up to three years and $24.32 million total
• Mid-level non-taxpayer exception: $12.4 million first year salary, up to four years and $53.33 million total
These exceptions can be split between multiple players. In the new CBA, these exceptions can also be saved to acquire a player via in-season trade. They cannot be combined with other exceptions or with players.
The Raptors have $115.9 million committed to 10 players right now, plus $1 million guaranteed for Thaddeus Young and a non-guaranteed deal for Joe Wieskamp.
Young’s contract would be $8 million guaranteed if he is still on the roster after June 30. Now that the draft has passed without Young being used in a trade, the most likely scenario is that the Raptors waive him in the next week and eat the $1 million he got. owed.
Wieskamp is owed $1.93 million if he remains on the roster after June 30. That’s roughly the amount for a two-year veteran minimum, so this is mostly a matter of roster flexibility. My guess would be that the Raptors waive Wieskamp and, if his camp is willing, re-sign him to a new deal with a different guaranteed schedule, allowing Wieskamp to develop in the system over the summer and compete for a roster spot for the fall.
There are also qualifying offers to be extended to Dalano Banton ($2.17 million), Jeff Dowtin Jr. (two-way) and/or Ron Harper Jr. (two-way) before June 29. These players would become restricted free agents if given the qualifying offer and unrestricted free agents if not.
For simplicity, the following graphic assumes Young and Wieskamp are waived. We will also put the RFAs aside for now.
The first thing that should stand out here is that even if we strip out all of the Raptors’ free agents, the team would only have $17 million in cap space. It’s a no-rights scenario to resign those players, and nothing comes back in any sign-and-trade. Because that amount is so small — barely above the mid-level exception — the Raptors will operate as an over-cap team, retaining the rights to their free agents and opening up the mid-level exception.
The more important number is the $47.85 million the Raptors have under the luxury tax right now.
If the Raptors don’t want to move into the treasure, that’s the number they have available to re-sign VanVleet, Poeltl, any middle target, any undrafted rookie, Dowtin, and so on. You have to have at least 14 players under NBA contract, so the max for just VanVleet and Poeltl, assuming the roster is filled with minimum contracts and they leave one open roster spot, is $43.8 million. That would drop to about $42 million if they planned to use a 15th-ranked spot during the year.
Teams are allowed to backload contracts to a small degree, giving the Raptors some added flexibility. For example, if they wanted to get VanVleet and Poeltl for $42 million total, they could offer Poeltl a three-year, $55.1 million deal and VanVleet a four-year, $112 million deal and have them at starting salaries of $17 million and $25 million dollars. . That example gives you both players for $42 million in 2023-2024 salary despite the average salary of $46.4 million. This example also again includes no use of the mid-level or signatures beyond the minimum. So use the $42 million number carefully.
Trades (and sign-and-trades) can change the outlook here pretty quickly. For now, the offseason headline is “$42 million below the tax for VanVleet and Poeltl, plus minimum contract guys, subject to trades.” There is a world of creativity beyond that – i either franchise direction — but that will be our starting point for June 30.