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The Amnesty Provision and the Orlando Magic – Will it truly help?

2011 November 29

In today’s edition of OTIS SMITH SPECULATION SPECTER, I take a look at the Amnesty Provision that will be included in the soon to be ratified CBA and what that provision means to the Orlando Magic.

am·nes·ty – an act of forgiveness for past offenses, especially to a class of persons as a whole.

Also known as, you owners are idiots and chose to sign your players to contracts that were significantly higher than anyone else in the league was willing to offer. Basically, it’s a cap lifeline being thrown to organizations. Fortunately for Magic fans, this handy provision will likely work to your advantage.  How much it will help though, may not be as much as originally thought.

What is it?

Via Larry Coon and ESPN

“One player can be waived prior to the start of any season (only one player can be amnestied during the agreement, and contracts signed under the new CBA are not eligible). The salary of the waived player will not count toward the salary cap or luxury tax. Teams with cap room can submit competing offers to acquire an amnestied player (at a reduced rate) before he hits free agency and can sign with any team.”

“For example, if Cleveland uses its amnesty provision on Baron Davis, a team that is $5 million below the salary cap can submit a $5 million offer to acquire Davis’ contract. If that offer is the highest, the team acquires Davis and is responsible for $5 million of his salary — with Cleveland responsible for the balance. This happens before Davis becomes a free agent and can sign on his own with a team like Miami.”

Or sign with a team like Orlando. Basically this new competitive bidding process makes it highly unlikely that the Magic would be able to sign a player who would be amnestied from another team. If they do sign someone, he will probably end up being nothing more than an end of the roster addition. Or to put it bluntly, highly unlikely to find a rotation, impact player. 

The big difference between the same clause that was included in 2005 is that back then there was no salary cap relief, only tax relief.

What happened in 2005?

With the limited relief that came in ’05, the league still saw 18 organizations take advantage of the provision. However, few big name players were included in the cuts (Allan Houston was not cut and the rule was nicknamed after him!) and 8 of the 18 players cut weren’t even on the active rosters (Baker, Robinson, Coleman, Miller, Bell, Person, Eisley and Mourning).  Players did not necessarily need to be on the roster for the clause to be used on them. They just needed to be on the team’s salary figure.

’05 Amnesty Cuts via the NY Times:

Boston – Vin Baker
Chicago – Eddie Robinson
Dallas – Michael Finley
Detroit – Derrick Coleman
Houston – Clarence Weatherspoon
Indiana – Reggie Miller
L.A. Lakers – Brian Grant
Memphis – Troy Bell
Miami – Wesley Person
Milwaukee – Calvin Booth
Minnesota – Fred Hoiberg
New Jersey – Ron Mercer
New York – Jerome Williams
Orlando – Doug Christie – was 35 at the time. 8.2M salary, final year of deal and was not going to be returning regardless. Thanks, wifey!

Philadelphia – Aaron McKie
Phoenix – Howard Eisley
Portland – Derek Anderson
Toronto – Alonzo Mourning

Numbers that matter:

The salary cap for the 2010–2011 season was around $58M

The luxury tax for the 2010–11 NBA season was around $70M. For every dollar over the luxury tax threshold, teams must pay dollar for dollar to the “system”.

The Magic total salary number for 2010-11 was around $90M. Meaning the Magic would have had a ~$20M tax payment.

Who are the Magic amnesty candidates?

Gilbert Arenas – 3 years, ~62.5M remaining

Hedo Turkoglu – 3 years, ~35M remaining – final year is unguaranteed

Chris Duhon – 3 years, ~10.7M remaining – final year is unguaranteed

Quentin Richardson – 3 years, ~8.5M remaining

Why Gil?

Because Gil makes a LOT of money.  Gilbert’s salary for 2011-2012 is around $19.2M.  Assuming the team salary number for this upcoming season is similar to last year, Gil’s contract alone covers the luxury tax payment. Meaning that Gil’s true cost is actually DOUBLE his salary. Do you think Rich Devos enjoys paying $38M in one year for a player that he had to be talked into acquiring in the first place?

Financials aside, the team must ask themselves if Gilbert Arenas can be the player that they thought he was when he was traded for. He showed glances of it last year, but it was sporadic at best. Is that knee properly rehabbed? Did he work with Tim Grover in the offseason like he was supposed to? Can the Magic use Jameer Nelson as one of their few trade assets to return an impact player at another position? Are they comfortable with Chris Duhon as the primary backup PG?  Does Dwight Howard trust Gilbert? Does Dwight want Gilbert? Isn’t that what it all boils down to anyways?

Even if they amnesty Gil, it doesn’t create cap space to acquire a free agent because they are still over the cap. Everything would still have to be done through exceptions and sign and trades.  It comes down to 1) Are they willing to pay to find out if he can produce? and 2) Can he be relied upon if Jameer is traded?

Why Hedo?

Ball. Because Hedo, despite wanting “ball”, hasn’t been very good of late at getting said ball in the basket. His ability is clear when focused, but it seems to rarely be there. It’s not even as much of a lack of focus, but maybe a lack of fire.  His stats have steadily declined over the last 4 seasons and with him turning 33 in March, I don’t think much more “upside” is running through his pizza sauce blood. Hedo also plays at a position that is much easier to fill than point guard.

Why not? He is still 6’10” with handles. Stan LOVES what Turk can bring to the offense in terms of intangibles and can still help the team win in other ways when not scoring.  This may be the season that he ends up getting slid to a Lamar Odom 6th man type role, but he is honestly probably better suited for that at this point. Plus his deal is only partially guaranteed in his final year. Not to mention that I have really grown fond of yelling TURK-A-LOOP. 

December 9 – December 26.

17 days.  There will be only 17 days from the start of the free agency period until the beginning of the season.  You have no IDEA who you really are in that time frame, even for a team that is returning a similar group. There are just too many outstanding questions on where guys stand after not playing in 8 months. 

If the Magic do make a play in the amnesty market, don’t expect it to be immediate. Even the option of picking up a player who was amnestied from another organization is highly unlikely. When a franchise uses the amnesty provision on a player, that player than goes through the waiver wire process with the highest bidder winning out. AKA, not likely to be the Magic/Heat/Lakers.

My ultimate prediction:

Cutting Gil gets below the tax threshold but would still not put the Magic below the cap (3 free agent spots that must be filled). Realistically, the only way the Magic could remain as a non tax-paying team was if they filled out the roster with league minimum players. While cutting Gil for financial or personal reasons makes sense, and lowers the dollar for dollar tax payment, it does not necessarily make the Magic a better basketball team.

The important thing to remember as this all plays out is that none of it is a simple black and white decision. Every angle has elements and sub-elements that play off and have different repurcussions. The market, the court, the players… all have equal parts input into the process.

My prediction is that the Magic will hold on the clause for this entire season then use it on either Gil or Hedo next summer. Whoever looks the least promising to Dwight – gets axed.

Bonus prediction: While I hope that I’m wrong, for purely selfish reasons, that player will be Gilbert Arenas.

 

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