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ANALYSIS: Brooklyn Nets Salary Cap 101

In his day job, ProfessorB is an award-winning social scientist. His writing has appeared in the New York Times, Washington Post, and other major media outlets. But he also dabbles in NetsWorld and this is the latest of his analysis.

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Brooklyn Nets v Minnesota Timberwolves Photo by David Sherman/NBAE via Getty Images

The Nets are in a state of flux following the sudden departures of Kevin Durant and Kyrie Irving at the trade deadline. The rest of this season will be devoted to assessing talent and beginning the arduous process of building a new identity. Fans are already speculating about what additional moves this summer will bring; but assessing those possibilities requires at least a rudimentary grasp of the complex NBA rules regarding team salaries.

The Nets currently have $145.6 million committed to 11 players for next season. That’s almost $12 million over the projected $134 million salary cap and about $16 million below the projected $162 million luxury tax threshold. (The projected figures may be adjusted slightly once the book-keeping on this season’s league revenue is complete.) Being over the cap entails significant restrictions on adding new players. But, practically speaking, the Nets are even further over the cap than the $145.6 million figure suggests. That tally doesn’t count Cam Johnson, a restricted free agent. Until the Nets sign him or renounce his rights, a $17.7 million “cap hold” will stay on the books, effectively putting them about $30 million over the cap and a bit over the tax threshold.

Restricted free agency gives the Nets the right to match any offer for Johnson’s services. He was a significant piece in the Kevin Durant trade, and it is very unlikely that they will just let him walk away. Even if another team gives him a crazy offer, they will probably match it and hope to trade him later for 80 cents on the dollar if necessary. Since his likely price is north of $20 million per year, the Nets figure to be a taxpaying team again next season, though on a smaller scale than they were in the superstar era, paying out around $100 million annually.

Assuming Johnson stays, what else happens? A trade or two seems likely, given the somewhat miscellaneous roster resulting from the deadline deals that shipped out Irving and Durant. With a wealth of defensive-minded wing players, two possible trade chips are Dorian Finney-Smith and Royce O’Neale, both 29-year-olds with attractive contracts. (Finney-Smith has two more years at an average salary of $14.4 million per year, followed by a player option year at $15.4 million. O’Neale has a $9.5 million expiring contract with just $2.5 million guaranteed.) Depending on the return, the Nets might also consider parting with Cam Thomas, a brilliant young scorer whose defensive deficiencies have continued to limit his playing time.

Some fans are eager to cut salary by trading Ben Simmons and/or Joe Harris, two players with big contracts whose performance has been hampered by injuries. But neither is likely to have significant trade value this summer.

Potential trade partners will want to dump their own low-value contracts in exchange and/or demand assets—valuable players or picks—to take Simmons or Harris off the Nets’ hands. What would be the point? Owner Joe Tsai would save some money, but the team would be worse, not better.

Even dumping both Simmons and Harris with no salary at all coming back—a feat that would probably cost a substantial fraction of the Nets’ accumulated draft picks—would not clear sufficient cap space to pursue a maximum-salary free agent. Barring an abrupt shift to radical cost-cutting, there is no hurry to move Simmons or Harris before summer 2024, when a bevy of expiring contracts (Spencer Dinwiddie, Harris, O’Neale, Nic Claxton, Patty Mills) will provide additional flexibility for big moves.

In the meantime, the Nets’ best tool for adding more talent will be the $18.1 million traded player exception (TPE) generated by trading Durant. But the trade exception is not an asset in its own right; it is merely a license to add salary over the cap. The Nets would still have to offer enough assets to make another team want to give up an attractive player. They could draw on their stash of draft picks for that. They could also include Thomas, a valuable young player whose salary would otherwise be too low to get back a capable veteran in trade. What they cannot do is combine the trade exception with a player (or players) to acquire a more expensive player.

Using Thomas ($2.2 million) plus the trade exception—or even Claxton ($8.8 million) plus the trade exception—they could get a better $18 million player, but they still could not get a $19 million player. (An $18 million player acquired using the trade exception could be packaged with other players or picks in a subsequent trade for a more expensive player, but not for two months.)

What about marquee free agents? Very unlikely. Being over the salary cap, the Nets cannot simply offer, say, Kristaps Porzingis a big contract. Even a sign-and-trade deal is unlikely, since that would “hard cap” the Nets, requiring them to keep their team salary below the $169 million “apron” for the rest of the season. That is less impossible now than it was with two superstars on the roster, but still a constraint that GM Sean Marks is likely to shy away from. (And no, trade exceptions cannot be used to sign free agents, only for trades.)

Regardless of what else happens, the Nets will be able to add another rotation player for up to three years using the $7 million taxpayers’ mid-level exception (MLE). At one point this season, fans were wringing their hands about the dilemma of having to choose between T.J. Warren and Yuta Watanabe for that slot. Now Warren is gone, Watanabe has been playing little, and other needs are looming. So how the MLE will be used is anyone’s guess. Another big? A back-up point guard?

The Nets never did use this year’s MLE, perhaps due to uncertainty on all sides stemming from Durant’s bombshell summer trade demand. As with the TPE, the team’s willingness to use next year’s MLE will be an interesting test of the strength of their commitment to remaining competitive. If they re-sign Johnson and fully employ both the TPE and the MLE, their team salary could reach $195 million. That would be a lot to pay for a team still without a superstar, especially because their lavish spending in the “Clean Sweep” era will subject them to an additional “repeater tax” on salary over the $162 million threshold.

On the other hand, they could re-sign Johnson, leave the TPE and MLE untouched, and make some small cost-cutting moves by the end of next season to get under the threshold, thus paying no tax at all and entering the summer of 2024 with cap space.

With Marks “expected back” as GM, there is no reason to doubt that he and Tsai are on the same page regarding long-term strategy. What the rest of us in NetsWorld don’t yet know is whether that strategy involves a full-court spending press in 2023-24 or something more like a holding pattern, preserving significant assets but postponing significant improvements.