Salary Cap 101 Now in Sessions

As we've discussed many times, the NBA Collective Bargaining Agreement, specifically the rules pertaining to the Salary Cap, is very complex.  I spend a lot of time reading and thinking about it, but there's still much I don't understand.

Ramon Sessions is the Final Exam on the Certified Capologist's home study course.  If you were interviewing for a job as a GM, the interviewer could do worse than to say "Tell me everything you can about Ramon Sessions' situation." 

If you're really interested in this subject, you might review this post from a couple months ago regarding the confusion about Steve Novak as a restricted free agent.

Like Novak, Sessions was a second round pick, which is one of the reasons he does not fit into the model we are used to seeing.  But unlike Novak, Sessions has only been in the league for two seasons.  As such, he is what is commonly referred to as an 'Early Bird' free agent.  The Bucks do not hold his full 'Bird' rights, a status reserved for players who have been in the league three years or longer.

He is also one of the first players to fall under what is commonly known as the Gilbert Arenas provision. 

He is also going to be a Base Year Compensation player, assuming he gets the pay day he's looking for.

In short, if there's a salary cap complexity, Ramon Sessions has got it.  (OK, that's not really true - he's not over 36.)

Let's take these one at a time.  I'm not going to go into too much detail, but rather just try to cover the issues as they relate to Sessions, and potentially to the Clippers pursuit of Sessions.  If you want more details, read the FAQ.

Early Bird - Teams have certain rights to go above the salary cap to re-sign their own free agents.  A player who has been on his contract without being waived in the last three years can be paid any amount up to the maximum by the team that holds his 'Bird' rights.  The 'Early Bird' provision is similar, but applies to players like Sessions who have been with their team for two years.  The Bucks can pay him up to the average player salary (or 175% of his prior salary).  The average player salary is the same thing as the Mid Level Exception. But since the Bucks are over the salary cap, they cannot re-sign him for more than the average player salary.

Gilbert Arenas Rule - When Arenas left the Warriors for the Wizards a few years back, he was a second round draft pick entering his his third season in the NBA, just like Sessions.  The Bird and Early Bird provisions were put in place to help ensure that teams who WANTED to keep their stars could do so, regardless of the salary cap.  But because Arenas was an Early Bird FA, the Warriors were limited in what they could pay him.  The Wizards were under the cap, and could offer whatever they wanted.  They made an offer that the Warriors literally were not allowed to match, even though Arenas was ostensibly a restricted free agent.  In the wake of the Arenas situation, a provision was added to the CBA stipulating that a player with fewer than three years in the league can NOT be offered more than the MLE.  This is to ensure that the original team can indeed retain the player, using either the Early Bird Exception or the Mid Level Exception. 

Base Year Compensation - To keep teams from shenanigans in which they sign a player for much more than he's worth in order to include him in a trade solely for salary matching purposes, the CBA includes what it calls Base Year Compensation provisions.  This is super-duper complex, moreso than either of the earlier items, but in short, if a player gets a BIG raise (Devin Harris is one recent example, Sessions will certainly fall into this category), his salary for trade purposes is NOT his actual salary, but rather something less (usually 50% of his new salary).  This one is particularly nasty because the trade has to work in both directions (sending and receiving team) but the salary is different for the BYC player in each case.  This is why it is so difficult to trade BYC players, and usually such trades involve a lot of players and maybe even a third team (under the cap) to facilitate.

So how does all of this relate to Sessions?  Well, he's got the full complement of these complications.  He's an Early Bird free agent, governed by the Arenas provision and will be a BYC player on his new contract.

So first things first - I could be wrong, but I cannot think of any way that any team can pay him more than the MLE (which is, remember, the same as the average player salary).  Any team like the Clippers or the Knicks or the Thunder wanting to sign him is limited to a maximum starting salary of the MLE by the Arenas provision.  As for a sign-and-trade, the Bucks are over the cap and can't sign him for more than the average because he's an Early Bird FA, not a Bird FA.  So his maximum salary next season, no matter how you slice this, is the MLE.  If I'm missing something here, let me know in the comments, but I'm not seeing it.  Having said that, one strategy that Sessions may or may not be considering would be to sign for the Qualifying Offer now, in hopes of a much bigger payday next season when these restrictions are lifted.  But that would be a pretty big gamble.

Second, I myself implied yesterday, and Eric Pincus and others have done the same today, that the Clippers could use their $7.4M trade exception to offer him more.  I don't think that's true - simply because, as I pointed out above, no one, not even the Bucks, can actually pay him more than the MLE.  So even using the $7.4M trade exception in a S&T would do nothing in terms of making a bigger offer to Sessions.  This is significant because it takes money off the table as a lure.  If New York is willing to go up to the MLE, and Sessions wants to play for D'Antoni more than MDsr (I'm just saying), then he'll head to the Knicks.  For almost any other FA on the market, the Clippers trade exception would be a major bargaining chip, allowing them to help both the player (with more money) and the team (with the exception itself) and coax them into a S&T instead of just signing elsewhere.  But since they can't pay Sessions more by rule, there's no incentive for him to play the S&T game.

Third, the suggestion that OKC might be the dark horse in this because they're under the cap is just not true.  They can't pay him more, despite being under the cap.  (OK, they actually can.  Read the FAQ - they can structure a deal where there's a HUGE increase in the third year and get him more money over the course of the deal.  But now we're getting into truly crazy stuff.  As far as I know, no one has ever signed one of these 'big raise in the third year Arenas' contracts.)

The Clippers do have a slight advantage in the Sessions sweepstakes (if you want to call it that) as regards any potential S&T.  They can't pay him more - but the trade exception is much easier to match to a BYC player than actual outgoing players.  In short, trying to trade a BYC guy for an actual player is almost impossible - he'll be $5.8M coming in, but only $2.9M going out - the math just doesn't work without lots of other bodies involved.  On the other hand, the trade exception works fine to acquire a BYC player.  The Clippers could also 'sweeten' the pot some for Milwaukee by offering to take another unwanted contract off their hands.  BUT, whereas that might get the Bucks' attention, it does little to convince Sessions to come to LA.

In conclusion, this is a very complex situation.  But if NY is serious about extending the MLE to Sessions, I think that the Clippers are out of the running.  Sessions has a chance to start in New York in an uptempo offense, as opposed to playing behind Baron Davis for the Clippers.  Which would you rather do?