How do buyouts work? OR Can we buy out Kenny Thomas?

[Packt]

If we are going to pay KT, we should at least retain the rights to trade him. You open up a roster space, but there are other, cheaper ways to accomplish that if that was the intention. Ben Wallace didn't do nothing for the team that found him. KT as an expiring can realistically net you something, if not, there is nothing lost. You're paying him either way. He might not get you a Pau Gasol, but you can get bench players to round out your roster. Maybe even an undrafted pick-up will get thrown in to make the numbers work.

 

[fnordius]

And example of a few players that will be available then. Joe Johnson, Marvin Williams, the infamous Linas Kleiza, Jermaine O'Neal, Steve Nash, Chris Paul, are old friend Turkoglu, Emanuel Ginobili, Deron Williams ( you can't have too many players named Williams on your roster. I like to confuse the anouncers ), Carlos Boozer, Mike Miller, and if there's anything left in the tank and for intertainment sake, Shaq O'Neal...

Yes, I am familiar with the list, but the average age of the guys you mention (in 2010) is going to be 29. JO, Shaq, Nash? We might as well bring The Big O out of retirement. Chris Paul, sure. Deron Williams, sure. But my wish list ends there, and I doubt there's much chance that either one will actually come onto the market. Their GMs would have to be insane to not do everything in their power to sign them to extensions, and they will very likely succeed.

I guess there's the real hard down side of keeping Kenny... what if we DID use him to get some creaky vet like JO, who then took over SAR's towel waving spot? *shudder*

Hopefully it will all work out for the best, whichever way we go with it.

 

[bajaden]

Yes, I am familiar with the list, but the average age of the guys you mention (in 2010) is going to be 29. JO, Shaq, Nash? We might as well bring The Big O out of retirement. Chris Paul, sure. Deron Williams, sure. But my wish list ends there, and I doubt there's much chance that either one will actually come onto the market. Their GMs would have to be insane to not do everything in their power to sign them to extensions, and they will very likely succeed.

I guess there's the real hard down side of keeping Kenny... what if we DID use him to get some creaky vet like JO, who then took over SAR's towel waving spot? *shudder*

Hopefully it will all work out for the best, whichever way we go with it.

Well your right about one thing. We'll never get our moneys worth out of KT. I just threw in Nash and both the O'Neals to have a few, at least once superstars there. But guys like Varejao, Joe Johnson, Marvin Williams, or David Lee might be the final peices at that time to move us into the next level of competition. Don't rule out the possibility of a Deron Williams or a Chris Paul. You never know how the future is going to change things. I wouldn't hold my breath though. Lets wait and see where we are then. Actually, I guess we don't have a choice, do we?

 

[ParniValjak]

Well... Baron Davis was a kind of unusual case, in that he and Jamal Mashburn had had a showdown with their new coach, Byron Scott.* NO had just fired two coaches in two years, and Scott had both an excellent prior coaching record and a three year contract, so management felt they had no choice but to blow up the team. Davis had been out injured for months as it was, so his trade stock was very low for a player of his potential, so they let him go for Speedy Claxton and a bag of stale chips (Dale Davis) rather than try to survive the $60M worth of contract he had left.

I don't know what in the world possessed GS to take a chance on the guy, considering GS's rich tradition of player-coach fireworks, but it has obviously worked out great for them. Didn't work out so well for the poor suckers who took Mashburn (who never played again).

Anyway, I don't know that we can count on a fire sale of a young star who is misperceived to be damaged goods. They don't happen very often, and, we could end up being the team to get Mashburn instead of Davis.
----
*Just for the record, I have no opinion on whose fault the mess in NO was.

Look, all fair points but just this year, Lakers were able to get a much needed player in Gasol for a bunch of expirings, a young player and draft picks. If Lakers didn't have Kwame's big expiring deal to dangle out there, I very much doubt they would have Gasol now.

The point I am trying to make is that buying out anyone doesn't really achieve anything in terms fo flexibility. Sure you free up a roster spot for some undrafted kid that in reality is much more likely to fail than to make it. On the other hand you have 3 rather largish contracts coming off the books at the same time in Miller, SAR and KT. Thats some $30 million coming off your pay role at once. Those contracts are a MASSIVE trading chip to have when the 2010 deadline comes around because you never know what teams might do by then. They might well be dangling their franchise player to start over again. NO did it with Baron, Memphis did it with Gasol and it just might be the sort of player that will round off the team nicely.

Now, there is also the possibility that the contracts are just let to expire and you have $30 odd million coming off your payroll. Thats also good because you NEVER know what might happen by 2010. Maybe Williams and Paul get into a slanging match with Sloan and Scott respectivly and they might want out. Or maybe a LeBron James says, nah stuff it, I have had enough of this incompetency and I want out. I personally would rather have those contracts up my sleeve at that stage rather than not have them.

We would have to pay the players out regardless, one way or another. I would much rather take a risk and have those contracts on the books for the duration than take a shot at an undrafted kid that is a minimal chance of making it.

Big expiring contracts are a GREAT trading chip to have. In fact I wouldn't be surprised if Knicks use Marbury's $19 odd million expiring contract over the summer to get themselves a great player. Now if we could manage to do a sign and trade with the Knucks for Artest and one of our bad contracts for Marbury's expiring and a pick we would be laughing.

Point is, we would have a LOT more flexibility with those big expiring deals than we would without them and as such I think we should keep them rather than buy them out!

 

[fnordius]

The point I am trying to make is that buying out anyone doesn't really achieve anything in terms fo flexibility. Sure you free up a roster spot for some undrafted kid that in reality is much more likely to fail than to make it.

Very true. We are also likely to be let down with what we can ever get in a trade for Kenny. A buyout eliminates both the worst and best likely outcomes, and settles for a result which is likely to be so-so. Hanging on to him could net us anything from a young star (extremely difficult) to the next aging albatross (very easy), and whatever we'd get, we'd have paid $16M for.

Since management has told KT that he's not a part of the team's future, and permabenched him, it's clear that the plan is to get him off the team, either by persuading him to opt out this summer, or with a reasonably priced buyout. You don't have to like that, but there isn't much point in debating me on the subject. It's their $16M, and they don't seem to think that KT's value as an ender is worth it.

Are you going to be let down if KT opts out?

 

[ParniValjak]

Very true. We are also likely to be let down with what we can ever get in a trade for Kenny. A buyout eliminates both the worst and best likely outcomes, and settles for a result which is likely to be so-so. Hanging on to him could net us anything from a young star (extremely difficult) to the next aging albatross (very easy), and whatever we'd get, we'd have paid $16M for.

Since management has told KT that he's not a part of the team's future, and permabenched him, it's clear that the plan is to get him off the team, either by persuading him to opt out this summer, or with a reasonably priced buyout. You don't have to like that, but there isn't much point in debating me on the subject. It's their $16M, and they don't seem to think that KT's value as an ender is worth it.

Are you going to be let down if KT opts out?

No, not at all. I would be STOKED if KT opts out but lets be honest here, what are the chances of that happening?! I would say there is more chance of me winning the lotto without purchasing the ticket than there is of KT walking away from $16 million over the next couple of years.

 

[Section 101]

No, not at all. I would be STOKED if KT opts out but lets be honest here, what are the chances of that happening?! I would say there is more chance of me winning the lotto without purchasing the ticket than there is of KT walking away from $16 million over the next couple of years.

Here's the question KT needs to ask himself. Does he think/want his career to be over?

He's 30 years old turning 31 this off season. If he rots on the bench for the next 2 years he will be 33 going into free agency and not playing for basically 4 years. He may get a few offers for the vet minimum and even if he makes a comeback nobody will be giving him much more due to his age of 35.

If he opts out this year and takes a 1 year deal from a team that he can get playing time, he might be able to work out 3 year deal for for say 3-4 million if he proves he can still play. Yes he will be taking a loss money wise, but if he really wants to play again this looks like the only way.

 

[kingsfan101]

Are you going to be let down if KT opts out?

Big difference between buying him out and him opting out. Buying him out shall not give us any cap relief, and shall save a couple of million at best. If he opts out, that is a huge saving, and potential for significant cap space.

 

[fnordius]

No, not at all. I would be STOKED if KT opts out but lets be honest here, what are the chances of that happening?

Big difference between buying him out and him opting out. Buying him out shall not give us any cap relief, and shall save a couple of million at best. If he opts out, that is a huge saving, and potential for significant cap space.

I was just making sure that everyone was in agreement that it would be great if he opted out, since opting out is, for all intents and purposes, identical to accepting a $0 buyout.

I don't think there's any real chance that he will just opt out, not when the possibility of a buyout is so obvious. But I do think that a cheap buyout could happen, and there's no harm in the FO trying for one. It's hard to see how anyone could possibly object to a 1% buyout, or could possibly like a 99% buyout. So all we're really discussing here is whether KT is likely to accept a buyout for a figure which we consider acceptable.

And maybe he will. Everybody's got a point at which they conclude that freedom to do whatever they like is more valuable than some extra money. He's already made around $30M off the NBA, so he shouldn't really be hurting. The Maloofs could easily set him up with something like a trust fund that would pay out $100,000 a year (adjusted for inflation) for himself and his heir(s), in perpetuity, and it would only cost them a few million to do that. (They say that 60% of NBA players are broke 5 years after they retire... I bet Sprewell wishes he had made a deal like that!) $3M = 15%. There are lots of ways they could package a buyout to make it enticing, if Kenny is feeling any inclination to get on with his life.

We won't have any answers until this summer, but no harm can come of the FO's waiting and seeing. It's not as if we could have traded him this season, or could have benefitted from playing him. Benching him and waiting to see what he will take is a no-risk option, and, who knows? It could work.

 

[NewMonkey]

Well, in our case, a buyout might be a very positive thing, even if it's NOT going to solve any of our major problems.

If, say, Kenny were willing to take 75% in a buyout, we'd start off next year by saving $2.14M. Young bench players of the Beno-Justin-Dahntay sort cost around $600K-$1M a year. Since KT's contribution to the team is nothing, if you can find a bench player who is better than nothing, you're still getting a better team, potential for development and improvement, and may well save money at the same time.

But it's not the sort of thing that's going to turn the team around.

The thing is, expiring contracts are really valuable. The Lakers got Pau Gasol for a couple draft picks and an expiring contact. The Hawks got Mike Bibby for Shelden Williams and a bunch of expiring contracts. When you buy someone out, you lose the chance to trade that expiring contract.

 

[Warhawk]

The thing is, expiring contracts are really valuable. The Lakers got Pau Gasol for a couple draft picks and an expiring contact. The Hawks got Mike Bibby for Shelden Williams and a bunch of expiring contracts. When you buy someone out, you lose the chance to trade that expiring contract.

Yep. But I would probably put "can be" instead of "are" in there. Not necessarily the absolute you are implying, but often are.

 

[fnordius]

The thing is, expiring contracts are really valuable... When you buy someone out, you lose the chance to trade that expiring contract.

Right. Roster slots are also valuable, and I don't think it will come as news to anyone that money is also valuable. It's all an optimization problem, and since we don't know what Kenny would accept as a buyout, what FA we might be able to replace him with, or what we could get for him as an expiring, we can't do any more than to make wild guesses about which would work out best.

 

[Glenn]

I suspect KT would want 100% of what he is owed. At his age and with the surety that he can't do anything else but play basketball, I'll bet he'll hang tough and if it means sitting out a few years to get maximum money, he'll do it. After that period, he may pick up a few veteran minimum contracts but as of right now, he is making the money that will need to last him the rest of his life.

 

[KCKingsCountry]

Right. Roster slots are also valuable, and I don't think it will come as news to anyone that money is also valuable. It's all an optimization problem, and since we don't know what Kenny would accept as a buyout, what FA we might be able to replace him with, or what we could get for him as an expiring, we can't do any more than to make wild guesses about which would work out best.

Rosters slots arent really that valuable unless injuries come into play, you put KT, SAR in the 14-15 slot on the roster isnt really going to matter much. You get alot of youth in the other spots and keep those old big contract players buried on the bench till you need to make the trade.

 

[fnordius]

Rosters slots arent really that valuable unless injuries come into play

Here's another use for them: if you're going to rebuild, and need to trade a vet for expirings, they allow you to accept the incoming worthless oldsters without having to waive useful players and damage the rebuild before it can even begin. It hurt us this year, and it could hurt us again next year. We'll have 3 old guys departing, and 3 new draft picks coming in. If we do a similar trade in the next year, and I think it very likely that we will, if we have Kenny and SAR still on the roster, those second round picks are pretty sure to be the ones to go. So... is keeping the roster spot tied up with garbage worth a couple of second round picks to you, in addition to Justin and Dahntay?

 

[VF21]

Geoff Petrie is usually very stingy with his roster slots, preferring to carry less than the maximum at all times. I strongly suspect he'll be working hard to restore that kind of balance before next season. With AJ, Lue and Wright all coming off the books, he's gonna have a little more wiggle room.

 

[fnordius]

Three outgoing oldsters is it, though, unless he doesn't re-sign Beno, since he's our only other expiring. It seems quite clear that we should, and will, try to keep Beno if he comes at a fair price, so what then? He could try something like trading the second round picks for one higher up pick, but he's never traded up in the draft before, and that still leaves only one free spot. Hard to see a lot of options in this situation... which I suspect is exactly why we're forcing the issue with Kenny.

 

[venom_7]

Maybe the team could persuade Kenny to excercise his ETO. Petrie could mindgame him into delusions of grandeur. He could convince him the Cleveland wants to sign him for 14 mil a year.

 

[kingsfan101]

I was just making sure that everyone was in agreement that it would be great if he opted out, since opting out is, for all intents and purposes, identical to accepting a $0 buyout.

This is an interesting point, and I think I understand the point you are making. I have argued for not buying out Kenny to use his expiring contract down the road for a trade. At the same time, I felt that his opting out shall be good, though, it denies us the option of using his expiring, without creating any space. So, yes, viewed in that aspect alone, Kenny's opting out doesn't help the team.

Decided to take this opportunity to speculate on our 2010 summer. Probably a futile exercise, since so many things can, and almost certainly shall change. However, hoping that the responses shall help me also understand the team's position at that time. Apologies also for being unable to respond for so many days. This post however, required some time committment that I was not able to give for several days.

Warning: Long post alert

Let's begin by considering the scenario that we don't trade Kenny or any of our expiring contracts in their final year, but let them all lapse. For the purpose of this discussion, I shall also assume
1. That we resign/extend all our young FAs and draft picks.
2. Don't make any trades/use MLE, that shall add salary for summer of 2010, and/or land/reduce draft picks.
3. Our draft picks shall be in the Hawes range, ie. around 10th.

If so, in the summer of 2010, we shall have the following players on the roster
Salmons: In the final year of his contract @5.8M
Martin: In the 3rd year of his contract @11M.
Cisco: In the 2nd year of his contract @5M.
Douby: In the 1st year of his contract @3M.
Beno: In the 3rd year of his contract @4.5M.
Hawes: In the final year of his rookie contract @3M
Sheldon: In the 1st year of his contract @6M
3 First round draft picks: Total about 7M
4 second round draft picks: Total: About 1.5M

With the above, we shall have 14 players and a total payroll of about 47M.

Assuming salary cap at approx 60M, we shall have just about 13M, which is not good enough to sign a superstar (assuming one is available and ready to come to us). So, unless the above numbers are way off, or we do some other magic (let go of some of the young guys who are not performing too well, trade some guys to create additional space), we won't have enough space to make a big splash.

Now, I don't pretend to be a GM, even a bad one. So, if any of the above figures seem ridiculous, please feel free to correct me.

We could of course not use the money to sign a FA, and use the cap space to facilitate some trades, take on short term contracts from a team above the tax to get some picks in the process (like the Sonics, who got 3 picks for picking KT for a few months). However, where we are at that time, shall likely dictate this decision.

An interesting aspect shall be the state of the Western conference that year. Of the 10 teams currently above us, I see Lakers and Blazers becoming stronger. Hornets too shall be good with 3 young stars in Paul, West and Chandler, as will Jazz. Among other teams, Wolves might be good if Al continues to build on his recent play, and Mchale is fired as a GM. Sonics are tough to tell. They have a very large number of draft picks over the next few years, and a potential superstar in Durant. However, their rebuilding might take time, and with a potential move from Seattle, they might remain unsettled for a while.

With a lot of other teams though, Father Time may catch up. So, I wouldn't be too surprised, if Spurs, Mavs, Suns, Rockets, Nuggets and Warriors all start slipping around the same time, opening the door for us a little. This might put a lot of pressure on the owners and the front office (or on the front office by the owners) to make a playoff push, particularly if our post-season drought extends to 4 years by then.

Now, Kenny opting out, doesn't change this scenario in 2010. Prior to that too, it doesn't help in wins/losses, except make the Maloofs happy. Question is, can we trade his expiring (along with our other expirings that year) along with prospects/draft picks to land a superstar.

Finally, one thing we can and should do next year is to front load the contract of Beno/any other PG we sign, like the Bulls did for some of their players. We should still be able to stay below the tax. This shall allow us a little additional space in 2010, and also make it little easier to trade Beno if needed