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

[bloom]

Just a random question. Does anybody think that the Kings will buy out Kenny or SAR’s contract? I seriously wonder because it really seems that nobody wants to take on Kenny’s contract (even though he’s not that bad of a player but not worth that much money) and then we have Shareef, who unless he can run like speedy Gonzales when he comes back, I don’t we’re going to use him or be able to trade the guy.

I'm not sure how the contract buying works. Do you buy the player out and pay them all in one year? How long does it count against the salary cap?

 

[kennadog]

Just a random question. Does anybody think that the Kings will buy out Kenny or SAR’s contract? I seriously wonder because it really seems that nobody wants to take on Kenny’s contract (even though he’s not that bad of a player but not worth that much money) and then we have Shareef, who unless he can run like speedy Gonzales when he comes back, I don’t we’re going to use him or be able to trade the guy.

I'm not sure how the contract buying works. Do you buy the player out and pay them all in one year? How long does it count against the salary cap?

Whatever you buy them out for is spread out over the remaining years of the contract (even if he's paid in a lump sum) and counts against the salary cap. And you can't trade the guy anymore. See #60

http://members.cox.net/lmcoon/salarycap.htm

 

[fnordius]

I'm not sure how the contract buying works. Do you buy the player out and pay them all in one year? How long does it count against the salary cap?

I believe the way it works is about like this:
Let's say we offer Kenny 75% of his pay as a buyout, and he accepts. He gets crossed off the roster, but continues to receive his checks just like always, but with 25% knocked off. This continues until the end of his contract. (He may actually get a big lump sum, or get small payments for the rest of his life, but the NBA treats it as I just described, regardless.)

One snag is that if you keep a player past January 10th, you almost always have to pay them 100% for that year. The only exception is when a player is in the last few months of their contract and asks to have their salary protection eliminated. I think that has happened exactly once, so, if we do manage to buy KT out, there wouldn't be any savings until next year, and then it would probably only be a couple million a year. But the roster space would be freed up!

 

[bloom]

Thanks for the info kennadog and fnordius.

 

[SacKings4Life21]

So really buying out a contract is not that useful? I always thought that it should be:

If a player has 40 mil left on his contract over 3 years and you agree to buy him out for 35 mil, it is erased and its like you paid the guy and he is free to go. like the years are gone, and he is gone the next season from the salary cap books. But then I always wondered why Dallas is still paying Micheal Finely? Then when I realized the afroementioned way it works, why the heck do people buy out big name guys anyway if you dont save salary cap? Is it lux tax savings?

 

[kennadog]

So really buying out a contract is not that useful? I always thought that it should be:

If a player has 40 mil left on his contract over 3 years and you agree to buy him out for 35 mil, it is erased and its like you paid the guy and he is free to go. like the years are gone, and he is gone the next season from the salary cap books. But then I always wondered why Dallas is still paying Micheal Finely? Then when I realized the afroementioned way it works, why the heck do people buy out big name guys anyway if you dont save salary cap? Is it lux tax savings?

Well, in your scenario you've saved $5 million. That would be the primary reason and it might get you under the luxury tax limit, depending on your payroll. I'm assuming that a roster spot would also be opened up?

 

[Glenn]

So really buying out a contract is not that useful? I always thought that it should be:

If a player has 40 mil left on his contract over 3 years and you agree to buy him out for 35 mil, it is erased and its like you paid the guy and he is free to go. like the years are gone, and he is gone the next season from the salary cap books. But then I always wondered why Dallas is still paying Micheal Finely? Then when I realized the afroementioned way it works, why the heck do people buy out big name guys anyway if you dont save salary cap? Is it lux tax savings?

You really should read have followed kennadog's advice. Here's the specific paragraph http://members.cox.net/lmcoon/salarycap.htm#59

There is only one sure benefit and another potential benefit.

The sure benefit is that it allows us to spend even more money and fill that person's slot on the team. The more theoretical advantage is that money can be saved but the player is not obligated to take less than his salary says he should get.

Nothing is erased from the salary cap books unless the player agrees to less than what he is owed. You do not save luxury tax.

 

[Glenn]

Well, in your scenario you've saved $5 million. That would be the primary reason and it might get you under the luxury tax limit, depending on your payroll. I'm assuming that a roster spot would also be opened up?

Here's what makes even this seem less attractive. The $5 mil is paid off over 3 years or roughly $1.7 per year. Let us say we fill that roster spot with a guy and pay him $1 mil per year. That means the buy out has saved $700,000 per year for three years unless the new guy gets raises at which point in the last two years the savings is less.

Buy outs do not magically solve many problems unless the guy is a pain in the rear and then it saves disruption on the team.

 

[fnordius]

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.

 

[MassachusettsKingsFan]

if we bought kt out for say 75% of what he is getting payed.. could we trade that salary? im guessing no ..

 

[kennadog]

if we bought kt out for say 75% of what he is getting payed.. could we trade that salary? im guessing no ..

You'd be right.

 

[kennadog]

Here's what makes even this seem less attractive. The $5 mil is paid off over 3 years or roughly $1.7 per year. Let us say we fill that roster spot with a guy and pay him $1 mil per year. That means the buy out has saved $700,000 per year for three years unless the new guy gets raises at which point in the last two years the savings is less.

Buy outs do not magically solve many problems unless the guy is a pain in the rear and then it saves disruption on the team.

Actually I did think of that when I was thinking it might open a roster spot.

I suppose KT could want a buyout to be able to sign elsewhere, where he might play. But a can't see him accepting much less than his full contract. I'm sure 75% is a pipe dream.

 

[kingsfan101]

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.

Yes, but we lose any chance of trading his expiring contract two years from now. I know it seems a long time away, but between KT, Reef and Miki (if we pick his option for 3rd year), we shall have the potential to offer a huge amount of space to a team looking to unload its star. This does not even include Brad, who might have more value than just an expiring.

While I appreciate your points, I don't see lot of gain by buying out KT. It's unlikely he shall take a huge pay cut (why should he. It's not like other teams are lining up to sign him up for the difference). The buyout won't earn us any cap space. Yes, it shall free up a spot, and might motivate the owners to spend some of the savings on a young prospect. Despite this, the prospect of being able to trade his expiring for something valuable seems more enticing.

As for him impacting chemistry, I am not so sure. It was a problem earlier, but I haven't heard anything from him lately. While he might not be most demonstrative or cheerful, think he has accepted his position with the team, and is not making remonstrations any more (at least not publicly).

 

[Glenn]

kennadog,

Do you think a waiver is reasonable? Doesn't that give us a chance of coming out better and also offering KT a future somewhere else? I need to think about this waiver idea a little more but was hoping you could do some thinking for me.

I get a headache trying to sort this out.

In the end, keeping him and hoping he can be traded as an ender the year after next or even simply waiting it out might be best. I DON'T KNOW!

 

[SLAB]

Thats why Im so against buying out Kenny Thomas.


The guy is worthless with a huge salary, however in 3 years, the guys going to be a valuable trading chip...So knows, maybe by then we will actually be good, and K9s expiring will bring us in an important piece of the puzzle.

 

[KCKingsCountry]

No we should NOT buy out SAR or KT. Keep them around, buried on the depth chart and they can get us a superstar via trade bc of those big deals.

 

[fnordius]

Yes, but we lose any chance of trading his expiring contract two years from now.

While I agree that there would be only slight benefit to buying him out, I don't think he is of much use to us as ending trade bait. The teams that want enders usually do so because they have vets whose contracts are not good for the team. Not necessarily horrible contracts, but... let's say someone like Bibby, declining but useful vets are the most common target for such trades. Two years from now, acquiring a Bibby should be about the last thing on our minds. So with the exception of very rare giveaways, like Memphis just did, I don't know what we could get for him that we might want. I am not going to count on some team doing an enormous giveaway of a young star player right at the moment when we happen to be able to exploit it.

But maybe I'm overlooking something... what do you see us doing with his contract?

 

[kennadog]

kennadog,

Do you think a waiver is reasonable? Doesn't that give us a chance of coming out better and also offering KT a future somewhere else? I need to think about this waiver idea a little more but was hoping you could do some thinking for me.

I get a headache trying to sort this out.

In the end, keeping him and hoping he can be traded as an ender the year after next or even simply waiting it out might be best. I DON'T KNOW!

You'd rather that I get the headache? Maybe I'll check it out tonight or tomorrow.

 

[Glenn]

You'd rather that I get the headache? Maybe I'll check it out tonight or tomorrow.

Well, I looked and I must be missing something. Probably what I am missing is that no one wants him even for a $1 million per year. Or I am misunderstanding the waiver rule.

I know no one would pick him up on waivers. It's what happens once he clears waivers is where it either gets interesting or I am confused. Maybe there are too many years involved but I saw no years limitation.

After he clears waivers, any team can pick him up for whatever they negotiate with Thomas. We pay the difference in salaries. Maybe they need cap space but a veteran can be picked up using the veteran exception so cap space shouldn't be the issue.

If they don't replace his roster spot, that could save enough to be worth it.

Maybe I shouldn't babble out loud.

 

[kingsfan101]

While I agree that there would be only slight benefit to buying him out, I don't think he is of much use to us as ending trade bait. The teams that want enders usually do so because they have vets whose contracts are not good for the team. Not necessarily horrible contracts, but... let's say someone like Bibby, declining but useful vets are the most common target for such trades. Two years from now, acquiring a Bibby should be about the last thing on our minds. So with the exception of very rare giveaways, like Memphis just did, I don't know what we could get for him that we might want. I am not going to count on some team doing an enormous giveaway of a young star player right at the moment when we happen to be able to exploit it.

But maybe I'm overlooking something... what do you see us doing with his contract?

Doesn't have to be a young player. Depending on where we are at that point, a vet might do just fine.

Suppose, in the 2009-2010, we are a major piece away from contending (unlikely, but hey, it's hypothetical). A vet like Shawn Marion or say Elton Brand shall certainly help. Of course, if the guys is young, it is more welcome. Depending on the player, and the team/GM we are dealing with, the price shall vary, but most teams shall look for cap relief, prospects and picks. With additional expirings, we might be able to offset some of the latter (e.g. by taking on some of their bad contracts).

Any year, there are some guys who are unhappy and want to be traded. At times, they can force the hand of their management, by quitting on the team, and expirings are always a central part of any such trade.

Plus, there are some good young guys sitting on teams with bad management (Al Jefferson, even Loul Deng). It's quite possible that some of them might desire a change of address, and we might be able to help

I don't know what will happen with his contract. The potential of a big payday by trading it, against the marginal returns of buying him out is what makes me lean towards the former.

 

[Glenn]

Doesn't have to be a young player. Depending on where we are at that point, a vet might do just fine.

Suppose, in the 2009-2010, we are a major piece away from contending (unlikely, but hey, it's hypothetical). A vet like Shawn Marion or say Elton Brand shall certainly help. Of course, if the guys is young, it is more welcome. Depending on the player, and the team/GM we are dealing with, the price shall vary, but most teams shall look for cap relief, prospects and picks. With additional expirings, we might be able to offset some of the latter (e.g. by taking on some of their bad contracts).

Any year, there are some guys who are unhappy and want to be traded. At times, they can force the hand of their management, by quitting on the team, and expirings are always a central part of any such trade.

Plus, there are some good young guys sitting on teams with bad management (Al Jefferson, even Loul Deng). It's quite possible that some of them might desire a change of address, and we might be able to help

I don't know what will happen with his contract. The potential of a big payday by trading it, against the marginal returns of buying him out is what makes me lean towards the former.

Well put. I think I'm getting a grasp of it.

I hope never to hear another let's buy him out, let's cut him, etc. because it does no good! This is the NBA and not the NFL.

 

[fnordius]

Doesn't have to be a young player. Depending on where we are at that point, a vet might do just fine.

Suppose, in the 2009-2010, we are a major piece away from contending (unlikely, but hey, it's hypothetical). A vet like Shawn Marion or say Elton Brand shall certainly help...

Then let's trade Kenny to Portland for Przybilla. (If they'll buy that argument, anyway.) They will be one player short of a championship. I don't currently have reason to believe that we will be.

 

[kingsfan101]

Then let's trade Kenny to Portland for Przybilla. (If they'll buy that argument, anyway.) They will be one player short of a championship. I don't currently have reason to believe that we will be.

Looks like I was not clear. I was only suggesting a hypothetical scenario. However, in any case, an expiring contract is a valuable asset, and each year, few teams would be looking to shed salary by going for it. It might be to clear cap space for a rebuild, clear space to sign/extend some core piece for next year, send just a little extra salary back to get under the luxury tax, etc. The challenge is to turn that expiring into something useful. Might work out great, or just might lapse giving us space instead. In any case, I feel that buyout doesn't help us much, but the expiring has the potential to give big returns.

 

[fnordius]

Looks like I was not clear. I was only suggesting a hypothetical scenario.

Oh, okay.

I don't question that expirings are valuable in some trade situations, they definitely are, but it has always seemed to me that the time they were really in demand was when teams were to be rebuilt. Then they try to do something like what we just did for Bibby. But if we are headed down that road ourselves, what we'd get for them wouldn't be likely to help us. Rebuilding teams trade away vets, not promising kids or draft picks. And we couldn't build around, say, an Elton Brand. By the time the team was built, he'd be over the hill.

But, as I said, it would be pointless to do a buyout this year anyway, since we missed the Jan. 10 deadline. And next year we'll have diminishing returns. It's an idea whose time is almost past, at this stage. As with the opportunity to trade SAR and KT for anything useful, we let the best chances slip away.

It would sure be nice to have SOME sort of commitment to rebuilding, though. The Bibby trade looks like a start, but we need more than that.

 

[ParniValjak]

Oh, okay.

I don't question that expirings are valuable in some trade situations, they definitely are, but it has always seemed to me that the time they were really in demand was when teams were to be rebuilt. Then they try to do something like what we just did for Bibby. But if we are headed down that road ourselves, what we'd get for them wouldn't be likely to help us. Rebuilding teams trade away vets, not promising kids or draft picks. And we couldn't build around, say, an Elton Brand. By the time the team was built, he'd be over the hill.

But, as I said, it would be pointless to do a buyout this year anyway, since we missed the Jan. 10 deadline. And next year we'll have diminishing returns. It's an idea whose time is almost past, at this stage. As with the opportunity to trade SAR and KT for anything useful, we let the best chances slip away.

It would sure be nice to have SOME sort of commitment to rebuilding, though. The Bibby trade looks like a start, but we need more than that.

I am not sure that expiring contracts don't have trade value for a rebuilding team. There have been a number of teams that have been known to trade their stars at a reasonable age for expiring contracts. To me, Baron Davis springs to mind. GS got him from Hornets for practically nothing. A bunch of expiring contracts.

If we can collect enough young talent over the next couple of years, those expiring contracts might just be whats needed to get us that veteran to round out the team and put us over the edge into contention land.

I honestly see no purpose in buying out KT or SAR. It frees up a couple of spots bu really it means nothing because you can always have these 2 old farts on the inactive list.

 

[kingsfan101]

Oh, okay.

I don't question that expirings are valuable in some trade situations, they definitely are, but it has always seemed to me that the time they were really in demand was when teams were to be rebuilt. Then they try to do something like what we just did for Bibby. But if we are headed down that road ourselves, what we'd get for them wouldn't be likely to help us. Rebuilding teams trade away vets, not promising kids or draft picks. And we couldn't build around, say, an Elton Brand. By the time the team was built, he'd be over the hill.

But, as I said, it would be pointless to do a buyout this year anyway, since we missed the Jan. 10 deadline. And next year we'll have diminishing returns. It's an idea whose time is almost past, at this stage. As with the opportunity to trade SAR and KT for anything useful, we let the best chances slip away.

It would sure be nice to have SOME sort of commitment to rebuilding, though. The Bibby trade looks like a start, but we need more than that.

Yes, and that's a problem we shall likely face. By 2009-2010, we won't be good enough to contend for a championship, so won't really be looking at vets the rebuilding teams might like to dump. Nor will such vets be really interested in coming to us, since we won't be close to the promised land.

Having expirings around can still help. Apart from some of the scenarios I mentioned (e.g., teams dumping some salary to save tax, and us getting some picks in the process), there is always a small chance that a young superstar shall demand a trade, and we shall be able to offer the best package. Also, someone like Brad shall be interesting to a number of teams, since trading for him shall come at a relatively small risk (e.g., if someone is able to give us their crap expirings and some prospects/picks for Brad), and he can help them reach their immediate goals.

Finally, this shall be the second year we shall miss POs, and are unlikely to make it next year either. There will be pressure to make it in 2009-10, and management might feel obligated to trade expirings for some vet. If so, hopefully, the contracts won't be too long.

 

[fnordius]

To me, Baron Davis springs to mind. GS got him from Hornets for practically nothing. A bunch of expiring contracts.

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.

 

[bajaden]

Oh, okay.

I don't question that expirings are valuable in some trade situations, they definitely are, but it has always seemed to me that the time they were really in demand was when teams were to be rebuilt. Then they try to do something like what we just did for Bibby. But if we are headed down that road ourselves, what we'd get for them wouldn't be likely to help us. Rebuilding teams trade away vets, not promising kids or draft picks. And we couldn't build around, say, an Elton Brand. By the time the team was built, he'd be over the hill.

But, as I said, it would be pointless to do a buyout this year anyway, since we missed the Jan. 10 deadline. And next year we'll have diminishing returns. It's an idea whose time is almost past, at this stage. As with the opportunity to trade SAR and KT for anything useful, we let the best chances slip away.

It would sure be nice to have SOME sort of commitment to rebuilding, though. The Bibby trade looks like a start, but we need more than that.

I think were basicly talking about the 2009/2010 season, or the end of it when the Kings will, or could be taking over 30 mil off of their salary base. Brand will become a free agent after next year, but lets pretend its the year after next. He would actually be 31 yrs old at that time. Hardly over the year, unless he doesn't recover from his injury.
Every year there's always some team looking to get out from under salary in the future. If they have a peice you need, you have a deal. If not you just let it expire and go from there. Buy him out and all flexabilty is gone. By and large, good teams are built on the stupidity of other teams. There's nothing more valuable than a stupid GM that thinks he's smart. AKA Isiah......

 

[bajaden]

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.

I understand your skepticism. Its almost like going into a casino and thinking your going to walk out with more money than you went in with. The truth is, there is an element of luck involved. You have to be in the right place at the right time. The best you can do is to put yourself into that position. I think the Kings are heading in that direction. Even if they do nothing between now and the end of the 2009/2010 season salary wise, over 33 million dollars will come of their payroll. ( Miller, KT, SAR, Moore ) They will have some very nice young players in Martin, Garcia, Hawe's, hopefully a resigned Beno, and maybe a resigned S. Williams, Douby. All with more experience. Add to that another 2 first round picks and you have the beginning of team that might go somewhere with the right free agent added to the mix.
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...
This is just a handful of players available. Maybe we'll get lucky..

 

[fnordius]

Having expirings around can still help. Apart from some of the scenarios I mentioned (e.g., teams dumping some salary to save tax, and us getting some picks in the process), there is always a small chance that a young superstar shall demand a trade, and we shall be able to offer the best package.

Yeah... well, I think what makes this an unresolvable issue is that either approach is a long shot, and we'll never know what the right answer was. Maybe the next Ben Wallace will go undrafted this summer, and the only reason we won't get him is because KT was on the roster. Or maybe Derrick Rose will be demanding a trade in January 2010, and only having KT available will make it possible. It's all in the variables, which we can't predict, except to acknowledge that neither extreme is likely. The only thing that is likely is that we will never get our money's worth out of Kenny F. Thomas.