Richard Jefferson and amnesty

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While there is mostly angst and negativity surrounding the ongoing labor negotiations between NBA owners and the players union, there was some hope among Spurs fans that the new collective bargaining agreement would include some sort of amnesty rule. The idea behind this rule would aid teams in getting out of bad contracts they themselves handed out.

There was a previous iteration of this rule in the last collective bargaining agreement, where each team was able to release one player under contract and their salary would not count against the luxury tax. According to Larry Coon’s Salary Cap FAQ, teams had about a two week window in 2005, August 2nd through the 15th, to waive a player without getting hit with luxury tax penalties. Here’s Coon’s explanation of the benefits:

Players waived using this provision are not counted in the team’s team salary when computing the amount of luxury tax the team owes. For example, if a team waived a player with a $10 million salary, and ended up $15 million over the tax level, then they would only owe $5 million in luxury tax (saving $10 million). However, the tax savings does not necessarily equal the player’s salary — if the team ended up just $3 million over the tax level then they would only save $3 million (owing no tax at all). If they ended up below the tax level, then there is no tax to be paid so they wouldn’t realize any savings at all. On the other hand, it’s possible for the net savings to exceed the player’s salary. If a team’s amnesty cut takes them from above the tax level to below it, then in addition to not owing any tax they will also receive a tax distribution.

The Spurs were not one of the teams who used the NBA’s luxury tax provision in 2005. They were, however, one of the teams who took advantage of it. The Dallas Mavericks used the luxury tax provision on Michael Finley, releasing Fin Dog and the almost $52 million remaining on his contract. Mark Cuban still had to pay the remaining salary to Finley, but that money didn’t count against Dallas’ luxury tax number. Finley’s salary still counted against the Mavs’ salary cap figure, though. The Spurs swooped in and signed Finley to a contract which paid him about $2.5 million in his first year. The Spurs went on to win the NBA title in 2007 with Finley being one of the highest paid players in the NBA, and the vast majority of that salary was paid by Cuban and the Mavs.

There is some hope among Spurs fans that a new amnesty rule will come into play under the next collective bargaining agreement, one that will help the Spurs get out from under Richard Jefferson’s wet blanket of a contract. With talk of a hard salary cap, I myself held out hope that there may be a new amnesty provision that not only doesn’t count a particular salary against the luxury tax upon release, but also doesn’t count against the salary cap. This would enable many teams to get under the possible hard salary cap quickly. Peter Holt and the Spurs could waive Richard Jefferson and, though still paying his full salary, he wouldn’t count against the salary cap, theoretically giving the Spurs more financial flexibility. Truthfully, I know how ambitious/unbelievable this sounds.

If the last week has indicated anything about the new CBA negotiations, my pie in the sky amnesty provision won’t be included. Spurs owner Peter Holt is the head of the owners’ labor relations committee. Meaning, he’s the main owner negotiating alongside NBA Commissioner David Stern and the league. Holt is very involved in these meetings and presumably knows the ins and outs of the future CBA more than any team owner. Being the top notch owner that he is, most likely he’s shared some information about the upcoming agreement with his front office people, namely RC Buford.

If Holt expected there to be an amnesty provision that would rid the Spurs of Richard Jefferson’s contract, Buford would probably know about it. And the zeal with which the Spurs tried to move RJ last week indicates that nothing helpful is on the horizon. The Spurs answered every phone call leading up to the NBA Draft with a “Hi-if-you’re-calling-about-Tony-Parker-you-have-to-take-Richard-Jefferson-too” greeting met mostly with unenthusiastic dial tone. If the Spurs expected to be able get rid of Jefferson’s contract easily under the new CBA, RJ wouldn’t have been attached to every trade proposal mentioning Parker.

There’s still likely to be some sort of amnesty provision in the new collective bargaining agreement. Chances are, it’ll be similar to the one in 2005, where the waived player’s salary still counts against the salary cap and is still paid by the team, it just won’t count against the luxury tax. This is not the type of clause a normally frugal owner like Holt is likely to use. One exception may be the $2.5 million Antonio McDyess is guaranteed next season, as Mark Deeks of ShamSports mentioned in our podcast. If Dice retires, that is. It’s a limited amount of money the Spurs still owe to Dice and gives them a bit of financial flexibility, however small. The Spurs also won’t have to worry about paying a guy to play for another team as the Mavs did in the Finley situation.

No, most likely the Spurs will continue to employ and play Richard Jefferson, and Spurs fans will rue the day RJ opted out of the final year of his contract last summer. Folks can only hope that new draftee Kawhi Leonard, also a small forward, can outplay the salary he is owed under a rookie contract, making up some for the gap in cost vs. production that Jefferson represents.