Breaking down the Lakers’ cap situation for the summer of 2018

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The Lakers have spent the better part of the off-season discussing their plans for 2018. While certainly odd, it’s nothing Laker fans haven’t seen in recent years. Punting an off-season for a chance at max stars in an upcoming off-season is risky (some may even argue ignorant), but could have a huge pay-off.

One need not look further than Thursday morning to see Rob Pelinka mention the desire for the Lakers to sign two max slot free agents next summer. The caveat, however, is that the Lakers currently do not have room for two max contracts in the summer of 2018.

Maybe the team is certain they can move a piece like Jordan Clarkson to open up cap space for two max deals, something suggested earlier this week by Tania Ganguli on the Laker Film Room podcast. Even then, there’s a revolving door of pieces and moves the team could and may have to make.

It’s a complicated subject matter, but one we can hopefully explain more clearly to give you an idea of what the Lakers need to do and may do next summer.

First, an overview of where the Lakers currently stand. Right now, the Lakers will have $50.8 million in guaranteed contracts next summer given the current roster. We’re also going to work under the assumption that the Lakers decline Thomas Bryant’s team option because, as you’ll soon find out, money is going to be tight. That $50.8 million figure also does not delve into cap holds, a subject matter we’ll jump into more in-depth in a bit.

Under the latest project, the 2018-19 cap will be $103 million. That number will fluctuate (hence the word projection) based on a variety of things. This summer, the actual figure fell well short of the projections due to fewer playoff games, amongst other reasons. Considering the likelihood of the Warriors running the table again, this could play out in a similar manner this year. But that’s neither here nor there. That is the projection we’ll have, so that’s what we’ll work with.

Doing a bit of math, you’ll see the Lakers currently have $52.1 million in cap room. That seems like a lot (and it is), but once you start calculating max deals, that money is eaten up very quickly.

We’re going to start by working under the assumption that the Lakers are chasing just LeBron James and Paul George. James has over 10 years of experience, so he qualifies for the max that takes up 35 percent of the cap. In 2018-19, that would be worth $36,050,000.

George, who will be entering his ninth season in the NBA in 2018-19, qualifying him for the 30 percent max, which equates to $30,900,000.

Just like that, all the cap space, and then some, is gone.

Before we go any further, lets talk cap holds. Without diving too deeply into CBA talk (if that interests you, I highly suggest reading Larry Coon’s CBA FAQ), the Lakers will have cap holds for Brook Lopez, Kentavious Caldwell-Pope, Julius Randle and Corey Brewer totaling $79 million.

We can talk about Lopez and KCP later, but in our scenario and for the sake of some simplicity, let’s assume they renounce the rights to Lopez, KCP and Brewer as all three are unlikely to be Lakers (it should be noted that the Lakers won’t renounce the rights to those players until absolutely necessary. Their rights come off the books should they sign with a new team before the Lakers make any moves). That leaves the Lakers will Randle and his cap hold of $12,447,727.

This also gives you some insight as to why the Lakers aren’t going to extend Randle before next summer. He will get an offer sheet worth much more than $12.4 million annually next summer, so it’s in the Lakers’ best interest to not extend him and hope to convince him to be patient, allow the Lakers to make their moves and then sign him to his deal at the end when they can exceed the cap.

I’ve thrown a lot of numbers at you, so let me give you a visual of how all of this looks and why the Lakers don’t have enough room for everyone right now.

As you can see, the Lakers are well over the cap and need to make a couple moves.

The most likely scenario is that the Lakers will look to move Jordan Clarkson and/or Luol Deng. As previously noted, the Lakers are reportedly confident they can move Clarkson. Suppose they were able to move him with no salaries coming back. That would still leave the team fairly significantly over the cap.

The team could pair a Clarkson trade with stretching Deng. When using the Stretch Provision, a team waives a player and stretches the contract out over a longer length of time, lessening the annual cap hit. The formula is years remaining doubled plus another year. For Deng, who has two years left on his deal, the team would pay the remaining $36,810,000 over five years, which equates to $7,362,000 annually.

If the team did both of those moves, here’s where they’d stand cap wise.

As you can see, this doesn’t bring the Lakers under the cap. And short of trading some three-person combination of Larry Nance, Kyle Kuzma, Josh Hart and Ivica Zubac, it won’t get them under the cap.

Quite simply, the Lakers have to trade Deng.

So let’s rewind back and look at a Deng trade. It’ll come at a steep, steep price. The Toronto Raptors dumped DeMarre Carroll’s contract onto the Nets this summer at the cost of both a first- and second-round draft pick. Carroll’s deal had two years remaining on it, but was worth over $3 million less annually than Deng’s.

We also saw the steep asking price it took to shed Timofey Mozgov’s deal this summer, although that was a simple and straight-forward salary dump.

Those deals give the Lakers blueprints of what it’ll cost them to shed Deng’s deal, and it’s not going to be pretty. It’ll likely cost them at least one first-round draft pick and likely one, if not more, prospects.

Let’s assume the worst and it costs the Lakers Nance, Zubac and two future first round picks to shed Deng’s deal. Here’s what it would do to the cap situation.

Again, you’re close but not close enough. It’s clear that you’re going to have to shed the deals of Clarkson and Deng. When they do that…..

….the Lakers clear enough cap space and then some. The extra $7 million could be helpful in a Deng or Clarkson trade because it means you can take SOME salary back in a trade, just not much.

There’s a lot of moving parts here we didn’t discuss, however. Most of those revolve around Randle, who is the key to nearly all of this. If Randle goes out and signs an offer sheet, the clock starts ticking on the Lakers on July 7 and the Lakers will have 48 hours to decide whether to match the deal or not. As previously stated, Randle’s contract will exceed his $12.4 million cap hold and would put the Lakers into an even tougher situation, possibly an impossible one depending on how the team structures the contract.

The flip side to that could be a bit of…..shady workings. Julius Randle could simply sign the qualifying offer and turn down restricted free agency (Greg Monroe did this with the Pistons). His qualifying offer is worth just $5,564,134, a huge step down from his over $12 million cap hold. The Lakers then would still have Randle’s Bird Rights in the summer of 2019 and could sign him to any size contract the following summer.

If he did that, it could be big for the Lakers for many reasons.

That could save you from needing to trade Jordan Clarkson. Or, it could allow you to only trade Clarkson before stretching Deng, saving the team a ton of assets in both prospects and draft picks.

At worst, it would give the Lakers a lot more lee way with how they choose to handle the Clarkson and Deng deals.

There’s a ton of reasons this is incredibly unlikely to happen. Most notably is that it’s a big risk for Randle. A one-year deal offers no long-term assurances which is especially poignant for a player who missed an entire season to an injury already in his career.

It’s also, how do you say, sleazy by the Lakers. It may not technically break rules, but it would rub many people the wrong way to see the Lakers bend their way around the salary cap as such.

Things get even more interesting if James decides not to come to L.A. for one reason or another and the Lakers turn their focus to other max players like DeMarcus Cousins or Russell Westbrook. While Westbrook would command the same max deal as James, worth 35 percent of the cap, Cousins would only require a 30-percent max, giving the Lakers an extra nearly $6 million in wiggle room.

There’s a lot more scenarios in which this plays out. The Lakers might only land George and then look to bring back Lopez or KCP, more likely the former given fit and roster construction. They could still land George, trade Clarkson, stretch Deng and have a whole lot of cap space to build a roster around him.

The same could be said for only landing James and not George as the team would have around $25 million in cap space to assemble a team around James.

No matter how it plays out, it’s clear the Lakers have put a lot of eggs in a basket that still requires a whole lot of work and is built on a whole lot of uncertainty. Is it all worth it for a shot at George and an aging James with little else around them?