After months of speculation, the Los Angeles Lakers have finally reached an agreement on a buyout with forward Luol Deng, according to the Athletic’s Shams Charania. As part of the buyout, the team will stretch the final year remaining on Deng’s contract.
Sides have been working on parting ways on remaining two years and $36.8M on Deng’s contract and reached agreement, allowing him to enter free agency. https://t.co/Oj0Sl6JFep
— Shams Charania (@ShamsCharania) September 1, 2018
Deng was owed $36.8 million over the next two seasons. It’s not yet clear how much of that money he is giving up in order to hit free agency prior to the start of this season. By waiting until September first to stretch the former Bulls star, the Lakers will take the full cap hit this season and only stretch the final year of Deng’s deal.
Stretching the contract entails spreading the salary cap hit of Deng’s final year under contract over the next three seasons at about six million dollars per year. That figure could change slightly depending on the terms of the buyout agreement.
The Lakers were projected to have about 27 million dollars in cap space after renouncing free agents next summer before the buyout. They should clear an additional 12 million dollars (approximately), leaving them with enough space to sign a max contract. Kawhi Leonard and Jimmy Butler are likely free agents who have been linked to the team.
Deng was signed in 2016 as a free agent to a contract that almost immediately became regrettable for the Lakers. The 33-year-old no longer displayed the two-way excellence he demonstrated early on in his career and was benched entirely after only one game last season.
Cutting Deng now as opposed to later in the year does not change the financial implications, but it gives the Lakers one more roster spot for this year. Their biggest need is assumed to be veteran depth at the center position. It also gives Deng a chance to explore free agency and find a team that will have more minutes for him, something he has recently shown his annoyance towards.
The financial details on the buyout between Deng and the Lakers have surfaced, according to a report from ESPN’s Adrian Wojnarowski and Ramona Shelburne.
ESPN reporting with @ramonashelburne: In buyout with Lakers, Luol Deng walked away from $7.5M on the $36.8M left on his contract. With waive and stretch provision, Lakers have cleared $38M in salary cap space in 2019 free agency.
— Adrian Wojnarowski (@wojespn) September 1, 2018
With Deng giving a fairly significant portion of money back in this agreement, this helps the Lakers clear up some more cap space. As the roster construction currently stands, the Lakers will have max money available to them next summer, as Wojnarowski mentions.
This means the Lakers will have the cap flexibility to chase star free agents in the summer of 2019, such as Kawhi Leonard or maybe Jimmy Butler. By taking the full cap hit this season and just stretching the final year of Deng’s deal, his cap hit will roughly $5 million for each of the three years after this upcoming season.
This is a big win for the Lakers, minimizing the future cap hit the best they can, given the circumstances. With the salary cap projected to jump to $109 million for the 2019-20 season and $116 million in the 2020-21 season, Deng’s cap hit will only eat up less than five percent of the cap. This gives them tremendous cap flexibility for next summer to add another star, and they didn’t have to sacrifice any draft picks to try and trade Deng. Now, both sides can finally move on.