The NBA's free agent moratorium ended late July 9 with the NBA announcing the salary cap set at $58.679 million and the luxury tax threshold was set at $71.748 million. This announcement means NBA teams can officially begin signing players to contracts and introduce their free agents.
For the Magic this means the team understands what its salary position is entering the next year. According to HoopsWorld.com, the Magic have $58.3 million committed to next year's team. The Magic have an additional $2.5 million in cap holds -- really just the $1.8 million held in place for Fran Vazquez (he is just the gift that keeps on giving).
That puts the Magic over the salary cap this summer when it comes to signing free agents.
The payroll floor under the new collective bargaining agreement is set at 90 percent of the salary cap -- $52.811 million. This means, if the Magic go through with their reported plans to buy out Hedo Turkoglu and potentially Al Harrington, Orlando likely will have to make a couple free agent moves to reach this payroll floor -- as Larry Coon notes it is not a salary floor, but a payroll floor, it goes to how much the team actually pays its players.
Releasing Hedo Turkoglu or Al Harrington without getting anything in return would drop that number by nearly $9.5 million. Losing those two would put the Magic at about $48.8 million counting against the cap, a little more than $4 million short of the payroll floor and well short of the salary cap. As many of you pointed out, the Magic would not be in danger of reaching the payroll floor because of the other gift that keeps on giving -- Gilbert Arenas. His $22 million salary counts toward the payroll floor and puts the Magic comfortably over the payroll floor.
Gilbert Arenas is keeping the Magic from having to find $4 million extra dollars somewhere to reach that payroll floor. Their trade exceptions likely would have helped them do this, but that is still another player to deal with and potentially take playing time from the young guys Orlando wants to develop.
Orlando still has some signings to make and will have those two roster spots left open by Turkoglu and Harrington to get there. If the Magic choose to hold on to Hedo Turkoglu and Al Harrington, they would be over the cap. Releasing just one of them, would slide Orlando underneath the cap.
Fortunately the Magic still have most of their free agent exceptions to use since they will not be a taxpaying team this season and could potentially be over the cap depending on what they do with Turkoglu and Harrington.
HoopsWorld lists the mid-level exception at $5.15 million and the bi-annual exception at $2.652 million as available to the Magic. Being over the cap, they will have to use these exceptions to pick up players. They can be split between players.
The Magic then, appear to be in good financial shape entering the 2013-14 season. They do not have any crazy commitments and should be slightly over the cap. Some minimum signings -- or near minimum signings -- are likely to fill needs on the roster to filed a team this year. Do not expect much of a splash.
Why is that?
You only need to look to the summer of 2014 and the summer of 2015. Currently for the summer of 2014-15, the Magic have $27.8 million committed to players on the roster (including Al Harrington). Add in team options for Maurice Harkless, Nikola Vucevic, Tobias Harris and Andrew Nicholson, and the number creeps up by $8.6 million.
Likely to reach the payroll floor this time, the Magic will have to spend some money.
So when it comes to free agency for the Magic, patience seems to be the operative word. A likely high draft pick and cap space is coming very soon if the Magic continue to be smart.