Breaking down the Detroit Pistons salary cap situation

The Detroit Pistons are in uncharted salary cap waters a year after the free agency salary boom. We’ll take a look at what lies before the Pistons this summer.

The Detroit Pistons spent a fortune last summer. After signing Andre Drummond to an extension, adding free agents Ish Smith, Jon Leuer and Boban Marjanovic, the Pistons had handed out almost $200 million worth of salary committed over the next five years. That amount took them well over the 2016-17 salary cap of $94 million, and the 2017-18 projected cap dropped from somewhere in the neighborhood of $108 million to a significantly lower $101 million.

The Pistons will enter the 2017-18 offseason with $109 million on the books for the coming season, $8 million over the cap and just $12 million shy of the luxury tax threshold. Teams going over the threshold pay $1.50 in tax for every $1 they go over for the first $4,999,999, and the penalty increases sharply thereafter.

It’s worth noting that the $109 million figure includes cap holds for Aron Baynes, Kentavious Caldwell-Pope and restricted free agent-to-be Reggie Bullock. Baynes has a player option for 2017-18 worth $6.5 million that he has yet to announce if he will exercise. Stan Van Gundy has been convinced (to the point of signing Boban Marjanovic last summer to replace him) that Baynes will opt out, but it stands to reason that the longer he waits the less likely he is to opt out. The deadline for his decision is June 29th.

Related Story: Kentavious Caldwell-Pope's free agent suitors

The Pistons do have some non-guaranteed and partially guaranteed money on the books for the coming season. Michael Gbinije has $1.3 million coming this season, but only $500,000 of that is fully guaranteed. The full amount becomes guaranteed if he is still on the team as of July 15th. Similarly, Darrun Hilliard‘s full $1.471 million becomes fully guaranteed on July 1st.

Aside from Baynes’ player option, Bullock and Caldwell-Pope’s restricted free agency and decisions yet to be made about Gbinije and Hilliard, the only other player currently coming off the books (barring a trade) is Beno Udrih. He was signed to a one-year minimum contract at the beginning of last regular season.

Caldwell-Pope’s pending pay increase is where things get tough for the Detroit Pistons. Paying him up to the max (which would start this season at just shy of $26 million) without shedding salary elsewhere would thrust them over the luxury tax threshold. While owner Tom Gores has indicated he has no problem paying the tax for a winning team, he may be reluctant to do so for a team looking so similar to the one that just ended up in the lottery.

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The Pistons have a fixed stance on re-signing Caldwell-Pope regardless of the cost because of this cap-strapped status. For the Pistons to get under the cap, they would need Baynes to opt out and to renounce both Bullock and Caldwell-Pope. This would get them about $10 million under the cap, and they could save another $2.3 million if they renounce both Hilliard and Gbinije before July 1st, but that gets eaten up and more by the salary of whoever the Pistons draft with the 12th pick. That slot in the rookie scale checks in at $2.759

The problem here is that the Pistons would be left with either $10 million in cap space and only 11 players, or $12.5 million in space and only nine players under contract. They would also  have no shooting guard aside from an out-of-position Stanley Johnson. Needless to say in this salary cap era, $12.5 million isn’t enough to sign an impact free agent two guard, let alone do so and fill out a roster.

The Pistons are better served by re-signing Caldwell-Pope (yes, paying whatever obscene sum that might end up requiring), choosing between Bullock and Hilliard, and utilizing minimum contracts and the mid-level exception (MLE) to add depth. According to Bobby Marks of The Vertical, however, the Pistons need to be cautious with the MLE.

"The Pistons will likely have the $8.4 million mid-level exception and $3.2 million bi-annual exception to use but will need to be careful of the luxury tax and becoming hard capped.Use of the bi-annual exception or more than $5.2 million of the mid-level would place the hard-cap label on Detroit and further limit its roster flexibility."

Re-signing Caldwell-Pope for the $26 million first-year max will drive the Pistons into the luxury tax, possibly nearing the second tier of penalties ($1.75 per $1 spent). However the luxury tax for 2017-18 does not go into effect until June 30th, 2018. This means the Pistons can maintain their bulky payroll during the season without having to make a quick decision about paying the tax. If Reggie Jackson bounces back and the Pistons get off to a solid start, Gores will no doubt be happy to foot the bill. If they’re dreadful, they can dump salary at the trade deadline and avoid the tax entirely.

Next: Andre Drummond remains one of the most sought-after targets

The Detroit Pistons are hard up, but there are worse situations. They have the ability to add cheap veterans to a young core that will hopefully bounce back, and they have an owner who is desperate for a reason to spend money on his basketball team. They also have the ability to cut bait if things go badly.

All salary information derived from Larry Coon’s CBA FAQ and Keith Smith’s Salary Spreadsheet.