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Cap Crunch: Chris Boucher & Thad Young contract considerations

Raptors management have expressed they would like to bring Chris Boucher and Thaddeus Young back next season. The tricky part is, Toronto has a few players who are about to get very expensive. Imman Adan and Daniel Hackett discuss what's ahead for the Raptors. Full episode that also discusses Christian Koloko's NBA readiness is available on the 'Raptors Over Everything' podcast feed.

Video Transcript

DANIEL HACKETT: One of the big concerns with them using the mid-level this year is the Raptors are quickly approaching a significant salary crunch on their roster.

IMMAN ADAN: Yeah.

DANIEL HACKETT: They have two major players who will be expiring after this coming season, or opting out of a player option, which is the same thing, essentially, Gary Trent Jr. and, of course, Fred VanVleet. They will both want raises if they stick around. Even worse than that, the next season, Pascal Siakam, and OG Anunoby, and Precious Achiuwa are all up for raises.

IMMAN ADAN: I didn't even know about-- I didn't even consider Achiuwa.

DANIEL HACKETT: Precious is hitting restricted free agency, and he's going to cost--

IMMAN ADAN: Oh, boy!

DANIEL HACKETT: He's on a rookie scale right now, so he's going to have a pretty significant raise. So combine all those together, they're going to be either a little bit into or right at the tax line before they add anybody else. I'm talking you resign Chris Boucher with term and you're into the tax, not this year, but the following two years, when you give these raises. You resign Thad with term, you're going into the tax. You pay a mid-level exception guy, term, you're going into the tax. So this is a consideration for the Raptors as they build. I don't know whether they want to spring that tax line trap until they feel like they're a contender, until they think that they're a top-two team in their conference and have a chance to go all the way every year. Masai very strictly stayed away from paying the tax at all until the moment he made the Kawhi Leonard trade, and then went, basically, very deep into the tax and made some little tax-saving moves mid-season. But, for the most part, they did pay a significant tax bill then.

So a couple other things about the midlevel exception. I'll take it back to Christian Koloko for a second. So first-round draft picks get signed to what's called a rookie-scale contract. It's a standard four-year contract that you get to sign your first-round draft picks. Second-round draft picks don't have anything like that. There is no standard. You can sign them to a max deal on day one if you want to, as long as you have the cap space or an exception to do so. Generally speaking, though, they're a second-round draft pick, so they're going to get the minimum salary, which is fine. One of the things that you want to do when you sign your draft picks is think about what their free agency is going to look like after their first contract is done. The Raptors, last year, signed Dalano Banton to a two-year contract, which you don't need an exception for. It's called the minimum salary exception. You can sign any player to a two-year minimum salary deal any time. You can be over the cap, over the tax, it doesn't matter. Anybody can do it. I guess the exception is if you've managed to trigger a hard cap, which is something that you can do, but it's not a concern for the Raptors right now.

IMMAN ADAN: If Joe Lacob hasn't done it, they've got a ways to go.

DANIEL HACKETT: Well, it's not about spending, it's about mechanism. So, for example, if the Raptors use their mid-level exception this year, they'll be hard-capped, so they're not actually allowed to go more than, like, seven million past the tax line. Now, they don't want to go past the tax line at all this year, so it's not going to be an issue, but they will be hard-capped if they use the mid-level exception. So the issue with signing a player to a two-year contract as a rookie is that, when they hit free agency, they'll be a restricted free agent, which is good. The bad news is you won't have their full rights, their bird rights. You'll have something called "early bird rights," which means that you can only offer them about $10 million a year, about the average salary, which, sometimes, is enough. Norman Powell famously was the last person that signed that sort of extension with the Raptors. And sometimes another team will come make an offer, and it's those big, strange, backloaded deals that you hear about sometimes from the Gilbert Arenas provision, where teams are allowed to start at the mid-level and make a massive jump in the third year, so you get these contracts that are structured $10 million, $10 million, $30 million, which can be complicated to deal with.

So what's really nice is to be able to, A, have the guy cheap for three full years, and then, B, have his full rights, so you can offer him whatever you feel you need to when he hits free agency. The problem is you need an exception or cap room to do that, and the Raptors don't have cap room, and the only exception that lets you do three years is the mid-level. So if they want to give $1 million to Christian Koloko-- that's the minimum salary this year-- on a three-year deal, that eats into their mid-level exception, so instead of having an $11 million contract over four years, they have a $10 million contract to offer over four years. So right away, in the mid-level exception market, if they go that route with Koloko. You're behind everybody else. You've got a whole league full of mid-level exceptions being offered and you're $1 million short. Now, some other teams will make the same decision. But if there's a bunch of teams out there with the full mid-level, then you're probably going to lose out on guys who, like Tyus Jones, should probably make a little bit more in the league, but it's just the market.

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