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Important Denver Nuggets salary cap information entering free agency

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Sacramento Kings v Denver Nuggets Photo by Garrett Ellwood/NBAE via Getty Images

With the 2021 NBA Draft over and done with, the Denver Nuggets used their only draft pick on the evening and selected Nah’Shon “Bones” Hyland at 26th overall. There were possibilities throughout the evening on the Nuggets moving back into the draft, but ultimately, Hyland was the only player the Nuggets added to their roster. He’s going to be a fun scorer and shooter at the guard position for a lot of years, and it would surprise me if he didn’t pan out in the NBA as a bench scorer at minimum.

With Bones joining the team, the Nuggets have 11 players on their roster approaching the beginning of free agency on Monday. There are several questions to answer going into what is expected to be an action packed period for the Nuggets, from whether Denver will retain their own free agents to if the Nuggets can add to their roster and improve the team.

But in order to accurately discuss what the Nuggets can and can’t do, we must first revisit their roster constraints through the lens of the salary cap:


The Salary Cap situation

Denver Nuggets projected multi-year salary cap table

There’s a lot of information and numbers to parse in the above graphic, so let’s go from left to right. The Nuggets have 11 players currently on roster now that Hyland has been added, which means there are four roster spots currently left open. Nikola Jokić has the largest salary cap figure at a little under $31.6 million. Vlatko Čančar has the smallest cap hit at roughly $1.8 million. His money (as well as that of P.J. Dozier) is non-guaranteed, though I expect both players to be back with the Nuggets next year.

At this point, the Nuggets have a projected salary of about $105.2 million, meaning they have an estimated $6.8 million in cap space based on the (once again...estimated) figure of $112 million as the league wide salary cap number entering the 2021-22 season. The NBA previously projected 3% growth from 2020-21 to 2021-22 as their plan to battle league wide revenue losses due to COVID-19, and I don’t expect that to change on such short notice.

So, technically, the Nuggets could renounce all of their free agents and use their $6.8 million in cap space to sign a free agent. Hell, they could let go of Čančar and Dozier to open up an additional $3.7 million to get to $10.5 million in cap space if they so chose; I would be flabbergasted if they decided to go that direction though. Doing so would involve renouncing the cap holds on all of their impending free agents that can be found on the right side of the chart. That means (likely) saying goodbye to Will Barton, JaMychal Green, Paul Millsap, JaVale McGee, Austin Rivers, Markus Howard, Shaq Harrison, AND P.J. Dozier and Vlatko Čančar. Given the reality that Jamal Murray is going to be sitting out for much of the 2021-22 season, it would shock me if Denver chose that path.

Instead, the Nuggets will likely operate as an “over the cap” team, which opens up more possibilities to them. First, they can bring back several of those aforementioned free agents. There will be some restrictions, like Denver only being able to offer a certain amount to players like Rivers and Green. Still, keeping the continuity is something the Nuggets have prioritized in building this organization from the ground up again. There will be SOME goodbyes, but the Nuggets could certainly use the skill sets, veteran leadership, and talent of the free agents listed. Who the Nuggets decide to prioritize remains to be seen.

Denver Nuggets v Philadelphia 76ers Photo by Tim Nwachukwu/Getty Images

The Nuggets also open up another avenue for cap space in the mid-level exception (MLE). I explained a lot of this in my TPE targets article from last week. Here’s an excerpt on the MLE:

In addition, it grants the Nuggets access to the non-taxpayer mid-level exception, or the MLE, which is currently set at roughly $9.5 million in the first season. This is a tool that allows “over the cap” teams to sign players from outside their organization, offering them as much but not over $9.5 million in the first season with 5% raises in each subsequent year. That comes out to roughly a four-year, $41 million contract as the maximum dollar amount a team can offer.

So, the Nuggets have a way to pay free agents if they want to, but the dollar amount is limited, and several other teams can pay a similar amount. What will have to differentiate the Nuggets from other teams is how close they are to a championship, a potential role for said free agent, and an opportunity to play with one of the best passers in the NBA in Nikola Jokić. That’s a pretty good recruiting pitch in my opinion, and the Nuggets should use it to pick up the best possible player they can get.

The Nuggets don’t have the bi-annual exception (BAE) because they used it on Facundo Campazzo last offseason, and that’s the only other avenue to pay free agents above the minimum for “over the cap” teams outside of one other method: trades. Specifically, a traded player exception (TPE) that the Nuggets acquired from facilitating Jerami Grant going to the Detroit Pistons. The Nuggets used part of that to add JaVale McGee to the roster at the trade deadline, and $5.3 million remains that is likely to expire on August 6th.

You can read all about trade targets using that TPE here. One of the possible targets, Kris Dunn of the Atlanta Hawks, was traded on Friday night to the Boston Celtics and absorbed into their own trade exception, so...it’s possible I know what I’m...never mind. We will see what happens.


The Luxury Tax situation

The Nuggets aren’t in immediate danger of paying the luxury tax during the 2021-22 season. At least, if they don’t want to, they don’t have to. With a projected luxury tax line of $136.6 million, the Nuggets are currently just over $31 million below that threshold. With that amount of money to spend and four roster spots remaining, it would be surprising if the Nuggets crossed that number; however, it may prevent them from retaining certain free agents.

Barton and the Nuggets remain open to a new contract for the starting shooting guard, a role he would reprise in Denver for at least the 2021-22 season with Murray sidelined. The Nuggets could absolutely use his scoring and overall versatility. On any given day, Barton has proven he can excel as a scorer, rebounder, playmaker, and defender. He can’t do all of them at once all of the time, but his abilities warrant starter money. The only players in the NBA 6’6” and under to average at least 14.0 points, 5.0 rebounds, and 3.0 assists combined across the last four seasons are Barton, Stephen Curry, James Harden, Kyle Lowry, Russell Westbrook, Victor Oladipo, and LaMelo Ball.

MLB All-Star Celebrity Softball Game Photo by Tom Cooper/Getty Images

Barton isn’t perfect, but his loss would be significant without a tangible way to replace him on the open market. He warrants a salary in the $12 million to $15 million range at this point, and if the Nuggets don’t give him that, then someone else will.

If it does end up being the Nuggets who give him that deal, they can certainly spare $12 million this year. They would still have $19 million in space below the luxury tax to figure out the three remaining roster spots, hopefully figuring out the backup frontcourt spots in some way, shape, or form. Going higher than about $15 million makes things a little tighter, but Denver can still make it work, MLE and all.

I worry about the luxury tax though. If not now, then in the future when the Nuggets are (potentially) on the hook for three max salaries. Until they pay the piper, the question will always remain as to how far they are willing to go in order to put forward the best possible roster to win the first championship in franchise history. Nikola Jokić has one year left before he would be eligible to sign a super max extension of roughly five years, $244 million, the largest contract in NBA history. Add that to Jamal Murray’s max contract and (projected) max contract of Michael Porter Jr., and there are many questions as to whether the Nuggets will be able to avoid the luxury tax any longer. They will be a great team with those three players in their primes, but they will definitely be pricy too. The hope is that the Nuggets are happy to foot the bill for a special team.

I will believe it when I see it.


Over the course of this weekend, Stiffs writers will share their thoughts on the rest of the free agency story. From Denver’s other free agents besides Barton to potentially going outside the organization for help, there are many ways the Nuggets can go about becoming the best team they can possibly be. There may be some surprises. The Nuggets might simply be happy with where the roster is at and try to bring back as many pieces of the puzzle as they can.

We will see what they decide to do. It might ultimately be something Nuggets fans don’t expect.