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05-25-2009, 06:43 PM
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A Redden Buyout: How Viable is the Idea

Based on some basic calculations, I've determined that no matter what year Redden is bought out in, we're looking at $2.145M per year for twice as many years as are remaining on the deal when the buyout happens.

For example:
Scenario A: A buyout before 2009-10
Remaining Contract = 5 years X 6.5M = 32.5M Total
32.5 X 2/3 = 21.45
Double remaining contract length = 5 x 2 = 10 Years
21.45M/10 Years = 2.145M for 10 years

Scenario B: A buyout before 2012-13
Remaining Contract = 2 years X 6.5M = 13M Total
13 X 2/3 = 8.56
Double remaining contract length = 2 x 2 = 4 Years
8.56M/4 Years = 2.145M for 4 years

You can run the other years if you like, the numbers will check out. Basic formula for those who don't know = 2/3 of the remaining total contract cap hit divided by double the remaining length of the deal.

Long story short, no matter when the buyout happens, the cap hit of said buyout is 2.145M per year for double the remaining duration. Based on that, is there an optimal time for the team to make the move to recoup cap space? When do you think it is most likely?

My thought would be Scenario B, with 2 years remaining. I think a 4 year dead cap of 2.145 per isn't as terrible as it could be, and by that age, I think what little use he has left will be more than gone.

Buying him out now would save $4.355M in cap space for the next 5 years, but then cost $2.145M in cap space for the following 5 years.

What are your thoughts? It would be interesting how such an extended buyout would work if, hypothetically, the CBA expired in the middle of the buyout.


Also, question to the board to anyone who knows, is there a provision in the CBA that would reduce the player salaries by the same proportion as the decrease in the cap? Would teams really need to cut players to get under the cap? Would either side really want to go through the process of releasing players and dealing with long-term buyouts to get under a league-imposed salary cap?

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