Lance Stephenson is the Pacers’ fork in the road

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If the Pacers re-sign Lance Stephenson, they’ll have $5,305,000 to sign a free agent.

If the Pacers don’t re-sign Lance Stephenson… they’ll have $5,305,000 to sign a free agent.

Indiana will be over the cap even if Stephenson walks, meaning there’s minimal advantage to letting him leave – unless losing Stephenson is an advantage itself, which maybe.

Stephenson spent the Eastern Conference Finals trying to tweak LeBron James and Dwyane Wade and Erik Spoelstra. Instead, he just ended up bothering his president and coach.

It reached the point the Pacers’ top player, Paul George, doesn’t sound certain he even wants Stephenson back. And Stephenson had already gotten on the bad side of a couple other teammates.

So what should Indiana do?

The Pacers can’t trade Stephenson before free agency begins, and then it can only be in a sign-and-trade. That would require Stephenson wanting to join a team that lacks the cap room to sign him outright, that team wanting Stephenson, that team negotiating a trade with Indiana and Indiana accepting. A sign-and-trade could be great – potentially the answer to all the Pacers’ problems – but there so many hurdles to that transaction, they can’t make a plan counting on it.

Without a first-round pick, Indiana has few means to better its roster otherwise.

The simple answer is just to re-sign Stephenson and hope for the best.

But another, though more complicated, option exists.

It involves creating cap room.

Stephenson has a hidden value, but the Pacers aren’t positioned to take advantage of it.

All free agents continue to count against the cap until signed or renounced. How much a free agent counts against the cap is based on the terms of his previous contract, but he always counts at a number higher than his previously salary. So, usually, that free agent amount is cumbersome to the team.

However, when a player was drastically underpaid before becoming a free agent, his cap hold can become a tool. That’s the case with Stephenson, who was still playing on the contract he signed four years ago as a second-round pick. Stephenson will count just $1,909,500 against the cap this summer until signed.

Let’s say Stephenson’s starting salary in his next contract is $9 million. That means Indiana can leverage an extra $7,090,500 in flexibility (the difference between his actual starting salary and cap hold).

But that $7,090,500 only matters if it contributes to already-existing cap space. E.g., a team at the cap line has no more ability to sign a free agent than a team $7,090,500 over the cap line. Both can use just the mid-level exception – exactly where the Pacers tand now.

So, how can they get below the cap?

Using the latest salary-cap projections and salary data from ShamSports.com, here’s an example of a two-trade plan that would net Indiana its desired cap room:

Trade 1: Roy Hibbert to the Trail Blazers for Robin Lopez, Joel Freeland and Will Barton

Portland nearly signed Hibbert two years ago and only didn’t because it was clear the Pacers would match. The Trail Blazers clearly like him. Hibbert had a rough finish to the season, but he’s still an All-Star an All-Star and one of the NBA’s best defensive players.

Lopez fit well into Portland’s system, and he’s a solid starting center. But the Trail Blazers struggled defensively for most of the season, and in Hibbert, they’d get a chance at an upgrade without surrendering much in the trade. All they’d have to do is pay Hibbert’s salary, but they were already willing to do that once, and he’s progressed extremely well overall since 2012.

Trade 2 (and 3*): George Hill, Ian Mahinmi and Chris Copeland to the Warriors for Marreese Speights, Festus Ezeli, Nemanja Nedovic and Ognjen Kuzmic

In Steve Blake and Jordan Crawford, Golden State has searched for a backup point guard who would allow Stephen Curry to play off the ball. Hill is a high-end version of that player – and probably better than whomever the Warriors could sign with the mid-level exception. (Depending on how they feel about the luxury tax, they could still use the mid-level exception too).

Though he won’t push David Lee to the bench, Copeland is the stretch four Kerr desires. And Mahinmi is a ready-to-go backup center.

Golden State would add salary in the deal, but the talent upgrade should outweigh that penalty.

Perhaps most importantly, these bigger contracts might even make a trade for Kevin Love easier to maneuver. Mahinmi, Copeland and/or even Hill could make salaries match with Minnesota.

 *Technically, these would need to be structured as two separate transactions – Hill into the Richard Jefferson trade exception as its own deal. But that’s only a formality.

The Pacers would then waive Luis Scola ($940,946 guaranteed), Donald Sloan and Barton and renounce all their free agents besides Stephenson.

That would leave Indiana $12,695,605 in cap room ($13,876,155 if Paul George doesn’t make an All-NBA team) to pursue Kyle Lowry or Eric Bledsoe, a restricted free agent.

After signing a free agent with that near-max-level cap room, the Pacers could then go over the cap to re-sign Stephenson and use the room mid-level exception ($2,732,000) to fill out the roster.

What’s preferable, Indiana’s current starting lineup or this?

  • Kyle Lowry or Eric Bledsoe
  • Lance Stephenson
  • Paul George
  • David West
  • Robin Lopez

Of course, there’s no guarantee the Pacers could sign Lowry or Bledsoe. The best fallback point guards would be Mario Chalmers or Patty Mills – steep dropoffs who would mean Indiana takes a step back.

But at least the Pacers, without Hibbert (two years and $30,412,969 remaining on his contract) and Hill (three years and $24 million), would be leaner going forward. David West (two years and $24.6 million) could be jettisoned for space in other versions of this plan. Either way, coming offseasons would present new opportunities to upgrade.

Sticking with the status quo wouldn’t be so bad, and it seems that’s what the Pacers will do.

But if Larry Bird decides this roster needs an overhaul, Stephenson’s ridiculously low cap hold gives him the perfect excuse to do it.