At a crossroads when DeMarcus Cousins tore his Achilles in late January, the New Orleans Pelicans could have punted away the season, entering the offseason with questions not only about Cousins but also about the future of franchise cornerstone Anthony Davis.
Instead, New Orleans traded for Nikola Mirotic, finished with 48 wins and swept Portland in the first round of the NBA playoffs for the first series win since the team relocated.
With the Pelicans eliminated from the postseason, let's look ahead to the free-agency, draft and trade decisions facing New Orleans this offseason, starting with its plans for Cousins' free agency.
More summer focus: Click here for every team so far
The Cousins plan
Before his injury, Cousins was staring down a $176 million contract from New Orleans and at least $130 million from a team like the Lakers or Mavericks. Now Cousins and the Pelicans face a decision with long-term ramifications.
Do the Pelicans go ahead with the blank-check approach even with the uncertainty that Cousins can return to an All-NBA level? Doing so would stick New Orleans with annual cap hits of $30.3 million, $32.7 million, $35.1 million, $37.6 million and $40 million, and the inability to insure the contract in case he suffers another injury to his Achilles. The combination of the large salary and prior injury history would make the contract untradable in the future. The Pelicans would also be committing more than $80 million in salary for three players in each of the next three seasons.
It would also ask the question, who exactly is New Orleans bidding against? Teams with cap space should be hesitant committing max money to a player coming off a significant injury.
The Pelicans could model the Cousins contract as Philadelphia did with Joel Embiid, though there are clear differences between the two. When Embiid signed his extension in October, the center was not coming off a major injury and was participating in training camp. There was enough of a body of work from the 31 games played in the previous season to warrant an extension. Essentially, Philadelphia was buying stock in the franchise-level upside of Embiid but also protecting itself in case of a recurring foot or back injury.
While putting injury protection in a Cousins contract would protect the Pelicans in the future, what happens if Cousins returns but is a mere shell of himself -- a real possibility following an Achilles injury? As in the Embiid contract, New Orleans would get future financial relief only if Cousins does not reach the minutes criteria as a result of a prior, defined injury.
The Pelicans can go the short-term route and put a two-year, $46 million contract with a player option for the second year on the table the first day of free agency. The contract would be similar to what Rudy Gay signed in San Antonio following Achilles surgery, but at a higher premium. It would give Cousins guaranteed money but also an out after the second season if he outperforms his contract.
Would the Pelicans or Cousins walk away if there is no deal to be made? Front offices tend to get themselves into trouble when they feel forced to retain a player because of what they gave up in a trade to acquire him. Like the Deron Williams trade in 2011 that netted Derrick Favors and a lottery pick in Utah, the Nets felt that because they gave up significant assets, signing Williams in 2012 was a priority even if the player began to show regression on the court and was not the right fit moving forward. Williams got his max and the Nets were stuck with a bad contract they are still paying to this day.
But allowing Cousins to walk does not help add other pieces in the short term. New Orleans is over the cap with or without the All-Star and would only have the $8.6 million and $3.4 million midlevel exceptions to use in free agency. It would help in 2019 when only Davis, Jrue Holiday, Solomon Hill and E'Twaun Moore are under contract. The Pelicans would have over $30 million in cap space to bring back Mirotic and build out the roster.
Using Cousins in a sign-and-trade to get New Orleans a player in return is unrealistic for three reasons.
1. The Achilles injury.
2. The receiving team becoming hard-capped.
3. Cousins' outgoing trade value would be only $18 million (if he's on a $30 million deal) because of the rule of base-year compensation. (Base year is the greater of the player's salary in the previous season or 50 percent of his new salary.) For example, Washington could not deal Otto Porter to the Pelicans in a sign-and-trade because the Cousins contract would exceed the $129 million luxury-tax apron for Washington. The Wizards would have to send Marcin Gortat to a third team without taking back salary. The trade would also not work because Porter's salary of $26 million salary is not within 125 percent of Cousins' $18 million base-year amount.
There is also the question of how Cousins now fits on the roster, as ESPN's Zach Lowe detailed, and what impact the decision has on Davis' future.
Despite being super-max-eligible in 2019, would Davis become frustrated with the organization if Cousins is not re-signed?
What New Orleans decides will not only affect the free-agent class this year but also in 2020, when Davis could hit the market.
The luxury tax and roster restrictions
There were two mandates in New Orleans this year: Earn a postseason berth and stay under the luxury tax. The second-round loss to Golden State and finishing $1 million below the tax accomplished both.
Now comes the realization that New Orleans will be a tax team and face roster restrictions for the foreseeable future -- if Cousins is brought back on a max contract.
Here is a breakdown of the likely finances in New Orleans with Cousins and Rajon Rondo signed as free agents:
2018-19
Back of roster is filled with minimum contracts
Salary: $135 million
Luxury-tax line: $123 million
Tax penalty: $21.5 million
2019-20
Does not include free agent Nikola Mirotic
Salary: $114 million
Luxury-tax line: $131 million
2020-21
Anthony Davis super max starts with 11 open roster spots
Salary: $107 million
Projected cap: $112.5 million
2021-22
11 open roster spots
Salary: $107 million
Projected cap: 118.1 million
Summer cap breakdown
The status of Cousins will determine where the Pelicans stand with regard to the luxury tax.
By bringing the center back on a max contract starting at $30.3 million, New Orleans will have $130 million in salary, $7 million above the tax threshold. The Pelicans would still have three spots open and would be restricted to only the $5.4 million taxpayer midlevel.
If the Pelicans elect to bypass re-signing the All-Star, they will be right at the salary cap, left with the $8.6 million midlevel and $3.4 million biannual exception.
The Pelicans also have $3.1, $2.3, $2.1, $1.5 and $1.3 million trade exceptions.
Dates to watch
The Pelicans have flexibility when it comes to their four players on non-guaranteed contracts.
Small forward Darius Miller will have $300K of his $2.2 million contract guaranteed once he is on the roster past June 28. The remaining $1.9 million becomes guaranteed July 24. Expect Miller to be on the roster at the end of July.
Former second-round pick Cheick Diallo has $500K guaranteed and does not have a trigger date for the remaining salary protection. With consistent minutes, Diallo has been highly effective, and he gives New Orleans a solid rotation player at a minimum-level salary of $1.5 million.
The two players signed during the season, DeAndre Liggins and Emeka Okafor, have no protections on their contracts. Liggins will receive $50K if he is not waived by July 15, and Okafor $100K by July 12. Expect the first two weeks of free agency to dictate if either is on the roster by mid-July.
One thing to note regarding Okafor is that the Pelicans can waive the center and sign him to a lower salary. Because he was signed to a two-year minimum contract, New Orleans will not receive salary reimbursement from the NBA. If Okafor were waived and signed to a one-year contract, he would count $1.5 million and not $2.4 million against the cap.
Restrictions
Davis has a 15 percent trade bonus valued at $2.9 million. The bonus would be applied evenly to his 2018-19 and 2019-20 salaries.
Until June 30, New Orleans only has $2.6 million to send out in a trade.
The free-agent focus
Beside Cousins, the priority in New Orleans will focus on bringing back point guard Rondo.
Having signed the 32-year-old to a one-year, $3.3 million contract in late July, New Orleans is restricted to paying Rondo up to $3.9 million. Rondo could receive more in an offer, but that would cost the Pelicans either their $5.2 million taxpayer midlevel exception or -- if Cousins is not retained -- part of their $8.6 million midlevel.
Extension-eligible candidates
The three-year anniversary of Davis' rookie extension has the All-Star eligible for a new deal in July. However, because he has not met the years-of-service criteria (seven or eight seasons), the center is not super-max-eligible even after earning All-NBA in consecutive seasons.
Davis is eligible for a three-year, $98 million extension that would start in 2020-21, but he will wait until next July, when he can sign the largest contract in NBA history at five years and $228 million. By that time Davis will have reached the super-max criteria.
Beside Davis, Hill, Moore, Alexis Ajinca and Diallo are extension-eligible.
The draft assets
The Pelicans chose veterans over first-round picks when building their roster around Davis. The acquisitions of Holiday, Mirotic and Cousins cost New Orleans a first in each trade.
The Pelicans do have their own future first-rounders but are not eligible to trade one until the night of the draft.
Here's how ESPN's Jonathan Givony and Mike Schmitz see New Orleans picking in the 2018 draft:
No. 51 (own): Kevin Hervey | SF | Texas Arlington