Raptors Free Agency Primer: The different directions Toronto can go this offseason

I’ve been writing this annual Toronto Raptors primer so long that you could have weaved in a “last time the Maple Leafs did this in the postseason” joke last week. Some alternate context for this, the 12^th edition: This is now the third collective bargaining agreement the series has spanned.

Because the NBA and NBPA reached a new CBA that will come into effect on July 1, there’s a little more than usual to cover today. And it was already a lot.

As always, this piece is meant to be bookmarked and referred back to as you play through offseason scenarios. We’ll refer back to it plenty, too, as we play with different options the Raptors have available to them in the coming weeks.

Note: All of the exception amounts and assumptions within are based on the league’s latest reporting and general industry assumptions. All of the analysis will remain the same wherever the exact totals land, but for now we’re working with an assumed cap of $134 million and an assumed luxury tax line of $162 million.

CBA changes, the Raptors, and choosing a cap direction
The specifics of the new CBA are a bit anticlimactic as far as the Raptors are concerned. While there are tweaks that impact everyone, the two major system-level changes don’t apply to the Raptors at the moment. Those system changes target teams that spend deep into the luxury tax or teams that are below the cap and looking to spend.

Under the new system, the 2018-19 NBA champion Raptors would have faced more hurdles building out the roster around their Kawhi Leonard-led core and making deals at the trade deadline. A team like the 2015-16 Raptors would have had even more flexibility to bolster a roster beyond just their cap space. Some years, a team can also “choose” whether to be a below-cap or above-cap team, utilizing some accounting wrinkles to maximize the space and exceptions available to them; it’s possible that under the new system, the Raptors would have opted to be a “cap space team” more than once in the last decade.

In-between teams that operate above the cap but below the stricter tax levels — where the Raptors have almost always landed — face smaller changes, albeit with more paths to creatively build a roster. We’ll note those changes as we go, but your learning curve for the new CBA is nice and easy as a Raptors fan in 2023.

The current cap sheet
This is what my Raptors cap sheet for the offseason looks like:

And that graphic is why we break this down into smaller sections.

Contracts
The Raptors have the following guaranteed contracts on their books for 2023-24:

This is straightforward, and includes the news that Otto Porter Jr. exercised his player option for the coming season. Those eight players are locked in for a total of $92.57 million. In theory, that’s clean enough to leave the Raptors ample cap space. As we’ll see, things aren’t that clean.

Options
The Raptors love player options. Check your contract, as you may even have one. As mentioned, Porter has already picked his up, which became a formality the minute he was seriously injured. Fred VanVleet has a $22.82-million option he is very likely to decline so he can explore free agency, which he has until June 15 to do.

Gary Trent Jr.’s $18.58-million player option is also likely to be declined, though that is less of a certainty than it was earlier in the season. He has until the final buzzer on June 29 to decide.

Non- or partially guaranteed deals
Non-guaranteed and partially guaranteed deals sometimes get lumped in with options, and while they are practically team options, we separate them here because technicalities rule.

Thaddeus Young has an $8-million contract for next season, only $1 million of which is guaranteed. The Raptors have to decide by June 30 whether to waive Young and eat the $1 million in dead cap for 2023-24 or to allow his contract to become fully guaranteed at $8 million. This seems pretty obvious, but keep an eye on a draft-night wrinkle: If the Raptors need Young for salary matching in a trade, they can guarantee more of his contract to make the math work. That is, say they need $5 million in outgoing salary for a trade, they could guarantee Young an extra $4 million. In essence, Young has a small window to be a very well-compensated accounting trick. Failing that, it’s likely the Raptors will eat the $1 million and make Young a free agent.

Joe Wieskamp has a minimum salary that becomes guaranteed on June 30. Had this been a later guarantee date or one of the Raptors' more standard rolling guarantee structures, I would have understood the whole Jeff Dowtin Jr. conversion conversation a bit more. As it stands, the Raptors have to make a call on guaranteeing Wieskamp for the 2023-24 season before their 2023 offseason has even begun.

Unrestricted free agents
The Jakob Poeltl trade required the Raptors to renounce a bunch of long-held player rights that carried cap holds and made this section moderately interesting. Instead, it’s just Poeltl and Will Barton here as unrestricted free agents with cap holds. If VanVleet and/or Trent were to decline their player options, they would also slide into this category as UFAs with sizable cap holds.

To refresh, every free agent carries that “cap hold” on the books. This is an artificial charge against the salary cap that is determined by the player’s previous salary. These holds exist to prevent a team from going below the cap, signing free agents, then using rights to re-sign their own players. Effectively, teams have to renounce their rights on a player — and the ability to re-sign them beyond the cap — to clear their hold off the books.

Say, for example, the Raptors wanted to create cap space this summer to chase a big free agent. They would have to rescind the rights to Poeltl, VanVleet and Trent to clear their cap holds and create the necessary space. Rescinding their rights also costs the team Bird rights, so they couldn’t then exceed the cap to re-sign them.

Full Bird rights allow a team to exceed the salary cap to re-sign their own player up to the maximum contract amount. Early Bird rights also allow a team to exceed the cap to re-sign their own player, but only up to 175 per cent of his previous salary or 105 per cent of the league average salary the prior year, whichever is larger. Non-Bird rights cap that number at 120 per cent of the minimum salary. Some years, the decision of whether to be an above- or below-cap team is difficult, as you lose some exceptions and player rights to maximize cap space for a free agent or sacrifice free agent spending power to better retain your own players.

This year, the Raptors are in a space often referred to as “The Bird Rights Trap.” They have the ability to exceed the cap — and even enter the luxury tax — to keep Poeltl, VanVleet and Trent. That’s a positive. But there is no path to cap space because of their salaries and/or cap holds, meaning there is no means of replacing the players if they leave. It can make for a tough negotiating position where the Raptors’ alternatives aren’t, say, “Trent or another player slightly cheaper;” they’re “Trent or nobody because you don’t have cap space anyway.” I wrote more about this “trap” at the deadline.

Restricted free agents
RFAs are a little cleaner to deal with. In the case of the team’s two-way players, Dowtin and Ron Harper Jr., the RFA rules are so restrictive that the qualifying offer may as well not exist. Another team could sign away a Raptors’ two-way, but if the Raptors want to keep them, they’ll have more than enough flexibility to do so.

Dalano Banton is more nuanced as a two-year veteran coming off his contract as a second-round pick. To make Banton an RFA, the Raptors have to tender him a qualifying offer estimated at $2.17 million. Making the qualifying offer means the Raptors would have the right to match any offer sheet Banton signed elsewhere, but there’s a risk that Banton simply signs it, as his qualifying offer amount is above the league minimum. The other option is to non-tender him, letting him become an unrestricted free agent. The Raptors would lose the ability to match an offer for Banton, but they could still re-sign him through normal means. The Raptors have maintained that they’re high on Banton despite a disappointing second season; a quick deal guaranteed for the league minimum might satisfy both sides by removing the uncertainty of free agency for both.

Draft picks and draft rights
The Raptors have the No. 13 pick in the 2023 NBA Draft. Even without the ping-pong balls bouncing in their favour, a lottery pick in a draft that is very deep into the teens is a great asset.

That asset isn’t going anywhere, at least until after the draft. The NBA prohibits teams from trading away future first-round picks in consecutive years, and the Raptors owe their 2024 first-round pick to San Antonio. Once this year’s selection is made, there is no rule against trading the player away.

It’s that same rule that prohibits the Raptors from trading a first-round pick earlier than 2028. That’s because the pick they owe the Spurs next year is top-six protected. If it doesn’t convey in 2024, it would roll over to 2025, then 2026 before becoming two second-round picks instead. The Raptors can’t trade any pick that could possibly be needed to fulfill the obligation to San Antonio, so their tradeable draft assets are a little thin, even though they own all but one of their future firsts.

The Raptors have also traded away their next three second-round picks. Because the San Antonio pick could potentially become two second-round picks later, the Raptors can’t trade a second until 2028.

Once the 2023 draft is over, 2030 picks become eligible to be traded. You cannot trade picks farther out than that.

The Raptors also still hold the draft rights to DeeAndre Hulett, which, because of an amusing wrinkle in how trades work, could still technically be traded.

A new-CBA note on second-round picks, and cash
NBA fans have recently been conditioned to devalue second-round picks. The trade deadline this year saw about 20,000 of them traded, effectively as currency rather than real assets. That’s in part because it’s always been a little like that and in part because the introduction of two-way players has changed the value proposition for second-round slots for both teams and players.

A new CBA wrinkle aims to fix this and make second-round picks a bit more valuable again: Teams will now be able to offer their own second-round picks three- and four-year contracts.

In the past, teams had to use cap space or a part of one of their exceptions to sign a second-rounder for more than two years. Norman Powell and Christian Koloko, for example, received three-year deals by taking up a small part of the mid-level exception. Now teams don’t have to worry about holding exception space. They can just sign a Koloko to a three-year deal because he was their second-round pick.

This isn’t a major shift, but it’s notable for a team like the Raptors that doesn’t own a second-round pick for a while. That extra bit of flexibility makes it even more worthwhile to trade or buy your way into the second round, especially as you try to re-create an emphasis on your player development system.

Purchasing a second-round pick shouldn’t be too difficult this year, as there are a handful of teams with multiple seconds, and even a pair of teams with five draft picks in total. It seems likely a few of those superfluous seconds will be available for a spare million or two.

Expanded rosters, two-ways, Exhibit 10s and summer contracts
The new CBA has expanded NBA rosters in two key ways from a player development perspective.

First, they added a third two-way roster spot. Although there’s skepticism around the league about how teams may leverage that, it’s unquestionably a positive for players on the fringe of the league and making their G League-or-Europe decision and for teams truly invested in development. If you’re a team like the Raptors that has preferred to use one two-way spot for a long-term prospect and one two-way spot for someone who can provide NBA depth, you can now more freely do the latter without sacrificing development.

Offseason rosters are now also allowed to be 21 instead of 20 players, including for training camp. The 20-man roster used to be plenty with 15-man NBA rosters, leaving five spots for camp battles, summer development, and Exhibit 10 players tabbed for eventual G League duty. The introduction of two-way spots has tightened things a bit, making it tougher for a team to have both camp competitions and G League depth in mind.

The combination of these changes could lead to the Raptors entering camp with something like: 14 NBA players, two two-ways, and five players competing for the final NBA spot and the final two-way spot, with the “losers” headed to Raptors 905.

Exhibit 10 players — those brought in for camp and ultimately waived and sent to the 905 — will now also receive more money, and two-ways are eligible to negotiate higher guarantees. They are small changes that go a long way toward making the G League a sustainable model for players on the fringes and teams who know what they’re doing at that level.

The Raptors do not currently have any players signed to a two-way, Exhibit 10 or summer contract.

Dead salary
The Raptors were carrying dead cap hits for waived players in Svi Mykhailiuk, Juancho Hernangomez, Justin Champagnie, D.J. Wilson, Ishmail Wainright, Armoni Brooks and Saben Lee that will now be cleared from the books.

The big picture and polar scenarios
Let’s double back to our original image, now that I’ve explained most of it.

The first two questions that naturally flow from this exercise every year are how much cap space do the Raptors have and how much cap space could they have? Let’s run through the current and then most extreme scenario.

As things stand, the Raptors figure to have zero cap space. While technically they have only $93.6 million committed to eight players (plus Young’s small guarantee) — which would give them about $36 million in cap space if that’s all that counted — the path to actually using that cap space is extremely arduous. As explained, their pending free agents (and anyone who opts out) carry a cap hold, and those cap holds eat up that cap space. Again, the rule is there so you can’t use cap space and then re-sign your own players; it’s one or the other in Toronto’s situation.

No. 13 pick also comes with an estimated cap hit of $4.47 million, and you are charged a $1.1-million “minimum roster hold” for each roster slot you are below the league minimum. (That last one is to prevent teams from completely emptying out their roster; there is a small benefit to, say, having a minimum roster charge on the books instead of a Wieskamp type, but for most teams the gain is negligible and they’ll be less encouraged to go scorched earth.)

So let’s say they let VanVleet, Trent, Poeltl, Barton and Banton walk, waive Wieskamp and eat the $1 million owed to Young. What does that look like?

In this scenario, the Raptors could get to $32.65 million in space, enough to sign a player to the 25 per cent maximum contract for a free agent with six or fewer years of service. Realistically, if you chose that path, you’d either be looking to split that cap space across multiple players or unload an additional salary to create room for a higher-max player.

Have you looked at this year’s free-agent crop? It’s hard to imagine that what you could get with $32.65 million is worth losing VanVleet, Trent, Poeltl and access to the full mid-level exception.

Trades are always possible, but it looks like the Raptors would be better served staying as an above-cap team. That means keeping the cap holds — and therefore, the Bird rights — on their key free agents, keeping the possibility open to re-sign them or at least sign-and-trade them to avoid losing them for nothing.

The scenario on the other end of the extreme is that the Raptors try to retain all three key free agents. The big question then becomes whether the Raptors can stay below the luxury tax.

With their current structure, the Raptors would be able to pay their three free agents an estimated $63.96 million while staying below the tax. That’s not entirely accurate, though, because the Raptors would also need to fill out their roster. Two additional minimum contracts pushes that tax space to $59.98 million. If the Raptors also wanted to use some or all of the mid-level and/or bi-annual exceptions to fortify the roster, it gets even tighter.

Luxury tax
There’s nothing stopping the Raptors from paying into the tax. They’re at no risk of facing the stricter repeater-tax penalties anytime soon, and the roster-building restrictions that come with being a tax team aren’t too arduous for a team that’s just a little over the tax.

However, there is a real money component to it. Luxury tax is charged on an escalating marginal basis, such that the first $4,999,999 is taxed at $1.50 per dollar, and the tax increases for each subsequent $5-million block. It’s basically an escalating penalty the further over the tax you go, to where the deeper into the tax you are, the greater benefit there is to trimming each dollar.

More notably, you not only pay the tax but no longer receive the tax payout from the other tax teams. This past season, that’s estimated to be worth a little over $15 million per non-tax team.

The Raptors have only gone into the tax once under this front office, during the championship season. Some seasons, they haven’t even had the choice — you can only spend into the tax if you have the right combination of free agent Bird rights and cap exceptions. In other years, they’ve been close enough to the tax line to avoid it with minor moves like trading Bruno Caboclo for Malachi Richardson or waiving Sam Dekker.

Whether it’s worth paying into the tax to keep this core together depends on what you see that core’s near-term upside as.

Luxury tax apron(s)
There is also something called the luxury tax “apron” to consider. The tax apron is like a sort-of third line of salary demarcation after the salary cap and luxury tax lines. If a team crosses the apron — which is projected to be $169 million under current assumptions — then they lose some roster-building options that other teams have. (That includes sign-and-trade options, the BAE, a different MLE and more, as well as a hard cap.)

Barring a trade that adds significant salary, it’s difficult to see the Raptors going above this apron. (There is also a second apron level being introduced in the new CBA with even more restrictions. Let’s save that discussion for when it’s actually relevant to the Raptors.)

Exceptions
In addition to the non-taxpayer mid-level exception and biannual exception the Raptors could have available, teams can always sign players to the minimum if they have roster space (unless they’re hard-capped by the tax apron). A change in the new CBA is that teams can save their MLE/BAE/etc., to acquire a player in trade during the season rather than strictly as a free agency tool.

Here are the different options the Raptors face:

Get under cap

Cap space: Depends on how many free agents they lose/renounce; the theoretical max before trades is about $32.65 million

Room mid-level exception: $7.61 million (up to three years and $23.97 million; can be split between players)

Free agent rights: None

Stay above cap, below tax aprons

Cap space: $0

Non-taxpayer mid-level exception: $12.22 million (up to four years and $52.55 million; can be split between players)

Biannual exception: $4.45 million (up to two years and $9.12 million; can be split between players; if used, is unavailable for 2024-25)

Free agent rights: Can exceed cap for VanVleet, Trent and Poeltl, up to any amount

Stay above cap, reach tax apron

Cap space: $0

Taxpayer mid-level exception: $5 million (up to two years and $10.25 million; can be split between players)

Free agent rights: Can exceed cap for VanVleet, Trent and Poeltl, up to any amount

Trade exceptions
The Raptors do not hold any trade exceptions.

Trade rules
The rules for trades work the same as they do in-season, just with more wrinkles due to teams having cap space, the potential for sign-and-trades and more. If the Raptors operate below the tax apron, they’ll be subject to the following salary restrictions:

Outgoing salary under $6.5M: 200 per cent of outgoing salary, plus $100,000

Outgoing salary $6.5-19.6M: Outgoing salary, plus $7.5 million

Outgoing salary over $19.6M: 125 per cent of outgoing salary, plus $100,000

Being a below-tax team also allows the Raptors to acquire players via sign-and-trade, if they’re willing to accept being hard-capped at the apron amount.

Sign-and-trade
A sign-and-trade deal can help a player get to a preferred landing spot, even if that team doesn’t have enough cap space. The Kyle Lowry example remains fresh, where the Raptors’ willingness to sign-and-trade Lowry allowed him to earn more money than Miami could have otherwise offered without cutting a number of players. The Raptors picked up Precious Achiuwa (and, later, Young, via Dragic) for their trouble.

An important reminder here is that teams who acquire a player via sign-and-trade become hard-capped at the apron amount, and if they’re already beyond the apron level, they can’t acquire anyone via sign-and-trade. That takes a number of destinations off the board for a VanVleet type who could immediately help a contender.

Sign-and-trade contracts must be for at least three years, though only the first year has to be guaranteed. Players receive smaller annual raises than they would by re-signing with their own team and can’t receive a fifth year in a sign-and-trade. That is, it’s still a beneficial tool, but the player cannot maximize their earnings and pick their destination.

The Raptors figure to explore plenty of sign-and-trade possibilities. That is true whether they want to avoid losing their free agents for nothing or whether they’re simply trying to determine market values, or anything in between. Similarly, they’ll be explored both to make the team better via trade or help the team down a different path with younger pieces. Everything is on the table for the offseason ahead, and the ability to sign-and-trade their free agents is one of the key (if limited) pieces of flexibility they have to utilize.

Other assets
In addition to players, draft picks and the draft rights to Hulett, the Raptors can send out $6.36 million in cash before July 1 and $6.9 million in cash from July 1 onward. That is each team’s maximum allowable cash sent in trade, and the amount resets on July 1. So, the Raptors could theoretically use that $6.36 million to purchase a second-round pick or two while still having a fresh cash reserve available for trades in free agency.

The Raptors can also receive those same amounts back in trade. Remember when the Spurs kicked in $5 million with Kawhi Leonard and Danny Green? That was cool.

Extensions
Pascal Siakam and O.G. Anunoby are eligible for extensions this summer.

Siakam’s situation is fairly straightforward: He can be extended for up to his maximum salary and he can be extended any time. It’s a matter of negotiation and finding the right deal rather than anything cap-related.

Anunoby’s situation is more complicated. I broke it down in detail here but the short version is that the Raptors can offer him up to a 40 per cent raise beginning Oct. 1. If he’s traded before then, his new team would likely have to wait until he becomes a free agent to work out a new deal, as the rules around extend-and-trades are probably too restrictive for Anunoby to be interested in such a deal.

Achiuwa and Flynn are also eligible for extensions to their rookie-scale contracts this summer. If they are not extended, they will be restricted free agents in the summer of 2024. As with Siakam, the cap rules don’t have any impact here, it’s strictly about finding a number that works for both sides.

VanVleet and Trent are also technically eligible if they pick up their player options. Poeltl could be signed to an extension before he reaches free agency.

Key decisions

Player options: VanVleet (June 15), Trent (June 29)
Early guarantees: Young’s $1M becomes $8M on June 30, Wieskamp becomes fully guaranteed at $1.9M on June 30
RFA qualifying offers: Banton ($2.17M), Dowtin (2-way), Harper (2-way) all due by June 29

Free agency: July 1

Extensions: VanVleet eligible if he doesn’t opt out, Siakam eligible now, Anunoby eligible Oct. 1, Achiuwa and Flynn eligible until the start of the season

Team options: Barnes (2024-25 option, Oct. 31)

Wrap

As things stand, the Raptors are fairly committed to playing things out with some version of the current core. Letting their free agents walk would not result in meaningful enough cap space in a weak free-agent class, and so the Raptors will likely try to retain at least two of those players and sign-and-trade the other to avoid losing them for nothing. Retaining all three is possible but could get very tight around the luxury tax.

The plainest outcome is the Raptors retaining their free agents, unloading a salary somewhere for tax relief and using cap exceptions to add at the margins. A slightly more aggressive path might see them trade or purchase another pick to get back to developing inexpensive roster depth with long-term upside.

Those are possible paths. They aren’t the only paths. Losing multiple free agents, for nothing or via sign-and-trade, is possible, especially if the franchise decides not to further commit to what was a .500 core. There are more significant possibilities, too, like revisiting Anunoby trade talks or putting Siakam into play heading into the final year of his contract.

It’s true that the Raptors have a lot of good, interesting pieces. It’s also true those pieces missed the playoffs together and left the team’s president searching for answers about the coach, the culture and how to get back to winning in a meaningful way. Because of that in-between station in the league, everything feels like a genuine possibility right now.

So bookmark this page, refer back to it, and as things start to heat up around draft time, we’ll run through even more scenarios and their feasibility and implications.