[MavsFanFinley]

THE CAP, THE CUTS AND ESCHMEYER:

The Mavs roster got a bit less crowded Saturday with the announcement that Evan Eschmeyer had decided to retire.
Why did Esch suddenly decide to call it quits at this time? Did a good guy just do a favor to a Mavs team that needed some roster room? Why did he choose to walk away from the final 3 years of a lucrative contract? We explore the real story, and its ramifications, inside. The full story
Saturday morning the story broke that Evan Eschmeyer had decided to call it quits on his NBA career. Citing an end to a career due to lack of health, specifically knee problems, Esch praised the Mavs and cited an inability to continue doing what he enjoyed, in a press release from the Mavs' front office.
Eschmeyer said, ""I feel like the luckiest person in the world to live a dream of mine. I am sad it has come to an end, but I know I have given every ounce of effort every second I have played. I am forever grateful to so many people and especially grateful to the Dallas Mavericks. My only wish is that I would have been a little healthier. Sometimes the mind is willing, but the body is not able."
So why did he retire?
Although it was announced as a "retirement" and will be treated as such in some ways, this is a far cry from the concept of an employee who is making a decision to terminate his career at his option.
A better description of what really happened would be that this was a "contract buyout due to permanent medical disability." It was announced as a "retirement" to give everyone a chance to say good things and put a positive spin on a medically forced end to a career.
NBA doctors performed a medical exam on Eschmeyer recently, to determine if he was injured, and if so to what extent. What did they find out? And since he retired anyhow, does it matter?
The Mavs are not permitted (due to medical privacy issues) to disclose the results of the medical exam on Eschmeyer, but the "retirement" with three years left on a contract tells us the story that the Mavs are unable to reveal.
If the doctors had found him able to play, the Mavs could have removed him from the roster by negotiating a buyout of his contract, thus allowing him to sign with another team and continue to play as he desired. That would have saved the Mavs a few dollars, and also given Esch a chance to keep playing.
By contrast, the "retirement" means he will not be playing elsewhere. This is a signal that he was determined by the NBA to be medically incapable of playing any more.
So in essence all parties have come to an agreement: he is done, and it is time to put an end to his career and go on.
The fact that there is a medical basis for this move has huge consequences in many ways. Those include salary cap, luxury tax, and insurance issues, as discussed below.
Eschmeyer had 3 years remaining on his contract, with a total of about $10 million to be paid in that span. How much, if any of that, will he receive? Won't he lose money by quitting or retiring?
Almost all NBA contracts (including this one) are fully guaranteed to be paid to the player in future years, once they are signed.
Eschmeyer will be paid the full amount, most likely under the same schedule as he would otherwise have been paid if he had been able to continue playing. That includes approx $3.1M this year, $3.4M in the 2005-06 season, and $3.7M in the 2006-07 season.
I have heard about a Disabled Player Exception for teams over the salary cap, which allows a team to replace an injured player who becomes disabled. Does this apply here? And if so, how might the Mavs use it?
The DIsabled Player Exception allows a team to acquire (via free agency or trade) a replacement player, for a player disabled for the season. The player can be paid up to 50% of the first-year salary cost of the disabled player. This must be done promptly - in essence within 45 days of the date of disability, when it occurs prior to the start of a season. Note that NBA approval is required and - even with valid injuries - is not automatic.
In this case, such a designation would allow the Mavs to add a $1.7M player.
But in order to qualify for this Exception, the team must keep the disabled player on their roster. Since Eschmeyer is retiring immediately (thus removing him from their roster and opening a roster spot), the Mavs will not qualify for this Disabled Player Exception.
Given the Mavs' full roster already, it is very unlikely that the Mavs would have wanted or used such an Exception in any event.
What effect does this retirement have on the Mavs' Team Salary Cap figure? Since the Mavs will still be paying him, will he still be counted on team payroll? Does the fact that he will no longer be on the roster make a difference?
The Team Salary Cap computation for the Mavs includes all their payouts for players for the year, regardless of whether they are still on the roster or not. That would include Eschmeyer.
But when a player is forced to retire for medical reasons and a league-appointed physician confirms that he is medically unfit to continue playing, the league grants an exception in certain ways. In such cases, the player's salary is dropped from the Team Salary Cap total once the player has been injured for two years.
Though the exact date of injury that the NBA would accept is uncertain in Eschmeyer's case, it appears that the injury occurred during or following the 2002-03 regular season. Therefore, he will no longer count on the Mavs' Cap totals after this season.
It should be noted that, if the NBA's official date of injury is listed as any time during the 2002-03 regular season, he also will not count at all on the Mavs Salary Cap for THIS season.
Since the Mavs are far over the Salary Cap limits, what difference does it make if Eschmeyer's contract is removed from their Cap totals?
Luxury Tax assessments by the league are based on a team's Cap total. In years in which a tax is imposed (which has happened the last two years), a team far over the Cap like the Mavs are paying a marginal dollar-for-dollar tax rate.
In other words, in years when there is a Tax, the Mavs will save an amount equal to Eschmeyer's salary that year, if he is not counted on their Team Cap.
What if the Mavs paid off Eschmeyer in a lump sum? Would that create some sort of Salary Cap advantage to them? Could they place the buyout in one particular year or another, to their advantage?
No.
In a lump sum buyout, regardless of when it is paid out, the buyout would be split between the full three years for Cap purposes. It would be divided according to the annual percentage amounts of the original three-year payout. (For example, if the 3 year deal originally had 30% being paid in the first year, 33% in the second, and 37% in the third, the buyout amount would be split and allocated 30%-33%-37% to the cap.)
What about insurance?
NBA player contracts are generally insured for 80% of their payout, against medical disability of the player. Therefore in all likelihood the insurance company will be reimbursing the Mavs for $8M+ of the $10M+ total payout still due.
The fact that NBA doctors apparently have deemed Eschmeyer as unable to play any longer ensures that insurance will be paying for the bulk of the remainder of his contract, even though he has been removed from the team roster.
So insurance will be paying for the bulk of Eschmeyer's contract. Will the Mavs' Team Cap be reduced by the amount they receive from the insurance company?
No. Insurance payments to a team for player disabilities are not removed from the team's Cap total.
What effect does this have on the Mavs' overcrowded roster?
Eschmeyer, with this move, will be removed from the roster.
Not counting the three training camp players (Hood, Sasser, Lopez) who have no realistic shot at making this team, the Mavs after this move still have one more player that must be eliminated.
The Mavs would love to remove Tariq Abdul-Wahad from the roster by the same means they did with Eschmeyer, and TAW was indeed given a medical exam by the NBA doctors recently to ascertain if he qualifies for such a "permanently disabled" designation. The Mavs have the results on those tests, but are prohibited legally from sharing what was found.
If TAW is deemed disabled, the Mavs should be able to get him off the roster using a combo of a buyout plus insurance. If not, the options become uncertain. The Mavs still might be able to work a buyout with cooperation from the insurance company, or they might feel forced to keep him and stash him on the Injured List again. If the latter occurs, Dan Dickau (with a relatively cheap contract) is expected to be traded or waived.
In any event, the Mavs have only until the first regular season game to get it all sorted out and taken care of, so something will have to be done soon.