By Colin Maher, Cap Specialist and contributor to No Trade Clause
On June 7th, ESPN reported the Phoenix Suns informed Chris Paul of their intention to waive him before his $30.8 million salary for the 2023-2024 season becomes fully guaranteed on June 28th. Further reports indicate the Suns are open to bringing Paul back at a lower salary.
What are the Suns’ options if they look to resign Paul? Their options and the timing can get a little tricky. Here is a breakdown of the process.
Requesting Waivers
First, the Suns have to place a “request for waivers” for Paul. At that time, his roster spot immediately opens up and his non-guaranteed salary ($15 million for 2023-2024 and $30 million for 2024-2025) comes off the books.
Waiver Process
Next, any team can place a “claim” for Paul. With some exceptions, a waiver claim means the claiming team assumes the entire $30.8 million salary (and the remaining $15.8 million would come off the Suns’ books).
I will forego the details around waiver claims as we’re assuming he’s going to clear waivers for our hypothetical.
Clearing Waivers
Again, assuming no one claims Paul’s contract, he would “clear” waivers 48-hours after the Suns’ request. At that time, he would become an unrestricted free agent with the ability to sign a new contract with any team.
Also at that time, the Suns would officially be responsible for the “dead” salary of $15.8 million guaranteed to Paul (subject to a deduction of potential set-off amount we will not be discussing in detail).
Stretching or Resigning Paul
The team has the option to “stretch” Paul’s dead salary. Stretching his salary allows the Suns to spread the payments and the salary cap hit of $15.8 million over five years at $3.16/year. They could dip below the salary tax for the time being and trigger the ability to use the Non-Taxpayer Mid-Level Exception (appx. $12.2 million) rather than being limited to the $5 million Taxpayer Mid-Level.
However, if the Suns elect to stretch the cap hit over multiple years, they cannot resign Paul during the years the salary is stretched. It’s an either or scenario: either stretch the $15.8 million cap hit, or resign Paul to a lesser salary and absorb the $15.8 million cap hit this season.
The time constraint is where it gets interesting. The Suns must notify the NBA of its election to stretch Paul’s salary by 11:59 P.M. the day after he clears waivers. In other words, when Paul becomes a free agent, the Suns will want to have an answer as to whether Paul is resigning with the team at a discounted rate. If they trigger the waiver process without an answer, they gamble losing Paul permanently or taking a large cap hit this year for no reason.
Needless to say, by the start of the new Salary Cap year, we should know if Paul has played his last game as a Sun based on whether they stretched his dead salary or not.
