When the Hughes to the Knicks trade went down, I authored a couple posts speculating that James could be retired and come off our cap. After reading up more carefully, it looks like I was dead wrong about this so I wanted to make a straightforward post that folks would see.
Sorry to get anyone's hopes up.
How do retired players count against the cap?
Any money paid to a player is included in team salary, even if the player has retired. For example, James Worthy retired in 1994, two years before his contract ended. He continued to receive his salary for the 1994-95 and 1995-96 seasons, so his salary was included in the Lakers' team salary in those seasons. It is at the team's discretion (or as the result of an agreement between the team and player) whether to continue to pay the player after he has retired.
There is one exception whereby a player can continue to receive his salary, but the salary is not included in the team's team salary. This is when a player is forced to retire for medical reasons and a league-appointed physician confirms that he is medically unfit to continue playing. There is a waiting period of one year following the injury or illness before a team can apply for this salary cap relief. If the waiting period expires mid-season (on any date prior to the last day of the regular season), then the player's entire salary for that season is removed from the team's team salary. For example, in March 2003 the Knicks were allowed to remove Luc Longley's entire 2002-03 salary from their books (and since the luxury tax is based on the team salary as of the last day of the regular season, the Knicks avoided paying any tax on Longley's salary). This provision can also be used when a player dies while under contract.
If the player "proves the doctors wrong" and resumes his career, then his salary is returned to his team's team salary when he plays in his 10th game in any one season (including pre-season, regular season and playoff games). This allows a player to attempt to resume his career without affecting his team unless his comeback is ultimately successful. A team loses this salary cap relief even if the player later signs and plays 10 games with a different team.
Teams are not allowed to trade for disabled players and then apply for this salary cap relief. Only the team for which the player was playing when he was disabled may request this relief.
If a player retires, even for medical reasons, his team does not receive a salary cap exception to acquire a replacement player.
So yeah, that sucks. That means he won't come off our cap.and we've effectively taken on an additional $9.3M in guaranteed salary for next year. Bye Ben.
That leaves the following possible uses for James:
* Scrub our cap by trading him to a team under the cap. I'd imagine if the Bulls really wanted to they could pawn him to a team under the cap. Since insurance is going to supposedly pay 80% of his $6.6M contract, the receiving team would be liable for only $1.32M, which we could reimburse with cash (and add another million and a half or so for their trouble).
* As a trade chip. Like a mini Raef LaFrentz, we could include James in a trade to another team, who wouldn't have to pay most of his salary. Could help in round II of the Amare/Bosh talks. One can dream, right?
* As a multifaceted way for the Bulls to spend less. He's on the books for $6.6M, meaning they can't sign anyone else, but he actually only costs the Bulls $1.3M. Hurray for operating income.