I'm a finance guy (career wise) & a big Knick fan. I like the business side of sports as much as the actual games sometimes. I love drafts, trades, salary cap talk. One thing I've yet to pin down is the salary cap ramifications of buy outs. We know the Knicks are hamstrung buy the cap for years....but how does the idea of buying out players impact that. I know it costs money, so I'm not trivializing that...but say we buy out Anderson, Eisley. Up until this year & the practice of teams buying out players....the NBA seemed like a "make a mistake on a long term contract & you're screwed" league. Now, it seems like there's hope. Am I mistaken?

Compared to the beginning of the season...wouldn't a future without the ridiculous contracts of Travis Knight,Anderson, Eisley, Ward, Harrington & Weatherspoon look nice? Two of those four are gone (Knight, Spoon). Ward, Harrington & McDyess are soon to be expired. I know this is the gloom & doom website capital of the world, but can somebody explain:
a) the cap vs. a buyout?
b) whether there's actually promise on the horizon?

As far as I understand the cap, a buyout on a contract doesn't give any salray cap relief. The contract has to be a guaranteed contract but almost every contract in the NBA is guaranteed. The players take a little less usually 2million a year because it gives them most of the money in a lump sum. It clears up a roster spot and the insurance might pay another players IR. (the roster spot is of most importance)

The contract buyout remains on the salary cap and runs the length of the contract till the date of expiry. The only way to get cap relief on the length of the contract is to dump salary in a trade of an expansion draft like the one thats comming up. If however one of the players with a bought out contract is resigned by another team, the first team can reduce his orginal contract by one-half the difference between the player's new salary and the minimum salary for a one-year veteran.

The salary cap is at around $46M I think this year. There is a little penalty for every dollar spent over the cap in contracts/ There is a luxury tax set up which is aroun $54M and if a team goes over that, they have to match it dollar for dollar. So it the team is at $60M, they have to not only pay the 46 - 54 extra cap penalty and the $60M-$46M money ot the players, they also have to pay the league another $6M as luxury tax. So owners with large payrolls not only pay high salaries, they also have to pay the luxury tax which makes it a double loss.

Buyouts help in cases where the team is stuck with a bad contract and a player that is of no use and need the roster spot. Ex: Travis Knight, Luc Longely, LJ, Dikembe Mutombo. Spoon was almost bought out because we needed the extra spot and would've been a good deal cause we didn't need him to play at all. Deke was a bad buyout because not only is he still effective, he is way too good to pay him to "NOT PLAY FOR YOU ANYMORE". The Nets miscalculated Deke's and Zo's worth and their buyout backfired.