In order to remain legally eligible to execute a sign-and-trade with the Orlando Magic for center Dwight Howard, the Brooklyn Nets have re-drafted its free-agent agreement with European power forward Mirza Teletovic (via SI.com).
The Nets had originally offered Teletovic–who averaged 21 PPG in the Euroleague last year–a five-year, $15 million contract. The contract was per a mid-level salary cap exception.
According to the NBA collective bargaining agreement, a mid-level exception contract triggers a hard salary cap which a team's overall salary cannot legally exceed.
The hard cap during the 2012-13 season is $74 million.
Having already made lucrative long-term agreements with Deron Williams, Gerald Wallace and Joe Johnson, the Nets would not be able to keep those stars and assume Howard's $19 million contract while remaining under the hard cap.
To address this problem, the Nets revamped its agreement with Teletovic to a mini mid-level exception, the starting salary of which is $3 million a year over a three-year period (via SI.com).
Utilization of a mini mid-level exception eliminates the hard cap. Without a hard cap, a team is permitted to go beyond the collective bargaining agreement's current $70 million luxury tax threshold, so long as it is willing to pay tax penalties.
Brooklyn's billionaire owner Mikhail Prokhorov may be willing to make this sacrifice to acquire Howard via a trade to the Orlando Magic. An addition of Howard to the Nets would make them the prohibitive favorite to win an NBA title.
Howard would also give the Nets a windfall of endorsement and marketing opportunities that may easily eclipse losses from tax penalties.
Of course, several NBA teams are aware of these benefits as well, and many will continue to try to entice the Magic with their best offers for Howard.
Notably, it t is curious that Teletovic would immediately agree to what is a drastic cut in salary. However, Teletovic may already know that he will not be offered a better multi-year deal on the market.
The Nets can only officially sign Teletovic to a contract as of July 11th.