De’Anthony Melton’s contract situation explained

It’s complicated.

The Golden State Warriors were hit with some awful news on Wednesday, a few hours before their blowout win over the Atlanta Hawks: starting shooting guard De’Anthony Melton would undergo season-ending surgery to repair his sprained ACL.

Perhaps no team was as prepared to lose a starter as the Warriors, who started the season with a 12-player rotation and were actively trying to find ways to get a 13th player, Lindy Waters III, into the rotation. But even so, it’s a massive loss, as Melton was clearly one of the team’s best players, and a perfect backcourt fit alongside Steph Curry. And even with that depth, Mike Dunleavy Jr., Steve Kerr, and the rest of the Warriors braintrust will surely be looking for ways to fortify the roster in Melton’s absence.

Which brings us to his contract. What impact does it have on the Warriors’ attempts to improve their roster now that they’re down an impact starter?

Golden State will surely apply for the Disabled Player Exception, and likely be granted it. So let’s start the questions there.

What is the Disabled Player Exception?

The NBA does not have an Injured Reserve like in the NFL, or an Injured List like in MLB. They closest they have is the rarely-used Disabled Player Exception (DPE). Teams can file for the DPE when a player is lost to a season-ending injury. In order to be granted the DPE, a league physician has to determine that the player is, to use the CBA’s language, “substantially more likely than not” to miss the remainder of the season (though it’s worth noting that, should a player make a recovery, they are allowed to play again).

If granted the DPE, the team is then allowed the cap space to acquire a player up to either half of the injured player’s salary, or the non-taxpayer mid-level exception, whichever is smaller. Since Melton was signed to the $12.8-million mid-level exception, the Warriors would be afforded half of his salary, and be able to sign, claim off waivers, or trade for a player owed up to $6.4 million.

Sounds great, right? Unfortunately, there are restrictions that complicate matters.

What the DPE doesn’t allow

Unlike in football and baseball, the NBA’s injury exception doesn’t clear a roster spot. As long as Melton remains with the Warriors, he will use up one of their roster spots, with or without the DPE. This isn’t currently an issue for the Warriors, though, as they’re only using 14 of their allotted 15 roster spots (plus three two-way contracts).

The big issue, though, is the money. While the DPE allows the injured player’s team to spend money, it doesn’t open up any additional salary space. It’s similar to re-signing a player using their Bird Rights: you’re allowed to spend money that you otherwise wouldn’t be able to, but it doesn’t clear the salary space for it.

In other words, while the Warriors (if granted the DPE) will be allowed to acquired a $6.4-million player, they won’t have $6.4 million subtracted from their salary cap to place that player into.

For prior seasons, this would really just mean that adding another player would cost the Dubs tens of millions of dollars in tax payments. But they’re much more restricted this year, do to acquiring Buddy Hield in a sign-and-trade. By executing a sign-and-trade, the Warriors automatically became hard-capped at the salary cap’s first apron, which this year is roughly $178.1 million. The team’s current salary allocations sit at roughly $177.6 million.

You can see the problem. The Warriors are less than a minimum contract away from the first apron. The DPE would, essentially, give them license to buy a car, but the garage is full. It’s a tool that, at present, has no application.

So now what?

Assuming the Warriors are granted the DPE, they’ll have until mid-March to use it, and there’s no penalty for letting it expire. So they can sit on it and wait for an opportunity to put it to use. In order to have such an opportunity, they’d have to make a trade at some point that clears up salary space so that there’s some room in between their payroll and the first apron.

What about Melton?

Melton’s salary now becomes an interesting tool for Dunleavy and the Warriors. The bulk of big in-season trades are made when a competitive team sends an expiring contract to a non-contending team in exchange for a player that can help immediately. Melton’s $12.8 million deal isn’t a tiny figure, so it could be part of the Warriors making a big deadline move, as teams will be interested in expiring contracts. It could also be used to help match salaries in a bigger deal (hey, Melton’s contract attached to Andrew Wiggins, Gary Payton II, and Gui Santos makes a trade for Giannis Antetokounmpo work just fine!).

Since Melton signed with the Warriors this offseason, he’s not eligible to be traded until December 15, so we’re still a ways away from any potential rumors swirling.

While Golden State will surely be willing to use Melton’s expiring contract as a tool for the right trade, there’s value in keeping him on the roster, too. He’s a highly-intelligent player and an excellent leader, so he could be a vital mentor and coach in the locker room, on the bench, and on the practice court. And keeping him in the system all year long not only increases the team’s chances of re-signing him next offseason, but gets him as familiar as possible with the system before next year.

Heal up, De’Anthony.