The Orlando Magic, like all NBA teams, have to operate within the parameters of the salary cap. The salary cap is a limit placed on the total amount of money that a team can spend on player salaries. It is put in place to promote competitive balance and prevent teams from spending excessive amounts of money to build super teams. For the 2021-2022 NBA season, the salary cap is set at $112.4 million. However, teams are allowed to exceed the salary cap in certain situations, such as signing their own free agents or using salary cap exceptions.

Orlando Magic will have cap space again, but that isn’t much use anymore

Entering this offseason, the Orlando Magic seemed like a team poised to make a major move.

Here was a team that at least had a sense of who its core could be but had too much youth to make significant progress. They seemed like they needed a veteran and maybe a surehanded shooter to take the leap into contention and help their young group pace themselves.

The rumors started popping up at the trade deadline that the Magic could chase after an All-Star like Fred VanVleet with the cap room they had created.

What did the Magic do with all that cap room this summer then?

There was no major signing — perhaps an overpay on a two-year, $22-million deal for Joe Ingles with a team option on the second year and then a two-year, $16-million deal for Moe Wagner. The team simply flipped its cap space over another year and brought back much the same roster.

However, teams are allowed to exceed the salary cap in certain situations, such as signing their own free agents or using salary cap exceptions. The Orlando Magic have had mixed success in managing their salary cap in recent years. They have made numerous trades and roster moves to create salary cap flexibility and position themselves for future growth.

The Orlando Magic opted to maintain flexibility and flip their cap space over another year this offseason. Their time to do that is running out as they position themselves for their future.

The Magic’s offseason did not get flying colors and the strongest grades — even from us. But it was still widely praised for being patient and allowing the young players to grow and build on their progress from last season before pushing those chips into the middle.

Orlando’s goal this offseason was to maintain that financial flexibility so it could be ready to make that move. And that will be the case once again.

Keith Smith of Spotrac made his early estimates for teams with the most cap room heading into the summer of 2024 and the Magic are poised to have the second-most cap room heading into the offseason. They would be one of seven teams with projected cap space for next offseason.

Smith reports the league is offering a cautious estimate for next season’s cap, increasing it by about four percent to $142 million (that will likely increase though because the NBA is doing very well).

That would give the Magic an estimated $51.3 million in cap space for next summer. That number would include picking up rookie options for the Magic’s first-round picks — Jalen Suggs, Franz Wagner and Paolo Banchero — and picking up the final year in Jonathan Isaac’s contract.

The team currently only has $32.8 million in guaranteed money committed to the 2025 season. That number jumps to $61.2 million if you include Suggs, Wagner and Banchero to that mix.

Regardless of how you do the math (there are still various cap holds to consider in getting to the team’s final cap space), the Magic will have significant money to spend.

But that cap space is less important than ever. Yes, teams have to spend up to the payroll floor now or else face some actual consequences. Teams will spend. But that is not going to do much to get the kind of impact players on affordable deals that a team like the Magic need.

The Houston Rockets opted to overpay for an aging Fred VanVleet and Dillon Brooks to cement veterans on their young team. They were trying to expedite their process after struggling through last season.

The Magic spent too and will have to spend in the future. But the team opted to stay patient and start lining up their contracts.

Next year’s free agent class is not particularly strong either. And so the Magic are likely in a position to flip their cap room forward for another year or start lining up big money contracts to make a big trade.

That seems to be the path Orlando is likely to explore moving forward.

Everyone senses the Magic are ripe for a trade. They are loaded at guard and have an imbalance between their backcourt and frontcourt. They could also use a lineup upgrade at shooting guard. The team could easily combine some contracts for a big-money deal, especially before extensions for some of their rookies kick in.

That is likely how the Magic spend this cap room in the future rather than signing a player outright in free agency. Most star players do no move in free agency anymore.

So what will the Magic do with this cap room? They will likely use it to retain their own players.

The Magic are likely to spend the majority of that upcoming room on extensions for Markelle Fultz and Cole Anthony — both could ask for starting salaries near $20 million per year, meaning nearly $40 million of that space will get eaten up with cap holds playing a big factor in the final number (a discussion for next summer).

Orlando’s time with this much cap space is running out. The team is going to have to start spending to retain its own players and that is what the team is preparing for.

That is a ticking clock to use this cap room or to align the players on the roster to be better positioned for trades. At the end of the day, it is about salary slots to make those moves. Because, until the team is ready to push all those chips into the middle, they are not going to spend.

Or they are not going to commit long-term. Everyone is spending, as The Ringer pointed out. The new CBA requires that now. And that is why the Magic felt comfortable overspending on Joe Ingles and Moe Wagner to hit the payroll floor and fill up their already full roster.

The question is when the Magic will spend in a serious way to add veterans to the team. They clearly did not believe the team was ready to do so this offseason.

The Magic left themselves in that holding pattern then. They believe enough in their young players to give them the space to grow. They know the salary cap is about to spike — probably not in the summer of 2024 but soon after. So spending now will not have the same consequences as spending later — and extensions for Franz Wagner and Paolo Banchero are certainly looming.

What is clear though is that these finances do lay the gauntlet for the team’s season.

This season is about figuring out who the Magic should keep around and continue growing with. It is about figuring out how to align the players for that time when the team will not have cap room.

Next. Time To Step Up: Cole Anthony's defense. dark

Do not think the Magic have wasted this opportunity with cap room though. There were not players worth investing in long term nor was the team ready to absorb the attention of a veteran player. That time is coming as the Magic try to pick up their pace for competitiveness. Everything is moving in the right direction for the team.

Orlando has kept itself open to anything. And that is the larger point of this rebuild.

Orlando magic salary cap

Signed a 2 year $3.7 million Rest-of-Season contract with Orlando (ORL) - includes 2023-24 Club Option

R.J. Hampton

Admiral Schofield

Admiral Schofield

Goga Bitadze

Terrence Ross

Patrick Beverley

Terrence Ross

Waived by Orlando (ORL) via buyout; leaving behind $10.58 million in dead cap. Salary reduced by $918,516.

Patrick Beverley

Traded to Orlando (ORL) from Los Angeles (LAL) as part of a 4-team trade: Denver (DEN) traded Nah'Shon Hyland to Los Angeles (LAC); Denver (DEN) traded Davon Reed to Los Angeles (LAL); Denver (DEN) traded 2024 2nd round pick to Orlando (ORL); Los Angeles (LAC) traded 2024 2nd round pick and 2025 2nd round pick to Los Angeles (LAL); Los Angeles (LAL) traded Thomas Bryant to Denver (DEN); Los Angeles (LAL) traded cash to Orlando (ORL); Orlando (ORL) traded Mohamed Bamba to Los Angeles (LAL)

Patrick Beverley

Patrick Beverley

Traded to Orlando (ORL) from Los Angeles (LAL) as part of a 4-team trade: Denver (DEN) traded Nah'Shon Hyland to LA (LAC); Denver (DEN) traded Davon Reed to Los Angeles (LAL); Denver (DEN) traded 2024 2nd round pick to Orlando (ORL); LA (LAC) traded 2024 2nd round pick and 2025 2nd round pick to Los Angeles (LAL); Los Angeles (LAL) traded Thomas Bryant to Denver (DEN); Los Angeles (LAL) traded cash and $2 million to Orlando (ORL); Orlando (ORL) traded Mohamed Bamba to Los Angeles (LAL)

Patrick Beverley

Traded to Orlando (ORL) from Los Angeles (LAL) as part of a 4-team trade: Denver (DEN) traded Nah'Shon Hyland to Los Angeles (LAC); Denver (DEN) traded Davon Reed to Los Angeles (LAL); Denver (DEN) traded 2024 2nd round pick to Orlando (ORL); Los Angeles (LAC) traded 2024 2nd round pick and 2025 2nd round pick to Los Angeles (LAL); Los Angeles (LAL) traded Thomas Bryant to Denver (DEN); Los Angeles (LAL) traded cash and $2 million to Orlando (ORL); Orlando (ORL) traded Mohamed Bamba to Los Angeles (LAL)

NBA free agency: Here’s where things stand for Orlando Magic

The Magic have made multiple moves since late last week and the start of NBA free agency but things could be slowing down soon with the roster filling up.

Orlando exercised the team option on center Goga Bitadze, declined options on Admiral Schofield and Michael Carter-Williams, guaranteed the contracts of Markelle Fultz and Gary Harris, signed first-round draft picks Anthony Black and Jett Howard and agreed to terms with free agents Moe Wagner and Joe Ingles.

The franchise still needs to make a decision regarding big man Bol Bol. Friday’s guarantee date for Bol’s $2.2 million salary was moved to an undisclosed future date.

So where does that leave them from a roster standpoint and cap perspective?

With Bol still part of the Magic and free agents unable to sign until 12:01 ET on July 6, Orlando is working with 16 players between agreed deals and current rostered members.

Under the league’s new collective bargaining agreement, which went into effect Saturday, all teams need to get to 90% of the $136 million salary cap for the 2023-24 season — a $122.4 million minimum team salary.

The tax level for the 2023-24 season is $165.3 million — or 121.5% of the salary cap.

When considering the team’s transactions, the Magic are projected to have a $132.5 million cap hit ($120.4 million in guaranteed salary) from their active roster for the 2023-24 season. That cap hit will change so they can be compliant with the league’s rule of having no more than 15 players signed to a standard contract.

Adding in $18.2 million in cap holds, Orlando would sit at $150 million in total cap allocations.

That’s $14 million over the salary cap but below the tax level.

Because they’d be operating over the salary cap but under the tax level, Orlando could sign Ingles using a portion of the $12.4 million non-tax payer mid-level exception and re-sign Wagner with his Full Bird Rights.

The Magic have the flexibility to operate as a team over or under the cap depending on what happens with their cap holds.

The free agencies of Carter-Williams and Schofield could impact the cap holds. If the pair sign elsewhere, the Magic would be down to about $14 million in cap holds. That would bring Orlando to $134 million in guaranteed salary for 2023-24, which would be $2 million under the cap.

This financial flexibility is something Magic president of basketball operations Jeff Weltman values.

In addition to the full 15-man roster, the Magic have guard Kevon Harris on a two-way contract with two more two-way contracts available.

The NBA previously only allowed teams to carry two two-way players, but the league’s new CBA will allow teams to carry up to three two-way players simultaneously.

Although some things remain fluid, the Magic appear to be settling down this offseason.

Email Jason Beede at [email protected] or follow him on Twitter at @therealBeede.

Share this:

• Click to share on Facebook (Opens in new window)
• Click to share on X (Opens in new window)

This has included trading away high-salaried players and acquiring young, inexpensive talent. As of now, the Orlando Magic have several players on their roster with significant salaries. Some of the highest-paid players include Terrence Ross, who is set to make $12.5 million, and Gary Harris, who will earn $20.6 million. These salaries, combined with others on the roster, contribute to the overall team salary. Despite the salary cap restrictions, the Orlando Magic have opportunities to improve their roster through various means. They can use exceptions like the mid-level exception or bi-annual exception to sign free agents or trade for players who fit their team salary structure. The team can also make trades to match salaries with other teams while staying within the salary cap. Managing the salary cap effectively is crucial for the long-term success of any NBA team. It requires a balance between investing in the right players and maintaining flexibility for future roster moves. For the Orlando Magic, understanding and navigating the salary cap is a crucial part of their overall strategy for building a competitive team..

Reviews for "The Orlando Magic's salary cap situation: The good, the bad, and the ugly"

1. John - 2 stars:

I found the "Orlando Magic salary cap" book to be quite disappointing. Despite the promising title, it was filled with jargon and technical terms that made it difficult to understand for someone like me who is not well-versed in finance. I was hoping for a more general overview of the Magic's salary cap situation and strategies, but instead, I was bombarded with complex formulas and calculations that were hard to follow. Additionally, the book lacked concrete examples and real-life scenarios, leaving me feeling confused and unsatisfied. Overall, I think this book is only suitable for individuals with a deep understanding of finance and the NBA salary cap.

2. Sarah - 2.5 stars:

While "Orlando Magic salary cap" did provide some useful information about the team's financial situation, I found it to be overly technical and dry. The author seemed to assume that the readers already had a strong background in financial analysis, which made it challenging for a casual reader like myself to fully grasp the concepts. I would have appreciated more practical examples and explanations to help bridge the gap between theory and real-world application. The book also lacked engaging storytelling or personal anecdotes, making it feel more like a dry textbook than an enjoyable read. Overall, I think this book could benefit from a more accessible and reader-friendly approach.

3. David - 1 star:

I was highly disappointed with "Orlando Magic salary cap." The book provided vague and outdated information about the team's salary cap situation, which made it difficult to trust the content. Many of the strategies and tactics mentioned were not applicable in the current NBA landscape, making the book feel irrelevant. I was hoping for a comprehensive analysis of the team's salary cap management, but instead, I got an outdated and confusing read. I would not recommend this book to anyone looking for up-to-date and practical information on the Orlando Magic's salary cap.

The Orlando Magic's salary cap flexibility: An untapped resource for potential trades