The set-off provision removes some dead money from Milwaukee’s books, but not much
As you might have heard, news came yesterday afternoon that erstwhile Bucks point guard Damian Lillard is returning to the Pacific Northwest on a three-year, $42m deal with the Trail Blazers, who will use their full mid-level exception to accommodate him. Of course, Milwaukee waived their two-time All-Star at the beginning of the month in order to create enough cap room to sign new center Myles Turner in free agency, consequently stretching the two years and $112.6m remaining on his contract over five seasons. That amounted to $22.5m in dead money on the Bucks’ cap sheet from now until the end of the 2029–30 season—not exactly ideal.
But, of course, Lillard was going to miss most of next season, so in a way, that was going to be tens of millions of dead cap anyway. In fact, reports after yesterday’s signing indicate that he’ll miss all of next season as he recovers from his torn Achilles sustained at the end of April in Game 4 of Milwaukee’s first-round series with Indiana. So Dame stands to make plenty of money next year to be back with the team that drafted him in the city that he calls home and loves—a pretty great outcome for him! But how much money? And how does that affect what the Bucks owe him?
Well, I’m a sicko who reads legal documents littered with gobs of confusing jargon for fun, and to figure it out, I consulted Article XXVII (that’s 27, in case you weren’t around for the Super Bowl in 1993) of the NBA’s collective bargaining agreement so you don’t have to. You’re welcome. Let me try and paraphrase what it says about teams who waive-and-stretch a player, who then signs a contract with another team:
- The team has their yearly liability reduced if they employ their “right of set-off,” also known as the set-off provision.
- The former team’s new liability to their former player is calculated based on the salary of his new contract for each season he would have been under contract with his former team.
- The waived-and-stretched salary (for someone who isn’t a rookie) for the player’s former team is reduced by half the difference between his new salary in each of those seasons and the salary of a player with one year of service, spread out over the length of the stretch.
- The set-off begins after the regular season of the league year in which the player signed his new contract.
Clear as mud, right? Let’s apply this to Lillard’s specific situation. Regarding the first point, since Dame would have only been under contract with the Bucks until the 2026–27 season at the latest (had he exercised his player option for that year), we are only using his Blazers’ salary in years one and two of his new deal. While none of these numbers are official, let’s say that he is earning $13.3m this upcoming season and $14m the season following (the full MLE allows for a salary of up to $14.1m in year one with 5% annual raises). In that case, the order of operations is:
- $13.3m – $2.0m (one-year player salary) divided in half: $5.6m
- $14m – $2.2m (one-year player salary in 2026–27) divided in half: $5.9m
- $5.6m + $5.9m = $11.5m
That $11.5m is then divided by five—the number of years the Bucks stretched Lillard for, and the result is deducted from the total the Bucks owed Lillard prior to his Blazers signing, spread out over the five years they will be paying him. So instead of owing $90.1m more if he hadn’t signed this contract, they owe him $80.8m instead. That amounts to a reduction of $2.3m per year, meaning the Bucks will have a cap hit of $20.2m for Lillard each season from 2026–30.
Milwaukee is also paying Vasilije Micić $680k per year in waived-and-stretched salary between now and summer 2028, meaning they will have $20.9m in dead cap for the following two seasons (through summer 2028), then $20.2m for the two seasons after that. Comparatively, prior to the Portland contract, that number would have been $23.2m for each season between now and summer 2028: a net savings of $4.6m for Milwaukee in that timespan and $9.2m overall.
If you’re curious, here is the estimated amount Dame himself will receive from Portland and Milwaukee combined in the years ahead, based on a three-year, $42m contract:
- 2025–26: $33,5m
- 2026–27: $34.2m
- 2027–28: $34.9m
- 2028–29: $20.2m
- 2029–30: $20.2m
That amounts to $143.0m between now and summer 2030. From his perspective, Lillard effectively turned a two-year, $112.6m contract into a three-year contract worth that amount: not quite another $42m on top of what he would have gotten if he never signed another NBA deal, but still a nice hunk of change. He’ll still get paid through 2030, and even if he were to sign another contract at one point, Milwaukee would still get their $2.3m break.
In the short term, this changes exactly nothing for the Bucks. They’re still paying Lillard the same amount this year, so no savings until next summer. From there, it could be the difference in some luxury tax payments or with regard to any eventual hard cap they face, but like this year, they may not be a taxpayer in 2026–27, since if they stay under the tax line for another season, they reset the clock on repeater penalties. But if they find themselves hard-capped at the first or second apron sometime in the future, they now have $2.3m more breathing room than previously.