Why the Los Angeles Lakers cannot use the Mid-Level Exception

Ever since the Los Angeles Lakers pulled off the massive Russell Westbrook trade every Laker fan has been putting their general manager hat on and trying to figure out how Rob Pelinka is going to build a roster around Westbrook, LeBron James and Anthony Davis.

The Lakers were already restricted financially and are now really restricted with the superstar trio accounting for more than $120 million in combined salary. There are not a lot of options for the Los Angeles Lakers, with minimum contracts being the go-to moves for the team.

One method that many teams use to go over the salary cap is the Mid-Level Exception. The MLE allows a team to sign a player for up to a four-year deal that will be worth somewhere between $9.5 and $10 million next season, depending on where the cap lands exactly. Said player gets a percentage raise increase each season.

Before the Westbrook trade, the MLE was a tool for the Lakers. Now, it is something that Rob Pelinka cannot even utilize. The NBA salary cap and its rules can be very confusing, so let’s break down why.

Why the Los Angeles Lakers cannot use the Mid-Level Exception:

It is all in the name. The full name of the MLE is the Non-Taxpayer Mid-Level Exception. Only teams that stay under the luxury tax apron are allowed to use the MLE. The Lakers are not going to stay under the tax apron.

For those unfamiliar, there are two cap numbers in the NBA. There is the basic salary cap and there is the luxury tax apron. Teams can maneuver money to go over the basic salary cap using things such as Bird Rights, minimum deals, and yes, the MLE.

Teams can also go over the tax apron in most situations. For example, teams cannot go over the tax apron if they acquire a sign-and-trade player, or in this case, if they sign someone with an MLE contract. If a team does go over the tax apron they are taxed $1.50 for every dollar spent over the apron.

While the official number is not yet set in stone, it is projected to be $136.6 million this season. It could be slightly more than that, but not by much. That is where the problem lies. Using the MLE would literally take the Lakers over the tax apron, which cannot be done.

The superstar trio plus Marc Gasol and the $5 million still owed to Luol Deng accounts for $128.4 million in salary-cap space. Even if the MLE is on the lesser end of the spectrum, $9.5 million, it would put the Lakers at $137.9 million.

Sure, the tax apron could theoretically be slightly more than that but it does not matter. The team would still have to sign minimum players to actually fill out the roster. Each minimum player has a $1.6 million salary-cap hit and the Lakers will sign multiple.

It is impossible. The MLE does not allow a team to go over the tax apron and it would literally take the Los Angeles Lakers over said tax apron.

So what can the Los Angeles Lakers do in free agency?

There are three things the Los Angeles Lakers can do. First, the team can utilize its Bird Rights to re-sign Alex Caruso and Talen Horton-Tucker. There is a point where the salaries will be too high to justify paying a high tax bill, but it is critical that the team re-signs these players and actually uses the Brid Rights.

Yes, they will have to pay tax, but they are going to have to pay tax anyways.

The second thing the Lakers can do is something we already mentioned: sign minimum players. There are five free agents, in particular, that will be available for a minimum deal that the Lakers should pursue.

The final straw lands with Dennis Schroder. The team could re-sign him with his Bird Rights, although that is redundant because of Russell Westbrook, or it could look to sign-and-trade him. The Lakers cannot acquire another sign-and-trade player as it would hard cap the team at the apron, and they have to go over.

But they can acquire someone that is currently under contract, such as Buddy Hield. Personally, I find that move extremely unlikely as the tax bill that the Lakers would be taking would be monumental. But hey, it theoretically is possible and if Jeanie Buss is willing to pay $50 million in tax alone then be my guest.

Those are the three routes the Los Angeles Lakers can take to build out the roster. The MLE is not one of those routes.