What The Indiana Pacers 2023 Offseason Means For Their 2024 Free Agency

The Indiana Pacers were an active team in the 2023 offseason, spending a significant amount of money by bringing in new players. Their highlight addition was Bruce Brown, who they inked to a deal worth more than $20 million per season. On top of that, they also extended guard Tyrese Haliburton and forward Aaron Nesmith’s contracts and traded for Obi Toppin. They also picked up team options in the contracts of Isaiah Jackson and Bennedict Mathurin. The front office was busy.

The team sits at 9-7 with November nearly over, and the Pacers’ decision makers didn’t stop tweaking the roster once the season began. They moved on from center Daniel Theis via a contract buyout earlier this month, opening up a roster spot and officially clearing some money from their salary cap books.

The team is doing well and has changed their style on the court after many transactions. Those deals listed above, in tandem, also could change the trajectory of Indiana’s 2024 offseason. For a while, it looked like the franchise could have significant cap space next year. That could still be the case, but the changes made to the roster means it is no longer a guarantee.

Brown’s contract is for two seasons, and his 2024-25 salary is $23 million. That could eat into Indiana’s cap room next season, though the second year of Brown’s deal is covered by a team option. If declined, the Pacers could open up some cap space.

Haliburton’s cap hit for next season won’t be known until the ongoing campaign is over, but it’s reasonable to assume it will be somewhere between $36-45 million. For the ease of math during the rest of this exercise, $40 million will be used for that number. Nesmith’s cap hit via his extension is $11 million for 2024-25.

Between those three deals and picking up Jackson ($4.4 million) and Mathurin’s ($6.3 million) options, the blue and gold added over $80 million to their books for the next campaign. They were smart to do so — each of those players is talented, and keeping them around is smart. It does impact the Pacers 2024 offseason, though.

Prior to those moves, the only contracts on the Pacers cap sheet for 2024-25 were Myles Turner (roughly $20 million), T.J. McConnell ($9.3 million), Jarace Walker (slightly over $6.3 million), Ben Sheppard (approximately $2.6 million), and Andrew Nemhhard (a tick over $2 million). That’s a small number of players — and dollars, in an NBA sense.

Now, though? Between Turner, McConnell, Mathurin, Walker, Haliburton, Nesmith, Jackson, Sheppard, and Nembhard, the Pacers have over $100 million in guaranteed salaries for next season — barring trades of course. That doesn’t even account for Brown’s $23 million team option or Jalen Smith’s $5.4 million player option. If those are added in, Indiana’s guaranteed salaries for 2024-25 climbs over $130 million.

The most recent projection for the 2024-25 salary cap is barely over $142 million. That would leave the Pacers with only about $10 million of cap room, and that’s before re-signing any of Toppin, Buddy Hield, or Jordan Nwora. So while the Pacers were previously thought to have cap space next summer, that may not be the case any more.

The Pacers will have full Bird Rights on both Toppin and Hield, and they will have Early Bird Rights on Nwora. That makes those players easier to keep, should Indiana want to, but using those rights requires the Pacers to keep those player’s cap holds in free agency. A cap hold is essentially a salary cap charge a team holds if they have Bird Rights, or a version of them, on a free agent. Those holds can be renounced, but doing so dissolves a player’s Bird Rights with their previous team. Bird Rights allow a team to sign a player even if they are over the salary cap.

Hield’s cap hold will be nearly $29 million and Nwora’s will be just under $4 million. Toppin’s can change but is currently projected to be just over $20 million.

With just $10 million in cap space, Indiana could not keep all three of those players without using their Bird Rights. Thus, it’s possible that the Pacers simply opt to stay over the cap and re-sign their own players. They could still add to the team in free agency via the Non-Taxpayer Mid-Level Exception, Bi-Annual Exception, and trades, and they currently have two first round picks in the 2024 NBA Draft. But using those resources requires roster spots, so there will be a tricky balance to strike between retaining talent, keeping the financial situation clean, and improving the team.

If the Pacers were set on using cap space next summer, they could hope that Smith opts out of his player option. They could then move on from McConnell, who has a partial guarantee of only $5 million next season, and decline Brown’s team option. If they did all of those things and renounced all of their cap holds, they would be sitting at over $40 million in cap space. That number does not account for any draft picks the Pacers could make.

A lot of what the Pacers decide to do next summer could come down to Brown and Hield’s situations. Combined, they will account for over $50 million in cap hits during free agency, though Hield’s cap hit will simply be his salary once he signs a contract. That $50 million number is significant, and it could be the deciding factor in Indiana going hunting for a strong free agent or staying over the cap and searching for trades.

Neither option is better than the other, and how this Pacers season goes could influence what the team decides to do. As it stands right now, though, it is no longer safe to assume that Indiana will enter the 2024 offseason with a mountain of cap space.

They have flexibility, though, and the current front office has prioritized keeping their options open during their ongoing roster build. Eventually, they will have to lose that flexibility to add talent, but for another summer or two, they have many transactional options.