Orlando Magic face crucial offseason as spending rises

For several years, as the Orlando Magic sat back with oodles of cap room and flexibility to spend, president of basketball operations Jeff Weltman warned this day would come. There would be a day when the bill comes due.

The problem with building through the draft is that contracts are cheap at the beginning, and then they suddenly become very expensive. The Magic would have to pay the players they believed and invested in.

The Magic knew that the bill was coming due when they signed Cole Anthony to a three-year, $39.1 million deal two years ago. They knew it was coming when they signed Franz Wagner to a maximum five-year, $224.2 million deal and Jalen Suggs to a five-year, $150.5 million deal.

Paolo Banchero is set to get his max contract -- worth 25 percent of the cap in its first year in 2027 or 30 percent of the cap if he makes an All-NBA team -- this summer. That is a decision Wagner quipped would be a pretty simple negotiation during exit interviews Thursday.

The era of free money is gone.

As part of the Magic's next phase in their development, they are not dealing with extra cap room anymore. The Magic will be a tax team next season and will be navigating the vagaries and restrictions of the luxury tax line and first apron in the years to come.

"Like I have been saying for years, the train is coming for all of us," Weltman said at the team's exit interviews Thursday. "It pulled up to our station this year. We've now joined the rest of the league regarding our financial flexibility. Most of our roster upgrades will have to come through swapping rather than just adding.

"The reason we've been a good team the last couple of years is because we have an elite defensive backbone. As we look to improve our offense, we have to be very cognizant of not unraveling the DNA of our team. That's going to be what we have to balance this summer."

Weltman has made it clear the Magic will be searching for an improved offense after the team finished second in the league in defensive rating but 27th in offensive rating and last in 3-point field goal percentage. The Orlando Magic failed to score 100 points in any game during its five-game series with the Boston Celtics.

Orlando knows it needs to improve its offense. The pathways to doing so will be tougher now because of these cap restrictions.

Orlando must hit the trade market, having spent cap room last year to sign Kentavious Caldwell-Pope and contract extensions for Jonathan Isaac, Wendell Carter and more.

More expensive, still flexible

This Orlando Magic roster is a lot more expensive now, but it still has the flexibility to make the kinds of moves the Magic must make.

Orlando still have a lot of resources available to it -- including all of the team's draft picks, plus the Denver Nuggets' pick this year and an intriguing pick swap with the Phoenix Suns next year.

The Magic also have a lot of contracts in the "sweet spot" for trades. Large enough to bring in capable players but not so onerous that they clog the books and are completely unmovable. Outside of Wagner and Suggs, Isaac and Carter are the only two players with contracts longer than three years.

The books are mostly in order. But the team will still require some key decisions to improve the roster and control payroll. And the frustrations of this past season and poor showings from several role players could create complications when the team approaches the trade market.

The Magic are currently committed to $175.2 million in guaranteed salary for next season. That excludes team options for Moe Wagner ($11 million), Gary Harris ($7.5 million), Cory Joseph ($3.5 million) and Caleb Houstan ($2.2 million).

That puts the team comfortably over the projected salary cap of $154.6 million. But still slightly below the luxury tax line of $187.9 million and the first apron line of $195.9 million.

Before including the team's draft picks -- the Nos. 16 ($3.7 million) and 25 ($2.5 million) -- the Magic are dancing around the luxury tax line. Picking up Wagner's option would put the team right at the tax line and taking one of the draft picks onto the roster puts them over the tax line.

Taking on too much salary would put the Magic above the first apron. It is why it seems unlikely the Magic would look to add another star player this offseason. The salaries would cost a lot of the team's depth and tip the team into the first and possibly second apron ($207.8 million).

The biggest decision the Magic have to make this year is who to trade, as it seems likely they will decline options for Harris and Joseph. Houstan may be 50/50 to return depending on the team's belief in him or other needs they start to fill around the draft.

The situation is not nearly as dire as Bobby Marks of ESPN puts it. But everyone recognizes that there is a big expense coming with Banchero's anticipated max extension this summer. That will force the Magic to flirt with the second apron and put the team well over the first apron.

Orlando has an estimated $195.3 million committed to the 2027 season, assuming options and guarantees for Anthony Black, Jonathan Isaac, Kentavious Caldwell-Pope and Tristan da Silva are picked up and assuming Paolo Banchero gets the 25 percent max. Even that conservative estimate puts the Magic just shy of the projected first apron line.

This is as much a reason why the Magic are trying to be careful with their finances. And it is why the Magic are focused more on swapping players and salary slots rather than pushing chips in for a superstar player. Orlando already has its star players and massive salaries set.

The Magic are expected to be aggressive this offseason to upgrade the roster -- Goga Bitadze, Kentavious Caldwell-Pope and Cole Anthony should be expected to be shopped, and how aggressive the team wants to be likely depends on their decision on Anthony Black -- but they are still trying to walk a tight rope to keep their books in order.

Weltman said during exit interviews that the team will be in a win-now mode. The Magic are likely more willing to part with future assets like draft picks to grease the wheels and get the players they want.

But there are big decisions in play. And the finances are not as loose as they have been. The Magic's bill has indeed come due.