How much cap room do the Orlando Magic actually have?

The Orlando Magic are expected to be a very active team this offseason.

After breaking through to the playoffs and forcing the Cleveland Cavaliers to seven games in their first-round series, everyone can feel the potential of this team to coalesce into something special.

The playoffs showed what this team's potential is, led by a budding star in Paolo Banchero. It also showed some clear weaknesses the Magic have to begin resolving. It showed that while the team is on the right path, there is still more work to do to be more than just a playoff cameo every year.

And this feels like the offseason to make something big happen.

As president of basketball operations Jeff Weltman has noted repeatedly, the bill comes due for every team eventually. The Magic's young stars are coming off their rookie contracts. With both Franz Wagner and Jalen Suggs extension-eligible, the Magic are about to become a lot more expensive.

Orlando does have considerable resources to spend this offseason. The team is expected at least to spend or acquire a starter-level player to take up much of that cap room.

But how much cap room do the Magic have? Keith Smith of Spotrac updated his cap projections and has the Magic having nearly $50 million in cap room this offseason, the third-most in the league.

But how do we come up with that number? ESPN estimated the Magic with $32 million earlier this offseason. Which number is correct?

The answer is it depends. It depends on how the Magic handle some non-guaranteed deals on their books. And ultimately, it depends on how much money the Magic need to go on their spending sprees this offseason.

A lot of this will get decided before the Magic face their first set of deadlines on June 29. No one can be naive. Teams know what is in the works in free agency long before the starting gun goes off to begin negotiating officially.

So it is important for everyone to start with this baseline of knowledge: How much cap room do the Magic have to spend?

The Orlando Magic do not have a lot of guaranteed money for 2025 this summer

The first place to start is with the basic facts.

The final salary cap number will not be revealed publicly until the league concludes counting the numbers for last season and finalizing the amount of basketball-related income that makes up what goes to the players.

But the league's projections are reportedly that the salary cap will be set at $141 million. Whatever number the Magic are below that number is how much cap space they will have.

As things stand, the Magic have only $66.1 million committed in guaranteed money for next season (all salary info courtesy of Spotrac).

Before we get anywhere else, the Magic could renounce all future cap holds and obligations and have $74.9 million in room to play with.

That is, of course, very unrealistic. The Magic will retain several cap holds and make some key decisions on players that will eat into that space.

But this is the heart of the team's flexibility. Orlando does not have a lot of money committed to next year's team. Cole Anthony is the largest guaranteed contract on the Magic's books.

Before we move forward to some of those critical decisions, the Magic are going to retain some cap holds.

All cap holds are is placeholders for contracts and players the team either intends to re-sign or players whose rights the Magic intend to keep. This prevents the team from circumventing the cap and declaring their intention to re-sign certain players if they need to use an exception to go over the cap.

For the purpose of this post, we are going to assume the Magic are operating without needing to worry about cap holds for their impending free agents—Gary Harris, Markelle Fultz and Chuma Okeke. They would play a factor if the Magic go over the cap though. Orlando would need to maintain those cap holds on their books to go over the cap and exercise Bird Rights on any of those players.

That is unlikely considering how far below the cap the Magic are. But it only takes one big free agent to make that important. We will cross that bridge when we get there.

The biggest cap hold the Magic face is for their draft pick at No. 18–$3.6 million. That is not a significant bite into the Magic's cap space. Orlando also has an open roster spot which leaves it with an open roster spot charge of $1.2 million (the minimum salary).

With guaranteed deals, then the Magic have $70.9 million committed to next season. it gives them roughly $70.1 million to play with.

The amount of cap room the Orlando Magic have comes down to non-guaranteed deals

How much cap room the Orlando Magic ultimately have depends on the decisions they make with free agents and team options.

The biggest one is Jonathan Isaac. He has $17.4 million left on his deal that is fully non-guaranteed until Jan. 10, 2025. It is a safe bet the Magic will retain Isaac, dropping the Magic's cap room total to $52.7 million.

That is starting to look closer to the number in most of the projections.

The Magic have further decisions to make with Joe Ingles, Mo Wagner and Caleb Houstan. All have some type of clause that could wipe them off the Magic's books for next year.

If the Magic only retain Caleb Houstan's non-guaranteed deal (something we should expect them to do), then the Magic's cap number drops to $50.7 million. That is roughly the number Smith and Spotrac are projecting for the Magic.

There may be some dead cap items that I am not calculating in here, but you can see how more informed cap projections get to these numbers. This post is meant to explain these basic mechanics and how the Magic could have such a wide range in their projected room available.

That number drops down to less than $50 million thanks to dead-money cap holds for Sindarius Thornwell and Trevelin Queen. The purpose of the Thornwell cap hold is beyond me, but the Magic still retain the right to bring him back on a two-way deal or sign him to a standard contract. The same for Queen, who is more likely to return to the Magic in some capacity.

The important thing to remember about cap holds like this is they can be renounced or reactivated as needed. There is no official declaration to them unless the Magic need to renounce them to make a signing or use them to go over the cap.

And, most important of all, cap holds are wiped out when they are no longer needed as a placeholder. If the Magic re-sign Gary Harris, for instance, to a two-year, $20 million, then his $19.5 million cap hold is wiped out and he counts only as $10 million against the cap.

The order you sign players matter. But that is more a mechanical function.

The important thing here to note then is how the Magic's cap range changes depending on what the Magic do with $19 million in team options the Magic have in Ingles and Wagner. That is really where this wide range comes. And most cap projections are really predictions of what the team will do with these options.

It is important to remember that the Magic can decline the options for either player and still bring them back. That could be a mechanic of creating cap room and then using an exception—the Magic have both the non-taxpayer mid-level exception ($13 million) and bi-annual exception ($4.7 million) to spend if they need to go over the cap.

They also should have the $8.1 room mid-level exception. Essentially, the Magic can decline Mo Wagner's team option and then bring him back on a new deal at the same salary (you can sort of double count your last $8 million in cap room using this exception).

Keeping both players, drops the Magic to $30.8 million, roughly the number ESPN projected earlier this summer. Declining both keeps the Magic around the $50 million Spotrac projects. Declining only Ingles settles the Magic at around $38.8 million.

This is why everyone is estimating the Magic are operating with somewhere between $30-50 million in cap room. It leaves open tons of opportunities for the team.