Originally posted on Crossover Chronicles  |  Last updated 11/29/11

The Denver Nuggets and the decision they made last February was one of the major talking points during the lockout negotiations.

The Miami Heat issue put small-market teams on notice about keeping their superstars. They feared the extend-and-trades that allowed Carmelo Anthony to leverage a trade out of Denver to New York, the place he chose. It gave the players all the leverage to force teams to do what they wanted. Owners hated not having the power. They sought to institute the 'Melo Rule that would prevent extend-and-trades or severely limit them.

They did not quite get that. It certainly is one of the losses the owners suffered in the new collective bargaining agreement.

But something happened that not many people may have noticed. The Nuggets, in acquiring a bunch of young players from the Knicks for Carmelo Anthony and Chauncey Billups, created a team that was too young to know it should not have had a successful second half of the season and a team with a ton of cap room for the free agency bonanza that is set to begin next week.

Denver has seven players under contract with three restricted free agents for whenever the free agency period begins. Including the qualifying offers (and not including any cap holds that might exist), the Nuggets have $28.9 million in salary committed to the 2011-12 season. Andre Miller is the highest paid player with a $7.8 million salary for next year.

This means the Nuggets will be a player in the free agency market this month. And they may be forced to spend a lot money this offseason.

 

The league, as part of the proposed collective bargaining agreement, is requiring each team to spend at least 85 percent of the team salary cap in the first two years of the agreement. If the league keeps the $58 million salary cap from last year, as it says it intends to do, each team will have to spend at least $49.3 million this year.

 

Denver will have to spend nearly $20 million this offseason alone to reach that mark. That does not include the two exceptions -- the $5 million nontaxpayer exception or the $2.5 million cap room exception -- available to nontaxpaying teams.

The Nuggets put themselves in a very strong position to pick and choose which free agents to chase down. The problem is, this year's free agent class does not have the kind of superstar the Nuggets would like to get to cement their balanced roster. Denver would like to find the star for the roster to galvanize and center around -- like, Carmelo Anthony.

And therein lies the other problem in Denver's excessive cap room. Who wants to go play in Denver?

This was the other issue in the collective bargaining session. Several small-market owners wanted some assurance that they could compete for big-name free agents and retain their stars. Denver is not a big market. Likely, Chris Paul, Deron Williams and Dwight Howard are not eyeing the Rocky Mountains for their next address.

Who can the Nuggets spend all this money on? That is going to be the issue Stan Kroenke and his team face as they try to make the team attractive in the future.

Denver, in the short-term, has to spend $20 million on 2-5 players depending on what happens with its restricted free agents. The Nuggets' hand might be forced this year to spend some money. That either means going after a top free agent this summer or looking for a trade.

What step Denver takes with its cap room is going to show where the team is going to take itself in the post-Melo era. The Nuggets were a nice story last year, but still have immediate needs to fill -- including finding post players to replace Kenyon Martin (stuck in China until March) and Nene (who did not sign an extension and seems to have his heart set on leaving). Denver could be in for a rough year. 

The difficulty for the Nuggets now is spending this extra money that they have to spend in a way that keeps cap flexibility for the move they really want to do.

If we are looking for a test of what the new NBA management style is going to look like, it might come in Denver. They cannot simply spend money for spending's sake (well, actually they have to), they have to build and wait for the right free agent or opportunity through trade -- as a team under the cap, they can take on 150 percent more salary back in a trade than they send out -- to get back to a competitive level.

This year will be tough for Denver. The trick is going to be making sure 2013 is not tough. The opportunity is there for Denver.

First, though, the Nuggets have to spend smart.

This article first appeared on Crossover Chronicles and was syndicated with permission.

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