Following the Lakers' elimination from the playoffs, LeBron James hinted at the possibility of walking away from the game for next season.
"I got a lot to think about, to be honest," LeBron said. "Just me personally, going forward with the game of basketball, I got a lot to think about.”
For the Lakers, LeBron's retirement would be stunning. He just signed a two-year, $97.1 million extension last summer that will pay him an estimated $46.9 million in 2023-24 and give him a $50.6 million player option in 2024-25. Although it seems unlikely, it would be a disaster scenario from a team building perspective if he did indeed follow through with that idea.
What LeBron James' potential retirement means for the Lakers' cap space & Kyrie Irving
What the Lakers could do if LeBron doesn't retire
The Lakers will have multiple options in free agency this summer.
They could clear up around $30 million in cap space to make a run at Kyrie Irving, although it would cost them retaining free agents D'Angelo Russell, Rui Hachimura, and Lonnie Walker. That figure would also fall well short of the $47 million maximum salary that Irving might be able to get somewhere else.
Trying to become a cap space team presents some issues. Yes, the team could maybe get a high-level player like Irving, who was in attendance for their Game 4 elimination. But they would be very limited in how to fill out the rest of the roster. They just witnessed firsthand in the first half of their season how big of a problem that can cause.
If the team decides not to make a run at Irving, then they could ensure that they retain Hachimura, free agent Austin Reaves, and give decent offers to their other free agents like Russell and Walker.
The Lakers would be a tax team going this route. That bill could get expensive, given that they are in the repeater tax and the amount that they go over the tax will incur a multiplier.
What the Lakers could do to replace LeBron James if he retires
In short answer, they can't. If LeBron were to retire, then the Lakers would obviously be in serious trouble. He was still very good last season, and the team managed just a 13-14 record in games that he missed.
It gets worse though — his $46.9 million salary in 2023-24 and $50.6 million in 2024-25 would still stay on their cap sheet for bookkeeping purposes. As salary cap expert Larry Coon's FAQ states, "Any money paid to a player is included in team salary, even if the player is no longer playing or has retired."
What that means is that LeBron's money would not get added back to the Lakers' potential cap space. Thirty-five percent of their salary cap would be completely dead money over the next two years.
This would make it exceedingly difficult to build a good team next season. And if the Lakers did fall in the standings, then they wouldn't even get to keep their draft pick. As part of the Anthony Davis trade, the Pelicans have the rights to take either the Lakers' 2024 or 2025 first round pick.
LeBron's dead money would also kill many of the Lakers' free agency options in the summer of 2024. They could still have around $40 million in cap space, but Anthony Davis is the only player signed through that season and they'd have to use that money to fill out their entire roster.
The Lakers could get some cap relief by waiving LeBron and stretching the remainder of his contract. That would spread his $97 million over five years instead of just two, opening up another estimated $27.5 million in cap space for the summer of 2023 and $31.2 million in 2024. That could get them close to $60 million in cap space, which is plenty to get a player like Irving. But $19.4 million of James' dead money would be on their books through the 2027-28 season.
Regardless of how LeBron's situation would or would not affect their cap, the Lakers do also have some avenues to improve the team through trades. They can trade their No. 17 pick in this year's draft after they make the pick. They also have their 2029 unprotected first round pick to move, and three second-rounders. If they choose not to return D'Angelo Russell, who looked to be falling out of favor towards the end of the Conference Finals, then they could use his money in a potential sign-and-trade to bring someone else back.
It will be a summer full of interesting decisions for the Lakers, who have some avenues to improve their team if LeBron does come back.