The Sacramento Kings have waived Wayne Ellington using the NBA's stretch provision, according to ESPN's Marc Stein. This move wasn't entirely unexpected, as Sam Amick introduced the possibility when the trade was first reported. However, there was a camp that thought the Kings might keep Ellington for his outside shooting. Ellington is a limited player, but has a career three-point average of 38.6%.
Ellington was acquired by the Kings from the Knicks along with Jeremy Tyler. The Kings traded away Travis Outlaw and Quincy Acy in the deal. The Kings also received a second-round pick, which they in turn sent to Houston in the Jason Terry deal.
The timing of Ellington being waived is important, as the stretch provision stipulates specific treatment for players waived on or before August 31. According to NBA Salary Cap guru Larry Coon:
If the player is waived from July 1 to August 31, then his remaining salary is paid over twice the number of years remaining on his contract, plus one. For example, if the player is waived on August 1 with two seasons remaining on his contract at $10.2 million and $10.3 million, respectively, then his remaining salary is paid over five years (two seasons times two, plus one), in even amounts of $4.1 million per year.
The Kings are also expected to waive Jeremy Tyler, but have yet to officially make the move. His salary does not become guaranteed until September 15th.
After waiving Ellington and trading Terry, the Kings have about $8.5 million worth of room under the luxury tax, assuming they waive all the players they receive from Houston. The Kings also currently only have 12 players under contract (including Omri Casspi, who has yet to officially sign), so there will have to be at least one more official signing before the Kings are at the minimum roster size. This could be where Dmitry Kulagin fits in, although there has yet to be any more information on that front.