For the second time in 3yrs, the Cavs won the lottery tonight, after finishing with the 4th worst record and only a 15% chance of binking it. Going into this offseason the Cavs already had a really intriguing situation, with a ton of cap space to improve their young core. Using the info from Shamsports.com, for the 2013/14 season the Cavs currently have under contract Varejao, Irving, Thompson, Waiters, Gee, and Zeller, along with a few other players who should not be retained (Casspi, Miles, Ellington, Jones, Quinn) who can be waived or not tendered qualifying offers without any cap hit. One interesting thing to watch out for is whether Speights picks up his $4.5 million player option. Many times players will decline it to secure a long term deal even if it's for less money per year, and he would be doing the Cavs a favor I think, considering he's not part of their long term plans. Even if he does pick it up they could likely trade him pretty easily because he's cheap and a serviceable big man. If he does opt out, that would give the Cavs $24 million in cap space after factoring in the cap holds for their #1 and #19 picks in the draft.
As for the #1 pick, I think it's safe to assume they are going to select Nerlens Noel, who despite coming off an ACL injury is widely considered to be the #1 prospect in the draft, and the Cavs are still at the point where they need to take the best player available as long as it isn't a PG. I have seen preliminary reports that they may look to trade the #1 pick, which to me seems insane. Having the #1 pick AND max cap space means you can effectively get two stars on your team, whereas unless you're trading the #1 pick for another player on a rookie deal, you're going to use up almost all of that space on whoever you acquire, and there aren't a ton of players on rookie deals who would be worth it IMO. As for the 19th pick, I think they should use it on the best SG/SF available in hopes that he will be a serviceable backup long term, with a shot at being a decent starter. Late 1sts like that don't have very much value, so it's important to be realistic.
So what should the Cavs do with their cap space? Let's assume they don't tender Speights so they have the full $24 million in cap room. Their core currently looks like Irving/Waiters/____/Varejao/Noel, then with Thompson, Zeller and the 19th pick being a decent backup core. The most important thing is that they don't pay 3 people $8 million each on long term deals, and doing some committee at SF with some overpaid backups. Realistically, being located in Cleveland, they are likely going to have to overpay someone to go there, but they need to get a good starting wing player out of this great position they've put themselves in. Let me just start out by saying that if they do not get someone who would greatly improve their team, they should just sign players to 1 year deals, similar to Dallas this season, which would effectively roll over their cap space to the following season. Overpaying role players is the worst possible option.
I'm going to immediately rule out any scenario where Cleveland gets a star like Dwight Howard to go there. Any player who is going to get a max contract offer from a perennial playoff team is going to go somewhere else over an equal offer from Cleveland. I think both Andre Iguodala (I expect him to opt out of his final year to secure a long term deal) and Josh Smith are good examples of players they could target. Iggy and Smith are both excellent wing defenders, and are solid offensively. I also think both would likely choose the offer that paid them the most.
If either of them are unavailable, I think at that point Cleveland could start looking to trade it's 2014 1st rounder in exchange for a solid SF who is approaching a big payday. Cleveland's 2014 1st will likely be in the 6-15 range considering Irving will improve even more. A past example of this would be Houston trading Lowry (who was approaching free agency but Houston didn't want to pay him) to Toronto for a lottery pick guaranteed to be in the 4-15 range. Or as I mentioned they could just roll it over to the following summer and try again.
If they are able to sign Iguodala or Smith, they would then just keep the 2014 1st rounder and get a good bench guy with that pick. They could also use the remaining $8 million in cap space to sign some veteran backup PG, SG, SF to one year deals. Filling your bench spots with Kenyon Martin (cheap, short term deals) is one of the keys to becoming a solid playoff team.
No matter what they do elect to do, it should be interesting. As long as they don't sign some middling starters and bench players to long term mid sized contracts, and as long as they don't trade the pick for some already maxed out player, they should be able to reap the rewards of winning the draft lottery twice in three seasons.