Cap space for what? They couldn't appeal to superstars and stars at their peak, so they damn sure won't now. Also, the roster would be mostly set (they'd just need to re-sign their own free agents). They'd have flexibility going forward.
Fultz and Covington combined will make about what Leonard will next season, then significantly less than he'd have gotten had he signed the super max. If they dumped Mills and bought out/stretched Bayless, they'd come out ahead.
Only in the NBA, can a 19 year old be written off after 1 season, having played a whopping 253 minutes over 14 games.