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Sunday, February 21, 2010

The Finances Of The Trade Deadline Deals

In the last week, more than 10% of the NBA was rehomed. 17 teams conspired to make 13 trades, and 43 players in the league were traded (along with 1 that isn't). A possible 14 draft picks changed hands, along with enough cash to support Iceland for a week. Three players were waived to accommodate incoming players (Chris Richard, Ricky Davis, Kenny Thomas), and one just wasn't asked back (Garrett Temple; re-signed since this intro was written). Trades ranged from the hugely significant (Kevin Martin) to the overbearingly underwhelming (Theo Ratliff). To use a phrase I use way too much, there truly was something for everyone. Unless you're a Heat fan.

(Drew Gooden and Larry Hughes also managed to achieve the dubious honour of being traded at three consecutive trade deadlines, with Gooden compounding his misery by compiling four trades in that time. It also seems reasonably inevitable that Gooden will be bought out by his new team (the L.A. Clippers), making him possibly the first player ever to be salary dumped at the deadline, only to be bought out and sign with a contender, in consecutive seasons. Congratulations, I think.)

While I was personally a bit gutted that my Adam Morrison and Memphis' second rounder for Steven Hunter trade idea did not go down, I was nonetheless stoked about this fine turn of events, as I'm sure you were too. Deadline day is second only to draft night in its badassity; there's something soothingly pathetic/pathetically soothing about cancelling all engagements, sitting indoors and mashing refresh until your eyes catch fire. I know you understand this, or else you wouldn't be reading this website.



As is usual around this time of year, many (if not most) of the completed trades were made primarily with financial motivations. This isn't news, for it happens this way every year, yet it gained added importance this year due to the awkward combination of a tough economic climate and the impending free agency crop. Teams were falling over themselves to both get under the luxury tax and open up as much summer cap room as was possible, trying to put themselves into a "flexible" financial situation that will allowed them to bid on this summer's highly prized free agents such as Chris Bosh, Acie Law and Cuttino Mobley. Some even managed it.

The salary information is now updated, aware as I am that it's the first thing people look at. Of particular note are the team salaries for both this season and next. Through moves earlier this season, the New Orleans Hornets managed to wriggle their way under the tax axe, albeit while losing contributors Rasual Butler, Bobby Brown, Hilton Armstrong and Devin Brown in the process. [Grant me some slightly liberal usage of the word "contributors", if you would be so kind. It's all relative. Relative to the contributions of, say, Ike Diogu.] Other teams were active at the deadline in trying to do the same, most notably the Utah Jazz, who managed to piss off their superstar in the process. But more on that later.



Most obviously salary dumping were the Washington Wizards. If they could find a way of consistently getting the ball over halfcourt, the five that they traded away (Antawn Jamison, Caron Butler, Brendan Haywood, Dominic McGuire, DeShawn Stevenson) would own the five they received (Zydrunas Ilgauskas, James Singleton, Quinton Ross, Al Thornton, Josh Howard) so badly that it would need a book written about it. The Wizards traded away the three best players amongst those ten and basically removed their own frontcourt; with buyouts of Ilgauskas and Fabricio Oberto looking inevitable, the Wizards will have only Singleton, Andray Blatche and JaVale McGee in the front court. This isn't good. (At least it will mean Flip Saunders has to play McGee, something he's basically avoided all season for no obvious reason.)

This implosion of talent, though, does not make them bad moves. All that talent had led to the Wizards winning only a third of their games, and when combined with the Wizards' mismanaged salary situation and the ongoing Gilbert Arenas drama, an implosion was inevitable. And overdue. Even though the Wizards gave away the best players for expirings - which always stings really really REALLY badly from the fans point of view - they have managed to obtain almost $50 million in expiring contracts in doing so. Between Howard's team option, Ilgauskas's $12 million expiring (after a trade kicker), the incumbent big expirings of Mike James and Mike Miller, plus the smaller ones of Oberto, Singleton, Randy Foye and Javaris Crittenton, the Wizards now have only 6 players under contract for next season;

Gilbert Arenas - $17,730,693
Andray Blatche - $3,260,331
Al Thornton - $2,814,196
Nick Young - $2,630,503
JaVale McGee - $1,601,040
Quinton Ross - $1,146,337 (player option)

Total = $29,183,000.

When factoring cap holds of roughly $4.5 million for their own first round pick and for the one they obtained from Cleveland in exchange for Jamison, plus cap charges for having too small of a roster, the Wizards will have roughly maximum cap room available next season. They won't be using it to sign LeBron James or anything, but it's a start. If you're going to be a bad team, you might as well be one with as little future committed salary as possible.

They've also managed to dodge the luxury tax this season, too. Via a combination of the Butler trade with the Mavericks, the Jamison trade with the Cavaliers, the cheeky dump of McGuire onto the Kings, and aided in no small part by the Arenas and Crittenton suspensions, the Wizards have managed to avoid a luxury tax threshold that they were almost $10 million over to begin the season. The outgoing 2009/10 salary in the Dallas deal ($19,664,899) was more than the incoming ($17,534,266), as was the case with the Cleveland deal. Moving McGuire's $825,497 for no incoming salary was similarly beneficial, and the money saved from Arenas and Crittenton's suspensions is enough to just get the Wizards under the tax.

When a player is suspended by the league, the team is credited half of the salary lost during suspension for the purposes of luxury tax calculations. So if a player loses $500,000 due to a suspension, the team gets to knock $250,000 off of its tax number. A player is docked 1/110th of his annual salary for every game missed due to suspension; Arenas is suspended for 50 games, and Crittenton for 38. Therefore, Arenas loses $7,360,036 (which is his $16,192,079 salary, divided by 110, times by 50), Crittenton loses $510,554, and the Wizards get to dock $3,935,295 from their payroll for tax number calculation purposes. Their payroll currently stands at $73,513,218 after their deadline day deals, and with the luxury tax set at $69,920,000, you can probably see where this is going. Congratulations, I guess.


None of this would have been necessary, however, were it not for the mismanagement that put the team into the situation. Forgetting for a moment the slightly amazing decision to give $110 million to a man who will play in only 47 out of 246 games in three seasons, let's take a second look at the Wizards' past draft. Regardless of what you think of Ricky Rubio - and for the record, you should think a LOT of Ricky Rubio - you must accept that having him is better than having a combination of Randy Foye and Mike Miller. Miller was always destined to be a one year rental, and Foye was not equal in calibre to a top five draft pick, even in a bad draft. He, too, may not come back. As a basketball decision, the Wizards appeared to decide that one year of Mike and Randy was better than four years of cheap production from a quality young player. As a basketball decision, it was wrong.

(It's also of note that, when we said it was a two player draft, we meant Rubio and Blake Griffin. Not Tyreke Evans and Taj Gibson.)

(Oh and let's also overlook the decision to trade a first rounder to Memphis for Crittenton in the first place. No matter how protected the pick was, it was still a first rounder for a player who barely played when he was healthy, did not play well when he was healthy, has missed all of this season due to injury, who is suspended for the remainder of year, whose fourth year option they did not exercise due to his poor performance, and who will be out of contract - and perhaps the league - this summer. And that's without mentioning the surplus guard depth they already had anyway.)

What that Rubio trade really did was shift the non-expiring contract of Darius Songaila. That was the prize, the purpose if you will, the reason why the best returning player for a #5 pick was only Randy Foye. In much the same way that double double machine (and ShamSports.com fantasy league mainstay) Brendan Haywood was just gifted away purely to facilitate getting out from under DeShawn Stevenson's final season of guaranteed money, the subtle switching of Darius, Etan Thomas and Stewie for Foye and Miller relieved the Wizards of Songaila's $4,818,000 salary for next season. Combine that with the fact that a combination of Foye and Miller cost $13,356,718, whereas keeping the three traded players would have cost $13,426,140 (assuming the #5 pick had not been signed), and you can see what they did there. They saved money. Congratulations, I guess.

Washington also decided to save money in the second round when they sold the #32 overall pick to Houston for a record $2.5 million. That's an awful lot of money for a second rounder, particularly in these more conservative times, and so even though it cost them a shot at possible contributors such as DeJuan Blair, Sam Young, Chase Budinger, Jonas Jerebko or Marcus Thornton, the move made some sense. And I say that as a big Sergio Llull fan.

But what didn't make sense is what the Wizards did with that saved money; a few short weeks after cashing it in, the Wizards signed Fabricio Oberto for the full amount of the Bi-Annual Exception, $1.99 million. Knowing that they were already over the tax threshold, and knowing that they already had four capable big men in place, the Wizards committed what looked to be as near as is $4 million's worth to one year of a player who had averaged slightly less than 3/3/2 the previous season. (The 2 is for fouls per game.) Oberto has responded by totalling 38 points, 49 rebounds and 70 fouls this season, numbers inferior to every member of the draft's second round, even those who haven't played in the NBA. A bad decision both financially and basketball wise.

The bad moves have gone on for a while. Signing Stevenson for that much instead of the superior Roger Mason Jr, for one. The Arenas deal, for another. Giving Darius Songaila a five year contract. Matching Larry Harris' ambitious offer sheet for Etan Thomas. Et cetera. Only now are they beginning to bite. If they'd bitten earlier, the Wizards could have been a good up-and-coming team by now. As it is, they've just begun the dismantling. The three deadline trades this season are, in a vacuuum, fairly solid moves. Yet the fact that the "future" is represented only by JaVale McGee and Andray Blatche at the moment is evidence that perhaps this should have begun a bit sooner.

As for the Mavs, it's pretty self evident. Butler is a lot better than Howard, and Haywood is a lot better than Gooden. If you can spend, you should spend. They spent, and thus they won. And as for the Cavaliers, it's a good move as long as they have budgeted to accommodate paying a 35 year old Antawn Jamison $15 million in two years time. If they can cope with that without simultaneously handicapping themselves, they've done well.



The other extremely active team at the deadline was the Knicks, who completed three trades of their own. One of them was the brilliantly pointless Darko Milicic for Brian Cardinal deal; Cardinal has already been waived, and Darko has already said he's going back to Europe once this season is over, which makes the logic behind the deal beautifully pointless (and inevitably, financially motivated; Cardinal's smaller cap number means less tax for the Knicks, and the cash New York gave up makes Milicic cheaper than Cardinal for Minnesota. Or at least the same cost.) On top of that, they traded Nate Robinson and Marcus Landry to the Celtics in exchange for the three expiring/unguaranteed deals of Eddie House, J.R. Giddens and Bill Walker. That deal saves the Knicks a little money, but will cost quite a bit for the Celtics who will have to pay Nate's $1 million playoff bonus (previously listed as unlikely), and then pay it again for tax. It's worth it, however, for the significant upgrade from House to he. (For that reason, it's kind of baffling why the Knicks did it. But none of it will matter anyway.)

The Knicks were also the most compelling protagonist in the deadline's biggest deal. Ever shameless in their pursuit of enough cap space to sign both Dwyane Wade AND Joe Smith, the Knicks craved Tracy McGrady's contract so freaking much that they gave up pretty much everything they have for it. Having already given their 2006 and 2007 firsts to Chicago (thanks!), and with their 2010 first owed unprotected to Utah, the Knicks continued on a theme by trading the product of their 2009 first (Jordan Hill) and their 2012 pick (top 5 protected for four years) to Houston, along with giving the right to swap 2011 picks with only top 1 protection. That's a pretty ridiculous amount of stuff just to get rid of the $9,553,320 that Hill and Jared Jeffries were owed next summer, but at least they're committed to a direction. That's....something.

The Knicks now have $18,637,294 committed next season, assuming that Eddy Curry exercises his $11,276,863 player option, which is about as likely as me using the phrase "congratulations, I guess" later on in this post. They have no cap hold for their first round pick, since they don't have one. Therefore, if we assume that they renounce all of their free agents - which they won't do instantly, but will do if they have good reason for it - then this is their cap situation for next year:

Eddy Curry - $11,276,863
Danilo Gallinari - $3,304,560
Wilson Chandler - $2,130,482
Toney Douglas - $1,071,000
Bill Walker - $854,389
Roster charges for not having 12 players - $3,315,228 (which is seven times the rookie minimum of $473,604)

Total = $21,952,522.

Walker's salary is unguaranteed if waived before July 8th. Remove him and that puts the Knicks at $21,571,737.

A maximum contract for the trio of LeBron James, Dwyane Wade and Chris Bosh starts at $16,568,908. Regardless of what the salary cap does, a player's maximum possible salary is never less than 105% of their previous salary, regardless of which team they are signing with. Therefore, to afford both of them outright, the Knicks would need the cap to be at least $54.71 million next year, something which it is not likely to be. However, this does not mean that they cannot afford two maximum contract players; if they really needed to open up those last couple of quid, Wilson Chandler would be easy to pawn off, considering the cheap price for his league average production. And the possibility of a sign-and-trade of David Lee is very much alive and kicking. So, financially at least, the Knicks are standing in good stead. They'd better be, considering all that they sacrificed to get here.

(Do they do that trade if they hadn't messed up the Hill pick in the first place? Probably not.)


Meanwhile, the Rockets gave up whatever cap space aspirations they made have had with this trade. By taking on the $20,153,325 earned by the Martin/Jeffries/Hill deal, the Rockets are not now 2010 players, but by taking on Kevin Martin, they also don't now need to be. The talent infusion was so substantial that whatever they may have wanted to do with that 2010 money - which was probably very little considering that the plan was to trade McGrady from day 1 - is now not significant. And the picks as well? Bonus. THIS, Miami, is what you do with a $23 million expiring contract. Watch and learn.


Sacramento's end of the deal is Carl Landry. Presumably given the option of dumping a bad salary or obtaining a quality player, they chose the quality player, as well they should have done. Landry is roughly Martin's equal and at a position of greater need; the fillers in the deal are relevant only for their expirings.

Landry is under contract for only $3 million next season, a veritable steal for a man of such great production. (It still makes no sense that the only offer sheet he could get was for three years and $9 million. We should have campaigned hard for more.) At the end of that, Landry will be an unrestricted free agent, but if they decline his team option this summer, he can be a restricted free agent will full Bird rights. It seems unlikely that Sacramento goes that route, considering that

a) they may lose him anyway,
b) teams spend their whole lives trying to underpay people, and they shouldn't throw it away once they finally get it, and
c) the new CBA kicks in in 2011, which will inevitably favour the teams.

Nonetheless, declining his option and locking him up for a few years with the benefit of a qualifying offer on their side remains a possibility until it isn't. If they don't take the risk, they'll have to pay up in 18 months time, or else lose him. And while I like Jason Thompson, Carl Landry is better.

It would be best for all concerned if Larry Hughes never suits up for them.

(Also not exactly sure they need McGuire, just another forward who won't play. But never mind. The pick that they traded to get him is top 41 protected, and thus irrelevant. And the cash will come in handy.)



The Bulls and Bucks both did two trades, including one with each other. Chicago was determined to find some more 2010 free agency money, as well they should be, so they dumped two average players for four mediocre-to-bad ones to ensure it. They first traded John Salmons to the Bucks for the expiring contracts of Hakim Warrick and Joe Alexander. And later they followed that up by trading Tyrus Thomas to Charlotte for Ronald Murray, Acie Law and a future first round draft pick. One that won't get until at least 2012 due to the outstanding first that Charlotte already owes Minnesota (Ty Lawson deal) via Denver (Alexis Ajinca deal).

In both instances, the outgoing Bulls player was the best player in the deal. And you never like to see that. Yet both of those players were only average; fringe starters and quality backups, useful but far from integral, and not the kind of player you jeopardise the possibility of a big free agency run for. Salmons would probably have opted into his contract next season, which would have been debilitating to the Bulls free agency hopes. So for the cost of two second rounders (the pick swap will not be relevant), the Bulls removed this risk. Thomas was going to be a free agent anyway, who would inevitably have to have been renounced; his stay in Chicago was well and truly worn out.

(They were also pretty determined to shift Kirk Hinrich, but found that there wasn't much of a market for a 29 year old backup calibre guard with no obvious position, earning $9.5 milion to shoot 38% in the worst season of his career. This is perhaps unsurprising. But Kurt is awesome, so we'll be fine with keep him for a bit longer.)

The Bulls now have the following contract situation next summer;

Lou Walding - $11,345,000
Kurt Hinrich - $9,000,000
Derrick Rose - $5,546,160
Joakim Noah - $3,128,536
James Johnson - $1,713,600
Taj Gibson - $1,117,680
Cap hold for first round draft pick (here assumed to be 17th) - $1,302,600
Five roster holds - $2,368,020

Total = $35,521,596

It's not as much cap space as the Knicks, but it's enough for Joe Johnson's inevitable max contract. There may also be renewed interest surrounding Hinrich around draft night, which could open up some more money. And the Bulls have two epic young pieces in Rose and Noah that should count for something. (And a statue.)

The two trades do mean a slightly worse team for the remainder of this season. It's a necessary evil, unfortunately. At the very least, however, the Bulls have gained some guard depth. Chicago opened the year with absolutely none of that; their only shooting guard options were Salmons (ideally a small forward), Hinrich (ideally a point guard) and Jannero Pargo (ideally in Russia). After this move and the Aaron Gray/Devin Brown swap that proceeded it, they now have plenty of guard depth on the bench; Murray, Law, Pargo, Brown and Lindsey Hunter. But I think I preferred it when they didn't have any.





Milwaukee made another trade late in the day when they traded recent second round draft pick Jodie Meeks along with defunct big man Francisco Elson to Philadelphia in exchange for Primoz Brezec, Royal Ivey and an unprotected 2010 second round pick. They did this because in acquiring Salmons to go along with Jerry Stackhouse, Carlos Delfino and Charlie Bell, the Bucks had already acquired four potential shooting guard options to take any minute that Meeks might see. I don't know why any team needs all four of those very average and somewhat similar players at that one position, but Milwaukee decided that they do, which spelled the end for Meeks' opportunities. So a second rounder, trade exception and slight salary reduction is ample compensation.

Perhaps more importantly, they did the deal to get out from under Meeks' contract next season. He will only be earning the minimum salary, but it is guaranteed, and there's no point guaranteeing the future salary of a player to whom you can't guarantee a single minute of playing time. I would rather have Meeks than the second rounder, but with that depth chart, you can understand it. It's a good pickup for the Sixers, albeit the only pickup for the Sixers. Which is problematic.

The inclusion of Brezec, Ivey and Elson in the Meeks trade is so dull that I can think of nothing interesting to say about it, so instead, here's a monkey on a pushbike.





Two other trades had significant financial ramifications, one of which was the deal that saw Ronnie Brewer going to Memphis for a 2011 first round pick (top protected), which was as close as Utah could get to dodging the luxury tax this year. They failed, by about $3 million, and roundly irked Deron Williams in the process. (Brewer then tore his hamstring in his Memphis debut, which is unfortunate.)

Of the other teams, only the Clippers made any significant future financial changes with their deals. After previously gifting away Marcus Camby to the Blazers for a backup point guard, an injured guy who can't play, no long term basketball assets and $3 million, the Clippers followed it up with a better move when they got in on the Jamison deal, traded Al Thornton to the Wizards and Sebastian Telfair to the Cavaliers, receiving Drew Gooden's expiring in the process. This move opens up $5,514,196 in cap room for the Clippers next season, and expunges the last remaining salary from their initial Zach Randolph trade. It gives the Clippers the following salary situation in the summer;

Baron Davis - $13,000,000
Chris Kaman - $11,300,000
Blake Griffin - $5,357,280
Eric Gordon - $3,016,680
DeAndre Jordan - $854,389 (unguaranteed until August 1st)
Roster hold for first round draft pick (here assumed to be 10th) - $1,865,300
Six roster spot cap hold things - $2,841,624

Total = $38,235,273


It's not quite max cap room, but it's nothing that can't be worked around. Then again, since this is still the kind of team that will occasionally trade starting calibre centres for $3 million without a luxury tax to fear, you can never be too sure of their intent.

As an aside, Gooden is now onto his 9th team in 8 years, having played for 7 (soon to be 8). He is putting on a solid run for the Most NBA Teams Played For record, currently joined owned at 12 by Tony Massenburg, Chucky Brown and Jim Jackson. If only he'd played a minute for the Wizards.

(The second deal opened up a roster spot, thereby allowing them to re-sign Ricky Davis. Let's see if they do so!)




There remain many taxpaying teams this year. As covered earlier this year, 14 teams were scheduled to be taxpayers earlier this year, and it's still a high number. The Lakers had no hope or no intention of getting under it, and retain the league's largest payroll, unable or unwilling to make any deals to shred a small amount off of it. (Not even my Morrison for Hunter special. Boooo.) The Knicks cleared future payroll but did nothing to change this year's, and Dallas, Boston and Cleveland took more 2009/10 salary on. Denver couldn't dump salary without jeopardising their current team, and rightly decided it wasn't worth it. San Antonio tried to dump salary, but couldn't shift anything other than Theo Ratliff's minimum contract (receiving a top 55 protected 2016 pick in the process; i.e. nothing at all). And while Orlando didn't seem to try, they'll have the added benefit of a reduction on Jameer Nelson's salary, as his $500,000 All Star bonus, previously listed as likely, will now no longer be applicable.

(Others with All Star bonus include Gerald Wallace, who will now cost $500,000 more with his earned incentive. Danny Granger did not make the team this year, so he will be listed as $200,000 cheaper next season. And Zach Randolph will be paid $333,333 for finally making the team, as well as shedding the burdensome label of being the highest paid no-time-All Star of all time. That "honour" now goes to Damon Stoudamire, Zach's former teammate and current assistant coach at Memphis.)

But some teams did make it under. As described earlier, Washington have joined New Orleans in making it under after their three deals, and they are joined by Houston. The Rockets were taxpayers until this week after spending their two MLE's worth of dough over the summer, and although the insurance payments on Yao Ming's contract numb the pain a bit, it was still less than ideal. However, one further bonus for the Rockets in the Kevin Martin trade was the $4 million payroll drop this season alone. Even with Jared Jeffries's trade kicker. Therefore, with that one move, they've acquired a star player, a useful youngster, a first round draft pick, a right to swap that may prove hugely beneficial, and about $10 million this season in saved salary and rebates. All for the cost of an inactive list player, a small amount of cap space they weren't intending to use anyway, and their backup power forward.

Congratulations, I guess.



The big winners of the trade deadline were Dallas, Houston, Portland and Cleveland. The teams that did pretty good to fairly well were Philadelphia, Milwaukee, Charlotte, Memphis, Boston and the Clippers. The team who did either brilliantly or catastrophically were the Knicks; hindsight will tell that story soon enough. Teams that didn't do as badly as it might appear were Washington, Phoenix and Chicago. Those that lost were San Antonio, Utah, Miami, Mark Blount and Detroit.

Not coincidentally, the four winning teams were the three teams that took on and gave out money. Cash rules everything around us.

3 comments:

  1. For highest paid zero-time all stars, it looks like z-bo turns over the single season mark to Mike Bibby, not Stoudamire. (At least according to basketball-reference.) If you're talking about career earnings, Randolph isn't up there yet, as he's still pretty young. It looks like Stoudamire is the top earner, with Odom and Bibby's current contracts slated to push them over him. Camby should also top him comfortably with his next contract. There could also be a bunch of people I'm totally neglecting.

    ReplyDelete
  2. As a Wizards fan, I have to defend trading the "pick" for Crittendon. The pick we traded was the one we got from Memphis for the rights to Juan Carlos Navarro. It was lottery protected for about five years, and when the protection expired it became a No. 2 plus cash.

    Memphis isn't making the playoffs in the next three years. So we picked up a prospect for a pick we were never going to see. The prospect didn't pan out, but that happens sometimes.

    ReplyDelete
  3. In your write up, you failed to mention that Milwaukee received Chicago's 2011 and 2012 2nd rounders and a first round pick swap, in addition to Salmons. Salmons, while still just an average SG is much better than Stackhouse, Bell, and Meeks. Thanks for sending him over. He has probably played well enough that he will not pick up his option.

    ReplyDelete

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