How Chicago Can Get Carmelo
July 7th, 2014
(originally published elsewhere)
Pretend for a minute that Carmelo Anthony chooses the Bulls. It’s possible until it isn’t.
Pretend for a minute that he wants more than they can pay him in free agency. Considering that their best free agency offers would top out at a starting salary of $15 million barring a significant weakening of the roster elsewhere, and that other teams are offering an unconditional max, and this seems a reasonable belief. To join Chicago for an amount of money comparable to what he would get elsewhere, Melo would have to be signed and traded.
Pretend for a minute that the Knicks are willing to do this deal to help out a conference rival. This, too, is realistic. If they want to be proud and/or stubborn and refuse to help a one time rival, instead preferring to let their player walk for free, then….OK. But there’s assets in it for them if they do, so they shouldn’t be stubborn in this way. They need assets to get good again more than they need to worry about who is good whilst they rebuild. It’s not personal, Sonny. It’s strictly business.
With all the previous assumptions in place, Chicago would want badly to acquire Melo via sign and trade while keeping together as good of a team as possible. This means no trading of Taj Gibson, and ideally no trading of Jimmy Butler and Nikola Mirotic. Can Chicago keep all three, acquire Melo, build a brilliant team and do it all within the confines of the Collective Bargaining Agreement?
Just about. Here’s how.
STEP ONE: Amnesty Carlos Boozer.
Thereby expunging his $16.8 million salary from the cap number, if not the payroll. Note that amnestying Boozer does not immediately put the Bulls under the salary cap, due to their assortment of cap holds. This will prove crucial, as will be seen and thoroughly explained below.
STEP TWO: A highly convoluted three team trade.
Bulls trade: Ronnie Brewer ($1,310,286 unguaranteed), Louis Amundson ($1,310,286 unguaranteed), Mike James ($1,448,490, unguaranteed), Greg Smith ($948,163), Tony Snell ($1,472,400), a signed-and-traded Kirk Hinrich (three year deal starting at $4,870,800 with 4.5% decreases totalling $13,954,842), two first round picks (see below) and $3.2 million in cash to New York. Also trade Mike Dunleavy Jr ($3,326,235) to Boston.
Bulls receive: A signed-and-traded Carmelo Anthony from New York. And something meaningless and arbitrary from Boston.
Knicks trade: A signed-and-traded Carmelo Anthony (four year deal starting at $19,686,660 with 4.5% raises for a total of $84,062,040) to Chicago.
Knicks receive: Hinrich, Snell, Smith, James, Amundson, Brewer, both first round picks and the cash.
Celtics trade: Something arbitrary like a top 55 protected second round pick.
Celtics receive: Mike Dunleavy Jr ($3,326,235, absorbed via Paul Pierce trade exception).
There follows a long explanation of both math and logic.
Teams above the salary cap can complete trades using the Traded Player Exception, the proper name for the cap exception by which teams above the cap are allowed to make trades. It is the exception which brings about the rules of salary matching with which we are all familiar.
Teams below the cap don’t need this – they can trade to their heart’s content without needing to match salary, as long as they don’t finish more than $100,000 over the cap.
But – and this is the important bit – no matter whether you started above or below the cap, you need to use the salary matching rules within the Traded Player Exception if you intend to finish more than $100,000 over the cap.
If Chicago wanted to sign and trade for Melo when below the cap, they could either trade out enough salary so that they don’t go over this $100,000 limit, or use the salary matching rules. Pragmatically, they are not far enough under the estimated $63.2 million salary cap to do the former. They could in theory be $10 million under and trade $11 million to get a $21.1 million player, but the only realistic way to do this is to include Taj Gibson. [Seriously, try it.] So their best bet to complete a trade is to stay over the cap throughout and use the Traded Player Exception.
Note once again what was said below step one – amnestying Boozer doesn’t immediately put Chicago below the cap. The cap holds of Hinrich, Mohammed, Mirotic, McDermott, D.J. Augustin, Jimmer Fredette, Daequan Cook, Brian Scalabrine, Vladimir Radmanovic and all their exceptions keep them above it, and actually quite a long way above it (about $15 million or so). The idea of the Bulls having cap space involves amnestying Boozer and renouncing all of the above save for Mirotic and McDermott, but this is not something that happens automatically. It is something they could opt to do. It is a weapon in the arsenal. It is not a weapon they are using here.
What an amnesty of Boozer does do is give Chicago the room to incorporate players via sign and trade without going over the apron (the line $4 million above the tax threshold, estimated at being $81 million next year, which teams receiving players via sign and traded are not allowed to go over). Amnestying Boozer is not in this instance about cap space, but about cap flexibility. He could be used for cap space in other scenarios, but not here. Here, Chicago are a team over the cap making a trade.
Chicago, then, has to match Melo’s salary. And in this deal, they just about do. Adding up their outgoing salaries totals $14,686,660, and when they are all aggregated together, that allows them to receive back $19,686,660 in trade. (When trading out between $9.8 million and $19.6 million in salary, teams utilising the Traded Player Exception who finish below the tax threshold upon completion of the deal are permitted to take back a maximum amount of the aggregated outgoing salaries plus $5 million.) This is where Anthony’s new salary is arrived at. And this aggregation includes the salary of Mike Dunleavy Jr, even though he goes to a third team.
Dunleavy Jr goes to Boston here, incorporated via part of the Paul Pierce trade exception, but could just as easily go to a team with cap space or anyone with a trade exception and a need for a 40% three point shooter. So could Hinrich, in theory. And indeed any of the outgoing Bulls players. As long as the two are traded to somewhere for no returning salary, or at least for salary which Chicago can incorporate via a different exception without going over the apron line, it doesn’t really matter where they go. But the fewer involved parties, the better.
If Melo refuses to sign for that little, add Nazr Mohammed in another sign-and-trade, and then add however much he gets – which will not be lower than his minimum salary of $1,448,490 – to Melo’s first year salary. Hypothetically, if Mohammed were included and were to receive that exact amount, Melo’s new contract could start at $21,135,150 and total $90,247,091 over the same four years. It’s not quite his four year maximum, but it’s damn close.
Both teams would need to finish below the apron line after this deal, as they both receive players via a sign-and-trade. However, as will be seen below, both will. Even with Nazr.
The amount listed for Hinrich is the most he can receive in a sign-and-trade without being subject to the artist formerly known as Base Year Compensation, which would reduce his outgoing value in trades to half of his actual salary. It would be fully unguaranteed in the two subsequent seasons, a la Keith Bogans, and thus not impinging at all on the 2015 free agency plan. New York receives no contract in this deal that has any guaranteed money beyond next season, and gets two picks for their troubles.
In the offseason, the maximum roster size is 20, so New York has enough space to incorporate all of the incoming. Even if they were to include Nazr, this is the case. They would then be expected to waive the three unguaranteed deals, leaving them with Smith and Snell as two young backups, and Hinrich as the sole returning salary filler. Well, unless you include Nazr.
The cash amount, the maximum amount a team is allowed to trade out in trades in one season, is sent by Chicago to New York to offset the overpayment to Hinrich. And Nazr, too, if you add him in. Then again, given how much Phil Jackson and Derek Fisher may love Hinrich, they might not consider it as such. (It would be, though.) Hinrich will not impinge upon their 2015 free agency plans, only slightly impinges upon the ambitious but apparently alive 2014 free agency plans, and would not hurt the team on the court or in the locker room in the interim. His presence in the deal is as a necessary financial instrument primarily and secondarily, but New York could still get something from him.
As for Smith and Snell – Smith is a solid offensive option at backup centre for the minimum salary when healthy, and Snell could be the next Wesley Person if he learns to shoot as well as he already thinks he does. Both of course are projected as career backups and are not being sold as pieces for the future, but both are worthy of a look.
The two first rounders are the meat of the deal for the Knicks and are in line with what Miami traded to receive Chris Bosh and LeBron James in their respective sign and trade deals in 2010. Chicago could send New York the 2015 first round pick from Sacramento that they received as a part of the Luol Deng trade, as well as their own 2015 first round pick, without falling foul of the Ted Stepien rule. The so-called Stepien rule is widely misunderstood, and simply states merely that teams cannot leave themselves without a first round draft pick in consecutive future drafts, but since Chicago has their own 2016 first round pick (as well as the right to swap it with Cleveland’s), they are not running foul of this.
Sacramento’s pick is top 10 protected for the next three seasons – if it is not conveyed in that time, it is instead their 2017 second round pick that is conveyed. In all probability, however, the pick would be conveyed. The Kings are not trying to get worse. As with pretty much everything else mentioned, the specifics of the picks to be included are very changeable depending on the specifics elsewhere in the deal and the demands of the respective teams – the larger point is that, in my own personal hypothetical, the Knicks would receive two first rounders.
Note also that Anthony Randolph, whose salary cannot be aggregated in this trade, is left out of it altogether given that he is no help to the trade maths. He could be added along with Pablo Prigioni if the Knicks wanted them both to be so.
The Knicks’s total haul would be two cheap if replacable young backups, three veterans they can waive immediately at no cost, a veteran backup point guard used as salary filler, and two first round picks. If that does not sound enticing, at least read until the end of the post, when hopefully the benefits of this deal to their future will become apparent.
STEP THREE: Sign Nikola Mirotic for the full non-taxpayer mid-level exception.
It is assumed that this is how much it would take. If the actual amount needed is less, that would be great. The non-taxpayer mid-level exception this season has a maximum starting salary of $5.305 million.
Note that doing so would make the Bulls subject to the apron, the point $4 million above the luxury tax threshold that becomes a hard cap if triggered by certain factors, one of which would be using a proportion of the non-taxpayer MLE to sign a contract or contracts that could not be signed by the taxpayer MLE (which is smaller and a year shorter in its maximum length).
STEP FOUR: Sign Doug McDermott to his rookie scale deal.
This could pretty much be done at any time, since cap space is not in play. Once signed for 120% of his rookie scale deal, as is custom (and woe betide the team that tries to change this custom on a lottery pick, especially one they just traded quite a lot for), McDermott will be due to receive $2,277,960.
STEP FIVE: Beg D.J. Augustin to re-sign for the Bi-Annual Exception
Last used on Marco Belinelli in the summer of 2012, the Bulls have the BAE available to them again, and Augustin earned it. He may feel as though he can get more in a market where Jordan Farmar got this much, and he may be right, but with a player option on the second year, he may be coercible. The Bi-Annual exception is for a maximum of two years and in 2014-15 offers a maximum starting salary of $2.077 million.
STEP SIX: Sign Camerow Bairstow to the standard late second round pick two year minimum salary contract
Can be done using the inexhaustible minimum salary exception, and is a nice way to stay cheap, as second round picks cost less than minimums in luxury tax calculations. Bairstow’s cost for 2014/15 would be $507,336.
After all that manoeuvring, the Bulls are left with the following:
Carmelo Anthony – $19,686,660
Derrick Rose – $18,862,876
Joakim Noah – $12,700,000
Taj Gibson – $8,000,000
Nikola Mirotic – $5,305,000
Doug McDermott – $2,277,960
D.J. Augustin – $2,077,000
Jimmy Butler – $2,008,748
Anthony Randolph – $1,825,359
Cameron Bairstow – $507,336
Richard Hamilton (waived) – $333,334
TOTAL – $73,584,274
They would still be three players short of a full roster, lack a true backup centre and have scant little guard depth. But what they would have would be a starting lineup of Rose, Butler, Anthony, Gibson and Noah, with a primary bench three of McDermott, Augustin and Mirotic. They would have $3,415,726 under the assumed $77 million luxury tax threshold to fill out the roster, and (most importantly) be $7,415,726 under the apron. They will have run out of free agency money save for the minimum salary exception, but that might be all they need, and Anthony Randolph is still plenty tradeable. And they could also still use their trade exception of $1,074,720 to acquire one more player via trade. Remember – they never went under the cap, so they never lost this.
As for the Knicks, they would have the following after the trade:
Amar’e Stoudemire – $23,410,988
Andrea Bargnani – $11,500,000
Jose Calderon – $7,097,191
J.R. Smith – $5,982,375
Kirk Hinrich – $4,870,800
Samuel Dalembert – $4,051,527
Wayne Ellington – $2,771,340
Iman Shumpert – $2,616,975
Pablo Prigioni – $1,662,961
Shane Larkin – $1,606,080
Mike James – $1,448,490
Lamar Odom – $1,448,490
Tony Snell – $1,427,400
Lou Amundson – $1,310,286
Ronnie Brewer – $1,310,286
Shannon Brown – $1,310,286
Tim Hardaway Jr – $1,250,640
Greg Smith – $948,163
Jeremy Tyler – $948,163
TOTAL – $76,972,441.
The contracts of Tyler, Brown, Brewer, Amundson, James and Odom are all fully unguaranteed. Dalembert is guaranteed only $1,885,755 of his salary. Waive all them, and the Knicks would have only $65,144,913 in committed salary. They would have Thanasis Antetokounmpo and Cleanthony Early to come, plus exceptions to use – the Raymond Felton TPE of $3,637,073, the non-taxpayer MLE of $5.305 million and the BAE of $2.077 million all still intact.
More importantly, headed into next offseason, their only players under contract after waiving Hinrich would be would be Calderon ($7,402,812), Larkin ($1,675,320, team option), Snell ($1,535,880, team option), Smith ($6,399,750, player option), Hardaway ($1,304,250, team option), Prigioni ($1,734,572, only $290,000 guaranteed) and whatever they give to Antetokoumpo and Early. This time next summer, they would be looking at the cap space for two maximum salary contracts AND the possibility of two first round picks that year. In this deal, then, they pick up future assets for a player who would otherwise walk, plus yet more flexibility, both this year and next. The Knicks obviously want Carmelo to stay so very very badly, but if he chooses to go, they can gain from it.
The Bulls said they would have to be creative this summer. Does this count as that?