NBA Trade Deadline Breakdown from a Fiscal Perspective
There once was a time in the NBA when trades were consummated based on the merits of the players on the court.
However, due to escalating salaries and complicated trade rules, the financial aspect often overshadows the talent aspect of deals made in the Association.
First off, teams above the luxury tax can only trade for players making no more than 125 percent of the outgoing salary plus $100,000, per Larry Coon’s CBA FAQ. Teams over the salary cap but under the luxury tax face similar but less restrictive rules, and teams under the salary cap can take on as much salary as they want up to the cap limit.
Many other deals are made to limit or eliminate their current luxury tax payment or to shed salaries for future seasons to gain long-term cap flexibility. Thus salary cap space has become a commodity valued higher than some mid-level players.
Although no major deals were consummated by today’s trade deadline, many of the deals that went down contained a major financial component:
Rockets acquire Thomas Robinson in multi-player trade with Sacramento
It’s rare to see a player drafted in the top five dealt so soon after being selected, yet this deal smells like a case of the league’s most shrewd GM (Houston’s Daryl Morey) taking advantage of an ownership group in Sacramento that’s in the process of selling the team.
The deal saves the Kings more than $3 million in payroll, and they received $1 million in cash to boot. Morey is famous for taking advantage of teams in a leveraged position, and this was the rare case where a team leaking money essentially sold a promising young player for cash.
Robinson has struggled as a rookie, sure, but teams just don’t give up on top-five picks like this in what seems like a pure cost-cutting move. Patrick Patterson is the only player of note sent to Sacramento, and he surely is not worth a player of Robinson’s potential caliber.
Quality ownership is so important in this league, and this is a deal that just wouldn’t happen if the Kings possessed a stable ownership situation at this time.
Rockets trade Marcus Morris to Suns for second-rounder
The Suns apparently didn’t learn not to deal with Morey after he fleeced them at the deadline two years ago by acquiring Goran Dragic and a lottery-protected first-rounder for Aaron Brooks. This deal contains considerably less risk for Phoenix, as the Suns added a recent lottery pick for an early second-rounder as well as the opportunity cost of $2 million next year and $3 million the year after.
Although that cuts into Phoenix’s 2013-14 cap space a bit (now projected at around $45 million for 10 players without including its two first-rounders), it’s a worthy gamble for a Suns squad craving young assets. The Suns will have to deal some of their big man glut this summer, and adding another Morris twin gives them additional flexibility from which to trade from.
Morey likely values the ensuing flexibility after taking on Thomas Robinson, and nobody has seemed to value early seconds more than Morey in recent years. With that pick he will have the opportunity to select a quality player who won’t automatically receive a rookie scale contract. Morey has plucked gems like Chase Budinger and Chandler Parsons early in the second in recent years before signing them to some of the most team-friendly contracts possible in the NBA.
For further analysis of this trade, see my work at Phoenix Suns blog ValleyoftheSuns.
OKC trades Eric Maynor to Portland
This trade fascinated me because all the Thunder got out of their former backup point guard of the future was a simple trade exception as well as the rights to a European player.
The Blazers were able to absorb Maynor into their cap space, and thus OKC received a $2.2 million trade exception in return as well as cap savings the rest of this season.
This is what is known as a non-simultaneous trade, as the Thunder will be able to acquire a player (or group of players) within $100K of Maynor’s salary anytime in the next year to “complete” this trade. That flexibility could be critical for a team that may be no more than one piece away from a championship.
OKC was not going to be able to re-sign Maynor when he becomes a restricted free agent this summer as they are already inching toward the luxury tax ceiling even without re-signing Kevin Martin or a commensurate replacement. Now they will have one more bargaining chip to improve their team and hence were able to turn Maynor into value as they always do with players headed out the door.
Wizards trade Jordan Crawford for expiring contracts
This one doesn’t make much sense at first blush.
The lowly Washington Wizards traded a talented young player in Jordan Crawford (yes, the guy who dunked on LeBron in college) for a guy out for the season (Leandro Barbosa) and another guy who is only effective against Dwight Howard (Jason Collins).
Crawford was said to be unhappy with his role in Washington, but still there must be more to this story for them to give up on him with the Wizards not exactly teeming with talent.
Crawford is on the books for $2.16 million next year, which is now cleared from their cap since Barbosa and Collins will be free agents.
Considering Emeka Okafor would need to be legally insane to exercise his nearly $15 million early termination option, the Wizards still won’t have much cap room to speak of with or without Crawford, so although this was clearly a salary dump, like many other recent Washington moves it’s not one that makes much sense.
Warriors get under luxury tax
The most important goal this time of year for any team in the vicinity of the luxury tax is to do everything possible to get under it.
That’s because instead of having to pay the punitive luxury tax, which is currently a dollar for every dollar over and will become harsher in future years, teams become the recipient of luxury tax handouts. It’s even more critical today with penalties for being a repeat offender, so if you are close to that amount it’s imperative you drop below it.
Back in 2007, the Suns traded Kurt Thomas AND two first-round picks to Seattle/OKC just to clear Thomas’ contract from their books in a deal the Thunder made with a gun to Phoenix’s head.
The Warriors came out much better by dumping Charles Jenkins on Philly and Jeremy Tyler on Atlanta to get under the tax after starting the day $1.2 million over it since all it took was a pair of conditional second-rounders to make it happen.
This is the epitome of a business over basketball trade since Jenkins is a solid young player who could help them in their playoff run, but he became expendable once he was all that was holding the Warriors back from the right side of the luxury tax.
With a roughly $58 million soft salary cap and $70 million luxury tax, cap management has become a crucial component of team building. Few teams can afford to sport the best superstars money can buy (and look how well that’s worked for the Lakers), so teams must take advantage of market inefficiencies to best build a contender for the long haul.
That provides opportunities for teams like the Suns, Blazers and Sixers to pick up potentially quality players for very little when other teams are practically forced to give them up for their short- or long-term fiscal health.