Financial Details Of The Rudy Gay Trade

February 1 2013 at 3:12pm CST By Luke Adams

For the teams involved in this week's Rudy Gay blockbuster, the money changing hands in the deal is perhaps as important as the players changing uniforms. The Grizzlies assuaged future luxury-tax concerns, the Pistons created even more potential cap space for the coming summer, while the Raptors essentially spent any cap space they'd have over the next two summers on Gay.

Here's how the trade broke down from each team's perspective:

Memphis Grizzlies

Together, Gay and Hamed Haddadi are earning about $17.76MM this season, while incoming pieces Ed Davis, Tayshaun Prince, and Austin Daye are earning close to $11.93MM. The reduction in 2012/13 salary ensures that the Grizzlies are in no danger of becoming a taxpayer this year, and could even take on a little salary before the trade deadline and still have plenty of breathing room. Memphis also acquired cash from the Raptors in the deal, though the exact amount is unclear.

More importantly, moving Gay's long-term salary should help the Grizzlies stay out of the tax for the next two years. Daye will be off the Grizzlies' books next year unless the team decides to bring him back, while Davis' and Prince's cap hits are significantly less than Gay's.

Although the move saves the Grizzlies about $7.7MM in 2013/14, it actually adds some guaranteed money to Memphis' books for 2014/15, since Gay had a player option for that season. But if we assume Gay would have exercised that $19.32MM option, Prince's $7.71MM salary will result in savings of about $11.61MM for '14/15.

In addition to the cap flexibility gained as a result of the deal, the Grizzlies also created a pair of traded player exceptions, as general manager Chris Wallace confirmed yesterday. Here's how the deal was organized from the Grizzlies' perspective:

  • Daye's $2,958,077 was absorbed using the $4.2MM traded player exception created when the Grizzlies sent Marreese Speights to the Cavs. Memphis could still use the rest of that exception on another player at some point before next January, but there's only $1,241,923 left on it now.
  • Using Gay's $16,460,538 salary, the Grizzlies took on Davis ($2,207,040) and Prince ($6,764,045). Since Gay is earning $7,489,453 more than those two players combined, the Grizzlies create a trade exception worth that amount, which they'll have a year to use.
  • The Grizzlies also essentially sent Haddadi's $1.3MM salary out for nothing, so they'll receive a trade exception worth that amount as well.

As our list of outstanding trade exceptions shows, the Grizzlies now have seven TPEs at their disposal, though many of them are small enough that they likely won't be used.

Detroit Pistons

For the Pistons, the deal doesn't affect their 2012/13 cap figure a whole lot. Prince and Daye combined to make about $9.72MM, so CBA rules allowed the team to take back up to 150% of that amount. Calderon's salary fits comfortably into that window, despite the fact that his contract includes a 10% trade kicker. Calderon had been earning $10,561,982, so the trade ups his salary for '12/13 to over $11MM. Because the point guard's deal was signed under the old CBA, the Pistons, not the Raptors, are on the hook for paying that 10% bonus.

Still, eliminating Prince's long-term contract from their books more than makes up for the addition of a little short-term salary. With Corey Maggette, Jason Maxiell, Will Bynum, and Calderon all coming off the books this summer, the Pistons will have a ton of cap space, even if the team decides not to amnesty Charlie Villanueva or release Rodney Stuckey, whose contract is partially guaranteed.

If the Pistons were to amnesty Villanueva and release Stuckey, the team would only have about $21.18MM in guaranteed commitments for 2013/14, potentially leaving room for two maximum-salary players. Of course, I don't think Dwight Howard or Chris Paul are clamoring to sign with the Pistons, but there are certainly plenty of ways Joe Dumars could take advantage of having that sort of cap room.

Toronto Raptors

With the Grizzlies and Pistons both clearing long-term money from their respective caps, that salary has to be going somewhere — namely, to Toronto. But before we get to that, here's how the move worked for the Raptors in the short-term:

Calderon's outgoing salary, which doesn't include his 10% trade kicker for the Raptors' purposes, isn't quite large enough to absorb Gay's contract on its own, so Toronto needed to combine Calderon's and Davis' salary, for a total of $12,769,022 in outgoing money. Trade rules allow the Raptors to take back that amount plus an additional $5MM, meaning Gay's and Haddadi's combined $17,760,538 just barely fits.

Despite adding extra salary for 2012/13, the Raptors are still in no danger of approaching the tax threshold. However, they can't say the same for next year. If we assume Aaron Gray and Linas Kleiza pick up their player options and the team keeps Kyle Lowry and his non-guaranteed deal (a no-brainer now that Calderon is gone), the Raptors are already essentially at or over the tax line for next season.

With more punitive tax penalties set to take effect starting in 2013/14, it's highly unlikely the Raptors will want to be a taxpayer with a roster that's not exactly a title contender. Whether that means amnestying Kleiza or finding a way to move some combination of Andrea Bargnani, DeMar DeRozan, and/or Landry Fields, we should definitely expect to see some maneuvering from the Raptors to clear some of that money.

If Toronto doesn't end up moving Bargnani, DeRozan, or Fields, the team's flexibility for the 2014/15 season will be limited as well. Those three guys, plus Gay, Jonas Valanciunas, Terrence Ross, and Amir Johnson, will be earning about $60MM, leaving the Raps with little to no cap space in a summer that's expected to feature a handful of impact free agents. For a team that struggles to attract stars without overpaying them, not having cap space isn't the end of the world, but it does mean the Raptors will fewer options when it comes to making roster moves.

ShamSports was used in the creation of this post.

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