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Financial Impact Of Deadline Trades: Southeast

Last week’s trade deadline was a dizzying affair, with 39 players and 17 teams involved in a dozen trades, including a trio of three-team transactions. The day had wide-ranging effects on the salary structures of those 17 teams, and we’ll examine the aftermath for each of them in this multipart series.

We’ll begin today with the Southeast Division, home to the Heat, who acquired Goran Dragic, arguably the top player involved in the deadline-day trades, and the Wizards, who engineered an Andre Miller trade for the second deadline in a row. The salary figures listed here denote this season’s salaries, though we’ll also discuss salary for future seasons.

Miami Heat

In: ($9,206,250)

Out: ($6,159,673)

The Heat slightly lowered their financial commitments for 2015/16, since Zoran Dragic‘s salary for next season is about $464K less than Danny Granger‘s player option. That’s rare for a team that acquires a star, but it’s not nearly the most significant financial upshot here. There was no reasonable chance that Miami would have had been able to clear the cap room to chase Goran Dragic with a fair offer in free agency if they hadn’t traded for him at the deadline. Making a play for Dragic without already having him in the fold would likely have required Dwyane Wade to down his $16.125MM for next season and agree to re-sign for mid-level exception money. Even a “Heat lifer” such as Wade would no doubt hesitate to do that. The motivation to trade for Dragic was much greater for the Heat than for the Knicks or the Lakers, two of the other teams Dragic was reportedly eyeing, and two teams expected to have enough cap room to pay him the max this summer. Those teams will still be out there once Dragic turns down his $7.5MM player option, as he plans to do, but now Miami has the financial advantage of Dragic’s Bird rights to go over the cap to sign him.

For the time being, the trade makes it more difficult for the Heat to find a way to offset the loss of Chris Bosh for the season, since it causes the Heat’s team salary to leap by $3MM, putting them only around $1MM shy of the tax line. That makes it unlikely the team uses the full value of its nearly $2.653MM disabled player exception.

Washington Wizards

In: ($2,077,000).

Out: ($4,625,000)

Sacramento used a trade exception to accommodate this swap, which gave the Kings more than twice as much salary as they gave up, and that in turn allowed the Wizards the chance to create a trade exception of their own. The precise value of that new exception is unknown, since J. Michael of writes that the team used part of its $4,329,089 Trevor Ariza trade exception to absorb Sessions, while Eric Pincus of Basketball Insiders figures the Wizards kept that exception intact (Twitter link). Michael’s way lets the Wizards create a new exception equivalent to Miller’s $4,625,000 salary, leaving the Ariza exception at $2,252,089. Pincus has the Wizards creating a new exception worth the difference between the salaries for Miller and Sessions, which comes to $2.548MM. If I had to take a guess, I’d say the Wizards did it as Michael indicates, since in that case the larger exception would be the newer of the two, giving it a later expiration date. However, that’s just my speculation.

What is clear is that Washington gave up some cap flexibility next season, taking on Sessions’ 2015/16 salary of more than $2.17MM instead of Miller’s contract, which expires at the end of this season, for some relief against the tax threshold this season. The Wizards were $1MM shy of the tax line going into the deadline, and now they have $3.548MM in breathing room. Even without the trade, Washington could still have added any player on a prorated portion of the minimum salary, which is all they have to give, and avoided the tax, assuming unlikely bonus clauses in the contracts of the players already on the roster didn’t trigger. I’d imagine the move was motivated more by Washington’s belief that Sessions can outperform Miller than by any immediate tax concerns, though that’s just my speculation. In any case, the team wouldn’t have had a chance to open enough cap room this summer to chase a marquee free agent before the trade, so adding Sessions’ salary for next season doesn’t do much harm. The Wizards should still have enough room beneath the projected $81MM tax threshold for 2015/16 to use the full biannual and non-taxpayer’s mid-level exceptions.

The Basketball Insiders salary pages were used in the creation of this post.

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