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Financial Impact Of Deadline Trades: Northwest

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 conclude the series today with a look at the Northwest Division, the busiest division on deadline day, with all five teams making at least one swap. The salary figures listed below denote this season’s salaries, though we’ll also discuss salary for future seasons.

Denver Nuggets

In: ($5,963,603)

Out: ($19,665,243)

The specter of the Sixers allowing an opposing team to offload a player with an eight-figure salary into their cap space loomed all season long, but it wasn’t until deadline day that it happened. The Nuggets not only reaped salary relief, for this season and next, from trading JaVale McGee to Philadelphia. They were able to create a powerful trade exception worth McGee’s $11.25MM salary that they can use anytime between the end of the regular season and next year’s trade deadline to find a player, or players, more productive than McGee proved during his time in Denver.

Trade exceptions can also be used to create other trade exceptions, an act of essentially rolling them over from one year to the next. That appears to be what the Nuggets did to allow themselves to create a new, $7.5MM exception equivalent to Arron Afflalo‘s salary, as Eric Pincus of Basketball Insiders estimates (Twitter link) and shows on his Nuggets salary page. They took Thomas Robinson‘s salary into the $4.65MM trade exception they created in January for Timofey Mozgov, reducing its value to $971,640, Pincus tweets. That took care of the largest incoming salary, and Denver took advantage of its last chance to use two other exceptions for the rest of the salary it took on from Portland. Victor Claver‘s salary fit neatly into the $1,659,080 Andre Miller trade exception, as Pincus notes on Twitter. Will Barton is making the minimum salary but couldn’t fit into the minimum-salary exception since he’s on a three-year pact. However, he was a fit for the $1,169,880 Jordan Hamilton exception. That allows the Nuggets to create a trade exception for Gee’s $915,243 salary, as Pincus shows. Thus, Denver used two expiring exceptions to create two new exceptions for Afflalo and Gee that won’t expire until next year’s deadline.

Of course, whether any of the McGee, Afflalo or Gee exceptions still exist at next year’s deadline depends in part on whether the Nuggets remain an over-the-cap team in the offseason, a proposition that seems less likely after Thursday’s trades. The excising of McGee left a $12MM hole in Denver’s 2015/16 commitments, and the team no longer has Afflalo’s $7.5MM player option to contend with. Robinson and Claver, both of whom have since been waived, were on expiring contracts, and the same is true of Barton. The Nuggets have about $48MM in commitments for next season, about $20MM beneath the projected salary cap. That doesn’t count Jameer Nelson‘s nearly $2.855MM player option, the team’s likely lottery pick, and more than $2MM in roster charges, since the team only has seven fully guaranteed contracts, so the Nuggets would have trouble offering the max to anyone but restricted free agents. Still, there are enough tempting 2015 free agents to make it a strong possibility that GM Tim Connelly renounces his exceptions and uses cap space for a significant signing or two.

For now, those exceptions are all that keep the Nuggets from having immediate cap space. Their team salary dipped below the $56.759MM minimum team salary when Philadelphia claimed Robinson off waivers and wiped his salary figure from Denver’s cap. Normally, a team in Denver’s position would cheer such a move, since it saves the Nuggets from paying out the remainder of Robinson’s salary. But the final two months of paychecks due Robinson would have been a cheaper cost than having to pay the difference between their team salary and the minimum salary line to the players on their roster at season’s end, which is the penalty for failing to meet the salary floor. The Nuggets have already paid most of Robinson’s $3,678,360, but those payments no longer count toward their team salary, since Robinson’s full number instead applies to the Sixers, pushing them over that same minimum salary line. Denver could claim another player off waivers just as Philadelphia did, but the Nuggets are operating over the cap because of the value of their exceptions, so they’d either have to renounce them or use one of them to accommodate the waiver claim, neither of which they’re likely to do.

Minnesota Timberwolves

In: ($12,000,000)

Out: ($9,410,869)

The Timberwolves made a pair of trades about a week before the deadline, but the one they made on deadline day was far more about intangibles than salary. They took on salary for this year, to be sure, but the more than $2.5MM gap between the salaries for Kevin Garnett and Thaddeus Young isn’t quite so pronounced, since each only has a few more paychecks to go. The Nets already paid the lion’s share of Garnett’s salary, as the Wolves did with Young’s. Minnesota swallows Garnett’s entire cap figure, but that matters little, since the team was over the cap but nowhere near the luxury tax threshold, and that’s still the case post-trade with a team salary of about $67.5MM.

Minnesota reportedly wants to sign Garnett to a two-year deal this summer, and he’s expected to fulfill that request, so that mitigates the potential savings the team reaped when it unloaded Young and his nearly $9.972MM player option. However, it’s uncertain just what sort of salary Garnett would end up with. It’s quite conceivable that he’d give the Timberwolves a break and allow them to pay him significantly less than Young would have made on his option. It’s just as conceivable that he’d insist on a salary similar to his $12MM pay from this season, and that the Wolves would give it to him.

So, it’s unclear whether the trade will end up a net gain or loss of salary flexibility for the Wolves, who have about $51MM committed for 2015/16, not counting Chase Budinger‘s $5MM player option and what will almost certainly be a high lottery pick. The team probably wouldn’t have had a chance to open enough cap space to be a major player on the free agent market even if it hadn’t traded Young and he’d opted out, so the deal to bring in Garnett makes financial sense. Young could have left Minnesota without the cap flexibility to adequately replace him if he’d opted out, but Garnett seems more willing to commit to the team that Young had been. There’s a decent chance the real financial after-effects of the deal won’t be felt until 2016, when Garnett’s would-be two-year deal stands to take up space just when rival teams are clearing the decks for when the league’s TV deal drives the salary cap up to a projected $90MM.

Oklahoma City Thunder

In: ($13,230,621)

Out: ($13,536,598)

A divorce between the Thunder and Reggie Jackson seemed inevitable. The same was probably true of Enes Kanter and the Jazz, so Oklahoma City swapped one discontented soon-to-be free agent for another. The Thunder nonetheless paid a price. They took on $6.75MM in guaranteed salary for 2015/16 to Steve Novak and D.J. Augustin for next season and gave up only $947,276, Grant Jerrett‘s salary for next season. Oklahoma City emerges with more than $78.3MM already committed for next season against a projected $81MM tax line, and that doesn’t include a new deal for Kanter.

The Thunder’s willingness to use trade exceptions to bring on any significant additional salary from here forward is questionable, but it nonetheless appears the team was able to create a new trade exception equivalent to Reggie Jackson‘s $2,204,369 salary. One of its existing trade exceptions facilitates this, though Oklahoma City narrowly missed out on an opportunity to reap a new Jackson exception without using one it already had on the books. The outgoing salaries of Kendrick Perkins and Jerrett come to $10,470,824, meaning that the Thunder, a taxpaying team, could absorb 125% plus $100K of that amount in incoming salary. That comes to $13,188,530, agonizingly close to the $13,230,621 worth of incoming salary involved in the deal.

Still, the use of either the $1.25MM Hasheem Thabeet exception or the $915,243 Lance Thomas exception to absorb Kyle Singler‘s salary would fit the bill. No reports have indicated which one the Thunder used, but the assumption here is that they would use the Thabeet exception, since it expires much sooner and there’s only a negligible difference between its value and the that of the Thomas exception. In either case, hiding Singler’s salary in an existing trade exception lowers the rest of Oklahoma City’s incoming salary within the 125% plus $100K range of Perkins’ and Jerrett’s salaries, so Jackson’s salary can go out by itself. Thus, the Thunder could create that Jackson trade exception if they so desired.

The Thunder’s other trade was quite simple, with Ish Smith the only currently rostered player involved. Offloading him allows the Thunder to create a small trade exception for his $861,405 prorated minimum salary. More significantly, the deal allows Oklahoma City to save close to $1.225MM in taxes on Smith in addition to his salary, and it gives the Thunder a net savings instead of a net cost from their deadline-day activity, at least in terms of this season. Of course, the true cost lies ahead.

Portland Trail Blazers

In: ($8,665,243)

Out: ($5,963,603)

Your eyes don’t deceive you, and that’s not a typo. Arron Afflalo‘s incoming salary for the Blazers is different from the outgoing salary listed for him in the Nuggets ledger above. That’s because the $250K in bonus money that he gets if his team makes the playoffs went from an unlikely incentive to a likely one, as Pincus pointed out. Likely incentives are a part of a player’s cap figure while unlikely ones are not, and so from Portland’s perspective, he’s a slightly more expensive player, while the Nuggets were able to create a trade exception only for the cap figure he represented to them.

This bit of accounting costs the Blazers a chance to create a trade exception, assuming the deal would have been constructed the same way in a world where Afflalo doesn’t have a playoff bonus. Portland is over the cap but under the tax, so it can absorb as much as 150% plus $100K of what it gives up. Afflalo’s Denver salary would fit within 150% plus $100K of the salaries of Thomas Robinson and Victor Claver, but his bonus-inclusive Portland salary would not. So, Portland had to add Will Barton‘s salary to the equation rather than send it out by itself. If Barton hadn’t been needed for matching purposes, the Blazers could have slipped Gee’s salary into the minimum-salary exception and created a $915,243 trade exception equivalent to Barton’s salary. Of course, it seems just as logical to suspect that neither Barton nor Gee would be involved in the trade if Afflalo didn’t have a bonus, since the deal would work without them in that case, so it’s quite possible Portland wouldn’t have ended up with a trade exception either way.

Blazers GM Neil Olshey probably isn’t losing sleep over that would-be element, and there probably isn’t too much for him to fear regarding Afflalo’s player option. The Nuggets reportedly expected that Afflalo would command $9-10MM annually in his next deal, figures that would no doubt entice the shooting guard to turn down that $7.75MM option for next season. Even if he opts in, the Blazers would still have only about $30.8MM committed for 2015/16, giving them flexibility to pivot should they lose any of the three members of their starting five who are due for free agency this summer.

Utah Jazz

In: ($10,470,824)

Out ($9,140,621)

Salary seemed to factor little into the Jazz’s thinking in their deal, which among other assets gave the team a protected 2017 first-rounder and the rights to 7’2″ draft-and-stash center Tibor Pleiss, whom Utah appeared close to signing shortly after the trade. Those Pleiss talks hit a snag, but the Jazz are clearly focused on the future, and it seems likely the sides will discuss a contract again, and perhaps this summer, when the Jazz only have about $47MM earmarked for 2015/16. The Jazz arrived at that figure having offloaded Steve Novak‘s $3.75MM guaranteed 2015/16 salary in exchange for Grant Jerrett‘s $947,276 guarantee for next season, a net savings of nearly $2.803MM.

Kendrick Perkins, whom the Jazz have already waived in a buyout deal, and Kanter both had expiring contracts, but the continued presence of Kanter would have complicated Utah’s flexibility even if he was destined to play elsewhere, since, unless Utah renounced his rights and gave up leverage to make a sign-and-trade, Kanter’s cap hold would have been stuck on the books. Perkins’ cap hold, like his contract itself, is already gone, and while the Jazz could have made the same happen with Kanter, GM Dennis Lindsey and company surely would have held out to try to find some way of recouping at least a modicum of value for the former No. 3 overall pick.

The Jazz instead found an palatable return for Kanter at the deadline, and they saved money for next season while doing so. Plus, it didn’t cost the team much in salary for this season, if anything at all, depending on how much Perkins gave up in his buyout.

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

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