As I detailed earlier this month when I examined how teams have used their 2013 mid-level exceptions, fewer than half of the NBA's 30 teams claimed cap room this summer. Of those 12 clubs that did go below the cap, seven have since exceeded that threshold, and no longer have space available. With only five teams still holding cap room, the odds weren't high that two of those clubs would work out a trade together, but that's exactly what happened last night, when the Bucks reached an agreement to acquire Caron Butler from the Suns.
Typically, over-the-cap trade rules must be observed by at least one team when two sides agree on a swap. But with both Phoenix and Milwaukee holding cap room, this is one of the few deals that doesn't necessarily require those trade exception rules. Still, it's worth exploring how the two teams made the deal work, and what the fallout will be for the Suns' and Bucks' rosters and cap situations.
For the Bucks:
Butler is earning an $8MM salary in 2013/14, so if the Bucks had been over the cap, they would have needed to send out at least $5,266,667 in the trade to make it legal. That wasn't necessary since Milwaukee had cap space, but the team still couldn't take on Butler without sending out any contracts. According to ShamSports, the Bucks' team salary was $51,175,131 prior to the trade, meaning the club had, at most, about $7.5MM in cap space — a little less than that if Marquis Daniels' $884,293 cap hold remains unrenounced.
Assuming Daniels isn't on the team's books anymore, Milwaukee could have included one of either Ish Smith ($951,463) or Viacheslav Kravtsov ($1,500,000) to sneak under the cap. The team included both players in the deal, which could mean several things: Perhaps the Bucks didn't want to renounce Daniels, or maybe the Suns simply wanted to acquire both players. Milwaukee also had 16 guaranteed contracts on their books prior to the deal, so a two-for-one trade saves the team from cutting a guaranteed contract down the road.
In any case, after the trade becomes official, the Bucks' team salary will jump from about $51.18MM to $56,723,668. Again, the presence of Daniels' cap hold affects the club's remaining cap room, but it's safe to say Milwaukee should have between $1MM and $2MM of leftover space, plus the $2.652MM room exception.
As for the effect on the Bucks' roster, adding Butler at the expense of Smith and Kravtsov balances things out nicely. The depth chart had previously been crowded at point guard, where Brandon Knight, Luke Ridnour, and Nate Wolters all figure to see time, so the loss of Smith isn't a big one. The frontcourt also remains strong without Kravtsov, since Larry Sanders, John Henson, Zaza Pachulia, Ersan Ilyasova, Ekpe Udoh, and Miroslav Raduljica can all contribute at power forward and/or center.
For the Suns:
The cap machinations of the deal for the Suns are less straightforward than they are for the Bucks, due in part to Alex Len. The team has yet to announce the signing of Len, meaning that his cap hold, rather than his actual 2013/14 salary, remains on the club's books. As our chart of likely 2013 rookie salaries shows, Len figures to sign for an amount that's nearly $600K greater than his cap hold. That's important for Phoenix, since the team is currently below the cap, at $58,403,579, but would go over the cap (to $58,985,699) if they signed Len to the full 120%.
Why does this matter? Well, if the Suns were over the cap when they made the deal, they could use those aforementioned over-the-cap trade rules. Swapping Butler's $8MM salary for Smith's and Kravtsov's smaller deals would reduce the Suns' guaranteed salaries by $5,548,537, but Phoenix could create a trade exception worth that amount, which also counts toward team salary. In other words, if the Suns were to sign Len, then finalize the Butler deal, they'd only have $53,437,162 in guaranteed contracts on the roster, but that $5,548,537 TPE would still take them a little over the cap, creating slightly more flexibility.
The difference between the two options isn't significant, so it's possible the Suns will just continue to act as an under-the-cap team, and forgo that trade exception in favor of their leftover cap space. But if the team officially announces the Len signing around the same time that they announce the Butler deal, it wouldn't be a surprise.
As Paul Coro of the Arizona Republic notes, clearing $5.5MM+ in salary should also make it more palatable for the Suns to release Michael Beasley. When Len is signed and the Butler deal is finalized, the Suns will have 17 guaranteed contracts for 2013/14, so at least two players will need to be traded or waived. Beasley, who has had his share of off-court issues, is a strong candidate to be cut, and it may happen sooner rather than later.
Players released on or before August 31st are subject to the stretch provision, which allows teams to "stretch" salary payments over additional years, reducing the short-term cost (and cap hit, if the team chooses). Beasley is owed $9MM in guaranteed money over the next two seasons, but by releasing him this week, the Suns could instead pay him that money over the next five seasons. It's not clear yet if stretching those payments is Phoenix's preference, but it looks like a good bet that Beasley will be gone by opening night.