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NBA Trade Deadline Impact – CBA (Atlanta-Golden State)

Atlanta Hawks:

2/5/20: Traded Evan Turner and 2020 1st round pick (Brooklyn, lottery-protected) to Minnesota, acquired Clint Capela and Nene Hilario from Houston

2/5/20: Traded Jabari Parker and Alex Len to Sacramento for Dewayne Dedmon, 2020 2nd round pick (Houston) and 2021 2nd round pick (Miami)

2/6/20: Waived Chandler Parsons and Nene Hilario

The Hawks’ deals are pretty easy to analyze from a cap standpoint. First, the players themselves: Capela has 3 years and about $53.1 million left on his contract after this year, while Dedmon has $13.33 million for next year before $1 million guaranteed of a $13.33 million non-guarantee in 21-22. Going into Wednesday, I had Atlanta slated for somewhere around $65 million in space this summer, depending on where in the draft order they and the Nets wind up (and yes, I’m assuming Jabari Parker will pick up his $6.5 million player option).

After acquiring Dedmon and Capela, that number is down in the $47 million range – again, this number moves around a couple million in either direction depending on what draft slot you assign the Hawks; I’ve projected Atlanta with the #4 pick. That number is still large enough to pick up some assets in exchange for taking on bad contracts or making a run at some of the younger restricted free agents, so there really isn’t any serious damage done to the Hawks’ books. They’ll also still have plenty of space in the summer of 2021, in case teams try to get off money in a more star-studded free agent class.

Chandler and Nene were waived to allow the Hawks to complete these transactions. Additionally, the Hawks completed a couple other deals that netted the team some cash but  aren’t important enough to cover (you’ll have to go somewhere else for your Derrick Walton Jr. analysis). Nene getting waived was probably the most predictable thing that happened this week. His salary was non-guaranteed until 2/15, basically setting himself up to get traded as matching salary and waived.

Cleveland Cavaliers

2/6/20: Traded John Henson, Brandon Knight, 2023 2nd round pick (lesser of Golden State and Cleveland) for Andre Drummond

The Cavs story is pretty simple. Both Henson and Knight are pending free agents while Drummond has a player option worth $28.75 million next season. If Drummond declines his option and becomes a free agent, Cleveland’s cap-situation going forward obviously won’t change as a result of this trade. If he picks it up, the option would effectively evaporate all of Cleveland’s cap space this summer.

Without the trade, they were set to have in the region of $36 million depending on where their draft pick fell. Now, if Drummond picks up his option, it will be more like $7 million. That $7 million is less than the full mid-level exception, currently projected at $9.755 million, so they would be better off staying over the cap by keeping some free agent holds on their books. The bet here is pretty clearly that Drummond on a 1 year, $28.75 million contract is the best way for them to use their cap space. (EDIT – the Cavs have signed Alfonzo McKennie to a multi-year contract, but that doesn’t change any of the analysis above).   

Denver Nuggets

2/5/20: Traded Malik Beasley, Juancho Hernangomez, and Jarred Vanderbilt to Minnesota, received Keita Bates-Diop, Noah Vonleh, Gerald Green, Shabazz Napier and 2020 1st round pick (Hou)

2/6/20: Traded Shabazz Napier to Washington for Jordan McRae

What Denver did was basically trade having to make tough decisions on Hernangomez and Beasley this summer for a late first-round pick and not having to make any decisions. Assuming Jerami Grant opts out of his contract, I projected the Nuggets to be about $40 million under the tax before these trades. That seems like a lot, but it doesn’t include cap holds for their free agents, many of whom play large roles on the team, like Paul Millsap, Torrey Craig and Grant. Just those three will likely eat up the $40 million if Denver decides to resign all of them, so there really wasn’t room to bring back either of Beasley or Juancho and also stay under the tax. Nuggets owner Stan Kroenke is only worth $7.7 billion so he absolutely cannot afford to pay the tax for any reason in any season, even as Denver hopes to make long playoff runs.

This trade is basically neutral cap-wise for next season. None of the players involved are guaranteed except Vanderbilt, and the first-round pick from Houston is basically equivalent to his salary. Denver will still have a cap crunch to fit in the three players mentioned above, but they have turned the difficult decisions of Beasley/Juancho’s restricted free agency into a 1st rounder.

Detroit Pistons

1/6/20: Traded Andre Drummond for John Henson, Brandon Knight, and 2023 2nd round pick (lesser of Golden State and Cleveland)

The analysis here is essentially the reverse of the Cleveland section above. As noted in the Cavs section, both Henson and Knight are pending free agents, while Drummond has a player option worth $28.75 million. Before the trade, assuming Drummond picked up his option, Detroit was looking at cap space worth less than the mid-level exception and therefore would have just stayed over the cap in order to utilize the MLE. After the trade, Detroit is looking at somewhere in the range of $35 million in space, depending on where their 1st round pick falls and some option/guarantee decisions (I’m assuming Tony Snell and Markieff Morris pick up their player options worth about $15.5 million total). Detroit is effectively making the bet that they can use this newly created cap space in a way that benefits the franchise better than a 1 year/$28.75 million contract for Drummond.

Golden State Warriors:

1/25/20: Traded Willie Cauley-Stein to Dallas for 2020 2nd round pick (Utah)

2/6/20: Traded Alec Burks and Glenn Robinson III to Philadelphia for 2020 2nd round pick (Dallas), 2021 2nd round pick (Denver) and 2022 2nd round pick (Toronto)

2/6/20: Traded Jacob Evans, D’Angelo Russell, and Omari Spellman to Minnesota for Andrew Wiggins, 2021 1st round pick (protected), and 2021 2nd round pick

The smaller two trades served one clear purpose: clear cap room this season. Golden State entered the 2020 trade deadline season about $300k below the hard cap, imposed on them last summer due to the sign-and-trade involving Russell. Once their season went into the tank, the hard cap became somewhat less of an issue, but it was still preventing them from converting Ky Bowman and Marquese Chriss from 2-way contracts to multi-year deals that they could profit from in future years when they hope to compete.

By trading Cauley-Stein, Burks, and GRIII without taking any salary back, the Warriors cleared about $5.4 million from their books, more than enough to lock up Chriss, Bowman and/or anyone  else from the G-League or buyout market. (EDIT – the Warriors have since signed Bowman and Chriss to multi-year deals, Juan Toscano-Anderson for the rest of the season, and Zach Norvell to a 10-day contract). These two trades got Golden State to within about $500k of getting out of the tax altogether.   

Now, on to the bigger piece of business – the Russell trade. Looking beyond this year, the cap ramifications are minimal. They project to be over the tax every year going forward until at least 2023-24 and Wiggins and Russell make about the same amount (Wiggins cap number is slightly higher since as a player signed-and-traded, Russell was limited to 5% raises instead of the 8% Wiggins got when he resigned with his old team).

However, the most important aspect of cap management by the Warriors here is that by including Spellman and Robinson in the deal, they were able to get under the tax this year and duck repeater penalties next year. They are currently a little more than $3 million under the tax, but five players – until Steph comes back – under the NBA minimum roster size of 12, so they’ll cut into that amount but definitely won’t exceed it.

The repeater tax is in effect for any team that is in the tax for four out of the previous five seasons. Golden State was out of the tax in 2016-17, so by getting below the threshold this year, they ensure that next year they won’t pay repeater penalties. That may not sound like a big deal, but here are some of the dollar amounts that they could potentially save; you’ll see why ownership cares about ducking the repeater penalties.

Including their draft pick (I’m using the #4 pick as a projection), only the players currently signed through next year, and minimum holds to fill out the roster, they are looking at being over the tax by about $12.46 million next season. Without the repeater tax, that equals a tax bill of $22.4 million. With the repeater tax it’s about $34.87 million. If they use their taxpayer mid-level exception, those numbers are $34.5 million and $51.3 million, respectively. So, getting out of the tax this year should save ownership at least $12 – $17 million next year.  

Finally, one parting thought on the Russell set of transactions. Recall that during the summer the Warriors traded Andre Iguodala and a very lightly protected 2024 first round pick to Memphis to clear up enough room under the luxury tax apron to get Russell. As a part of that trade, the Warriors gained a trade exception of about $17 million that expires on July 7, 2020 . That exception is another way for them to add talent, and getting out of the repeater tax may make using some or all of that more palatable to ownership.

If the Warriors use the entire taxpayer MLE and take on the largest contract possible into the Iguodala exception, they’re looking at a tax bill of almost $103 million without the repeater tax and $136.7 million with it. So, they probably won’t do all of these things, but the savings related to getting out of the repeater are obvious. Saving at least $12 million and up to almost $34 million is certainly worth dumping Jacob Evans and Omari Spellman. 

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