Shockingly, approximately 12 million words have been spilled about the relatively minor Trevor Ariza for Kent Bazemore trade [not actually shocking].
Several major NBA analysts have highlighted the tax saving element of the trade as a major consideration for general manager Neil Olshey and the Trail Blazers. To wit, John Hollinger of The Athletic had this to say:
With Portland’s announcement that they are open for business, the question is what the Blazers can do now to get themselves under the tax entirely. This is a potentially important consideration, given that they’re likely to either threaten or land in the tax in each of the next four seasons, and thus could face some ugly repeater bills if they’re in the tax this year too.
Most notably, the Blazers are now in position to consummate a Hassan Whiteside trade that gets them all the way under. For example, a team needing a big could send Portland $22M in expiring contracts and take back Whiteside and one of Mario Hezonja or Gabriel; that would allow the Blazers to limbo under the tax line.
Hollinger’s logic is sound. The Blazers shaved about $5.2 million off their taxable payroll by trading Bazemore and are now roughly $6.3 million over the tax line. Whiteside’s $27.1 million contract could be traded for as “little” as $21.6 million via the 125%+$100,000 rule, shedding another $5.5 million. The Blazers could then use cash to entice another team to take one of their minimum salaries for nothing and sneak under the tax line.
Now for the commentary: Call me crazy, but as a Blazers fan I would be, um, not happy if the net result of the expiring Bazemore and Whiteside contracts was negative-two second round draft picks and a few million saved for the billionaire owner(s).
Fortunately, some other scenarios are in play.
Scenario 1: Blazers cut Ariza and the $7.1 million trade exception expires
This is not the optimal scenario. If the Blazers choose to cut Ariza before June 29, reducing his 2020-21 cap hit from $12.8 million to $1.8 million, and not use the $7.1 million trade exception (details here), they’ve turned Kent Bazemore’s expiring contract and Bird Rights into zero players, a loss of two draft picks, and $1.8 million in extra salary next season. They could stretch that salary across the next three seasons to reduce the immediate cap hit, but that won’t solve the lack of roster upgrade.
Ultimately if Ariza is off the roster and the trade exception goes unused the Blazers sacrificed draft picks and the option to-resign Bazemore for nothing. This would be a pure salary dump move.
Scenario 2: Blazers keep Ariza OR use the $7.1 million trade exception
The middle ground scenario of keeping Ariza or using the large trade exception, but not both, is a mixed bag. If the player the Blazers end up with is more effective than Bazemore, be it Ariza or someone acquired in trade, then this is probably a solid move.
If this hypothetical Ariza-esque player is not better than Bazemore, things get dicier. At that point Olshey should have just attempted to re-sign Bazemore and kept his second rounders.
Scenario 3: Blazers keep Ariza AND use the $7.1 million trade exception
Transforming Bazemore into two (2!) serviceable role players would the equivalent of a Mark McGuire moon-shot dinger circa 1998. This is the optimal scenario and would be a perfect example of both cutting luxury tax to satisfy ownership while incrementally improving the on-court product. Cross your fingers.
What about Whiteside?
The caveat to all of the above scenarios is the impending expiration of the Hassan Whiteside contract. If Whiteside is not traded and walks at the end of the season the Blazers are suddenly under the salary cap which slightly complicates what’s been outlined. In general, though, the evaluation of each scenario will still be sound, pending any impossible-to-anticipate complex roster moves.
If the trade market didn’t exist to convert Bazemore’s expiring salary into a rotation player, then the Ariza trade may end up being a savvy conservation of an otherwise expiring asset. Segregating one $20 million contract into an expiring $12.8 million contract and a $7.1 million trade exception increases flexibility, generally speaking.
The caveat is that the flexibility must be utilized. If neither Ariza nor the trade exception turn into a serviceable player the trade was likely a mistake.
Odds and ends
- For every example in this article that involves not cutting Ariza, pretend that “Ariza” really says “Ariza or a player acquired with his expiring contract next season.” The question in play is “Did the Bazemore trade create a roster upgrade?” If the answer is yes it doesn’t matter if that upgrade is Ariza or someone else.
- Twitter user hazzyhaz2 had this elegant, but somewhat unorthodox, suggestion to subvert the intention of the new non-guaranteed salary trade rules (embarrassed that I didn’t think of it first!):
so... this wouldn't stop a capped team like the Lakers for example wanting to add talent - they only need to come up with 1.8m salary to match in a trade at the end of the season, then they can keep Ariza at 12m as a valuable player/asset for bigger deal @ deadline next season?..— hat tub (@hazzyhaz2) January 19, 2020
- The $7.1 million trade exception will expire Jan. 21, 2021, a couple weeks before the trade deadline. Not ideal since most teams wait until the last minute to make trades, so Olshey may need to be especially active this summer if he hopes to use it.
- Ariza cannot be aggregated with other trade assets until the offseason.
- Another unlikely option: The Blazers could cut Ariza and re-sign him to a lesser contract to reduce his cap hit. The downside is that they would have to use an exception since cutting Ariza would turn him into an unrestricted free agent with no Bird Rights. It would not be ideal to sacrifice a salary exception on a player you could have otherwise retained. The exception to the exception is if they cut Ariza to dip under the salary cap, sign/trade another player into cap space and then use a room exception to keep Ariza (this is one of the convoluted scenarios I referenced above). Confused yet?
- (See below for an update regarding the DPE) Note that the Blazers used the $2.8 million disabled player exception to absorb Caleb Swanigan and increase the value of the trade exception from about $5 million to $7.1 million. Olshey turned a DPE he likely never intended to use into an extra $2 million on the trade exception. Great asset management.
Regular readers will know that I often hammer the importance of apparently inconsequential decisions. This is an example of why I strongly emphasize that each decision matters. Individual moves may not have a noticeable immediate impact, but in the long run it MIGHT be possible to aggregate these marginal gains into a consequential asset — like trading for a $7 million player instead of a $5 million player.
My argument when emphasizing otherwise trivial minutiae is that it’s foolhardy to eliminate the possibility of incremental upgrades, even if there is no instant payoff.
UPDATE: The Blazers have reportedly decided to preserve the Rodney Hood DPE instead of generate a $1.6 million trade exception for Anthony Tolliver.
Can confirm what was first noted (I believe) by @jgsiegel regarding Blazers-Kings trade -- Portland is preserving the $2.859M Hood injury exception (which expires in March) rather than generate a new, smaller exception for Tolliver (which they would have had for a year).— John Hollinger (@johnhollinger) January 21, 2020
Source: Portland has opted to structure the trade as follows:— Jeff Siegel (@jgsiegel) January 21, 2020
Rather than trading taking Caleb Swanigan into the Rodney Hood DPE, they're trading Tolliver for Swanigan, retaining the full Hood DPE until 3/10/20 and not getting a 1.62M TPE for Tolliver.https://t.co/0w6I4UyYmI
The DPE does expire sooner, but a $1.6 million trade exception would have very limited utility. The relative versatility and larger size of the DPE makes this a smart move.