Breaking down the assets from the Nets trade

cs intro new guys

The trade is done, the guys have been introduced, and now the process of moving on begins (well, maybe it begins after the Nets introduce everyone on Thursday).  Now we’re starting to get a better feel for what the Celtics really got out of this deal.

I’m hoping this post can be a handy guide for fans who are trying to figure out what the C’s got as far as “assets” and how they can be used.  Maybe this can help ease the pain of watching Pierce and Garnett in Brooklyn.

Asset #1:  A $10.3 million trade exception

What is a trade exception? If you don’t want to drown in legalese, you can read Larry Coon’s detailed explanation in his indispensable NBA Salary Cap FAQ. But trade exceptions essentially give teams a one-year window in which to complete a trade by acquiring the difference in salary sent out.

The creative wizards in the Celtics’ front office — a group helmed by president of basketball operations Danny Ainge, assistant general manager Mike Zarren and director of player personnel Austin Ainge — were able to structure the Nets deal in such a way that a trade exception was generated for the difference in salaries between Paul Pierce ($15.3 million) and Keith Bogans ($5 million). Understanding exactly how that happened and why it works is enough to make you go cross-eyed. The bottom line is that Boston now has the ability to absorb $10.3 million worth of salary so long as it does so within a one-year window that started with Friday’s official consummation of the trade.

It’s tough to explain, but basically, the Celtics made this monster deal and walked away with the ability to acquire another player, from another team, that makes $10.4 million (the exception, plus $100,000).  You can’t combine this with another exception, or another player, or another anything.  It can, however, be broken down into smaller pieces.

So the Celtics can’t use this to get a $15 million guy, but they can use it to get a $7 million guy and a $3.4 million guy.

IMPORTANT NOTES:  

The Celtics cannot use the full $10.3 million exception right now because they are hard-capped at just under $76 million due to the sign-and trade for Keith Bogans (sign-and-trade deals trigger a mechanism in the CBA that forces teams to be under the tax apron, which is $4 million above the tax line.  This prevents big-spenders like the Nets to do a sign-and trade deal.)

The exception expires in one year.  So if the Celtics don’t use it to acquire anyone by July 12, 2014, it goes away.

Asset #2:  Kris Humphries, and his $12 expiring contract

Kardashian jokes aside, the kid is a 10-year vet who can reasonably be projected to produce a double-double with adequate playing time.  He’s 28 years-old, so he’s in the prime of his career.  And one aspect I haven’t heard anyone mention as a big plus is the other side of the “expiring contract” coin…

“Contract year”

This could be Hump’s last chance to get himself a big-money contract.  That’s valuable in one of a couple of ways:

  1. A team could understand that he’s playing for a contract and move to acquire him for a full season before he hits free agency.
  2. He could play for a while with Boston and put up big numbers, thus increasing his trade value.  

I know a lot of us want to crap all over the guy for various reasons, some of which he brought upon himself.  In pure basketball terms, though, he’s a very valuable commodity on the trade market.

IMPORTANT NOTE:

League rules prevent Humphries from being traded with anyone else for two months.  He can, however, be traded on his own immediately.

Asset #3:  Keith Bogans and his $5 million “expiring” contract

How did Keith Bogans hit the lottery in this deal and suddenly make $5 million?  It’s because he’s a “base year compensation” player.  In a nutshell, when the teams were about $2.5 million short salary-wise in the deal, they needed to make that up in a sign-and-trade with Bogans.  But because Bogans is a BYC guy, only half of his salary counts towards matching salaries in the deal.  Thus, he was paid twice what was needed.

Congrats, Keith.

Because it was a sign-and-trade, it needed to be a three-year deal, and the first year had to be fully guaranteed.  And while this windfall makes it seem like the C’s are way overpaying Bogans (and they are), it’s also a very useful trade tool for the Celtics.  Moving forward, his $5 million counts as the full $5 million towards future trades.  And because the second and third years of his deal are fully non-guaranteed (with no trigger dates to guarantee any of the cash), this deal is for all intents and purposes an expiring deal for the Celtics.

Now, the Celtics have $17 million combined in Bogans and Humprhies that could bring back as much as $21,250,000 in salary… a.k.a. a maximum-contract player.  Using 2013-14 salaries, that means there are only five players the Celtics could not trade for with the combination Humphries and Bogans:  Kobe Bryant, Dirk Nowitzki, Carmelo Anthony, Amar’e Stoudemire, and Joe Johnson.

That’s not to say other teams would.  I’m just saying that a team interested in clearing $17 million in cap space could part with a star player in exchange for those two guys.  Bogans’ deal is extremely valuable in that regard.  Expiring mid-level contracts can often be the difference between getting deals done, and deals falling apart.

IMPORTANT NOTE:

Because it was a sign-and-trade deal, Bogans cannot be traded until December 15.

Asset #4:  The Draft Picks

The Celtics received Brooklyn’s 2014, 2016, & 2018 first rounders.  They also have the right to switch with the Nets in 2017.  That means if the Nets manage to grab the 5th pick in the 2017 draft and the Celtics have the 10th pick, the Celtics can switch places and take #5.

Important Notes:

  • Atlanta has the right to switch spots with Brooklyn in 2014 (the exact same way I just explained).  As unlikely as it is, if something happens and the Nets implode, the Hawks could steal the pick if it’s better. 
  • The 2016 and 2018 picks are fully unprotected.  If, for some reason, the Nets go down the toilet and hit rock-bottom in a few years and become a lottery team, the Celtics would own those lottery picks between 2016 and 2018.

Asset #5:  Kris Joseph’s un-guaranteed $788K

He’s already been waived.  Sorry, kid.  The move saves the Celtics $788, 872

Asset #6:  MarShon Brooks

I’ve already talked about Brooks’ abilities and possibilities.  He’s a 24 year-old kid that costs the Celtics $1.2 million next season.  At a time where the team is in a bit of flux, a $1.2 million flier on a 24 year-old with potential is a virtually no-risk proposition.  And because the team holds the option on his contract next year, you can even consider his deal expiring if the Celtics, or another team, want to save some money by declining that option.   Even if that option is exercised, his salary next season is $2,179,354… which is very manageable.

Asset #7:  Gerald Wallace

This is the least valuable acquisition of the trade because he make $10,105,885 per year in each of the next three seasons.  The Celtics may find a trade partner for Wallace’s services should he prove himself to be a valuable contributor over the course of this season.  They may need to attach something of more value to entice teams to take him off their hands, though.

IMPORTANT NOTE:

League rules prevent Wallace from being traded with anyone else for two months.  He can, however, be traded on his own immediately.

In conclusion…

Wallace’s inclusion in the deal is the cost of doing business.  The Celtics acquired some very valuable pieces in this deal, but you don’t just get to do that for nothing.  Wallace’s contract was the price of admission for 2 very trade-able deals, three first round picks and the chance to improve your position in a 4th draft, and a $10.3 million TPE.  You may not like that he was included, but if he wasn’t, then none of the other stuff would have been possible.

The Celtics are CLEARLY not done making moves.  But they’ve acquired some very valuable pieces for two players who, while beloved, may not even be Nets at this time next year.  They’re also banking on Mikhail Prokhorov’s eventually fading appetite for paying massive luxury tax bills.  The 2014 pick is nice, but it’s the 2016, 17, and 18 picks that we should really be focused on.

The Nets are paying $83 million taxes this upcoming season.  Next season will be their third consecutive season paying the luxury tax, which will trigger the “repeater tax” I keep talking about.  They have EIGHT players currently under contract for the 2014-15 season for a guaranteed $83 million.  Even if we assume that luxury tax line goes up to, let’s say, $73 million… the Nets are already committed to $26.25 million in taxes next year for those eight players with a tax rate starting at $3.50 per dollar it spends after that.  A single $5 million player would add $17.5 million to their tax bill.

That’s a LOT OF MONEY.  Even a billionaire like Prokhorov has to, at some point, decide that he’s not going to hemorrhage money on a non-contender.  The 2015-16 season could be the year they decide to blow it up and start over, which is where the unprotected first-rounders start to come into play.  Meanwhile, in three years, the Celtics may well find themselves on the up-swing and back in “contender” status.  Suddenly, there is a very real possibility of the Celtics being a contending team spending consecutive years in the lottery.

Timing is everything, and the timing here could work out very well in Boston’s favor.  This upcoming season, even with Wiggins, et al.,  looming in the 2014 draft, isn’t necessarily the main focus.  This is a transition year that is really setting things up for the future.  There are obviously a lot moving parts and a few hopeful assumptions in all of this.  Things can certainly take turns for the worse along the way.  But all in all, the Celtics have set themselves up fairly well as they start this rebuilding process.