Some front office executives don’t see much value in knowing the terms of the Collective Bargaining Agreement (CBA). I’ve been told that it’s not all that important because the league office takes care of a lot of the cap management stuff and will always tell you whether a proposed trade or signing is legal.
But while the league office monitors what you need to do and what you can’t do under the CBA, the league will never tell you what you should or could do. That’s where understanding the nuances of the CBA can really come in handy.
There are so many competitive and financial advantages of knowing the CBA, like recognizing how and when to renegotiate and extend a contract to secure the team’s future, maximizing cap flexibility and exceptions to build a better roster, or finding a creative way to avoid paying the luxury tax, to name a few.
Here I’m going to focus on the role of the CBA in executing trades.
An oddly notable figure in the history of NBA cap maneuvering for trade purposes is Keith Bogans. Bogans was traded 7 times in his career, most famously by the Nets in dealing for Kevin Garnett, Paul Pierce, and Jason Terry.
As a Bulls fan, I have mixed feelings about Keith Bogans when it comes to his on-court contributions. Bogans started all 82 games for the 61-win Bulls in 2010-11, though he averaged a meager 4.4 points, 1.8 rebounds, and 1.2 assists per game. He was known as a 3&D guy, but he wasn’t nearly as good an outside shooter as Kyle Korver or as good a defender as Ronnie Brewer, both backups on the team who played about the same number of minutes. Bogans forged a long and prosperous NBA career by virtue of reliably doing whatever his coaches asked of him, never complaining about his role, and serving as a positive presence in the locker room and in the community.
When Bogans was 33 and on the brink of retirement, the Nets signed him to a contract that dwarfed all of his previous deals, simply so that they could use that contract for salary-matching purposes in the Garnett trade. The Nets could only do this because they held his Early Bird rights, and they only held his Early Bird rights due to a highly unusual circumstance. According to the CBA he had been with the Nets for two years rather than one, thus allowing the Nets to re-sign him using a much larger cap exception, even though they waived him after just a couple weeks in year one—merely because he hadn’t signed with anyone else in between.
For most of his career Bogans was a minimum-salaried player. Yet based on the minimum salary exception to the salary cap, such players are remarkably useful in executing trades of all sizes.
In the article below I explain a few different applications of the minimum salary exception for trade purposes. Most interesting in my opinion is the use of minimum salary contracts to create large trade exceptions that can allow teams to acquire more talent in the future. If that sounds boring to you, feel free to scroll to the jersey at the bottom.
August 15, 2015
The Importance of Minimum Salary Contracts in Structuring & Executing Trades
The “Minimum Player Salary Exception” allows any team to sign or acquire a minimum-salaried player, no matter its cap situation and without regard for salary-matching principles in trade. The exception provides as follows:
A Team may sign a player to, or acquire by [trade], a Player Contract, not to exceed two (2) Seasons in length, that provides for a Salary for the first Season equal to the Minimum Player Salary applicable to that player (with no bonuses of any kind). [Such] Player Contract . . . covering two (2) Seasons must provide for a Salary for the second Season equal to the Minimum Player Salary applicable to the player for such Season. . . .
[2011 NBA Collective Bargaining Agreement (hereinafter, “CBA”) Article VII, Section 6(i): Minimum Player Salary Exception (p. 155); see also Larry Coon FAQ #86].
As indicated, a team may use this minimum salary exception as long as no more than 2 years remain on the player contract, with each year strictly offering the minimum salary (“no bonuses of any kind”).
While this exception is limited to a relatively small dollar amount and a particular subset of players, it offers substantial flexibility in structuring deals between teams with minimum salary players on the back end of their rosters. In such situations, the minimum salary exception may allow teams to (1) make otherwise illegal trades legal, (2) save money, and (3) create or maximize trade exceptions. Some examples of how a team could derive these benefits appear below.
(1) Make otherwise illegal trades legal
For the 2015-16 cap year, most teams currently sit over the salary cap but under the luxury tax, allowing them to receive 150% + $100,000 of their outgoing salary in trade provided that this outgoing salary does not exceed $9.8 million and the trade would not increase team payroll over the tax line. [See CBA Article VII, Section 6(j): Traded Player Exception (pp. 155-56); Larry Coon FAQ #84]. If one of these teams trades away a $2M player, for example, it can only receive $3.1M in player contracts in return. In exchange for a $3M player it can receive $4.6M in player contracts.
Let’s say that Team A wants to trade a $2M player to Team B for a $4M player. Clearly it cannot do so under the standard rule. Adding a $1M player to each side of the deal still would not result in a permissible trade, as $5M is more than the $4.6M Team A would be allowed to receive in return. If these additional players are on minimum salary contracts, however, the minimum salary exception enables Team A to execute its desired trade. Its own minimum salary player is aggregated with its $2M player for a total of nearly $3M in outgoing salary, while its incoming salary remains just $4M because the minimum salary player it receives is absorbed into the exception.
For a more concrete example, suppose that the Wizards decide to pursue an offensive sparkplug off the bench to improve their contender status, both for this year’s playoffs and for the 2016 summer free agency period. The Wizards could offer rookie Kelly Oubre in exchange. One potential trade target is Devin Harris, although his roughly $4M salary is not a match for Oubre’s rookie salary just under $2M. By adding the minimum salary contracts of Garrett Temple (WAS) and Dwight Powell (DAL), an Oubre-for-Harris swap could be completed. [In free agency Temple and Powell just signed contracts totaling $61 million over 7 years! Yes, the salary landscape has changed.]
(2) Save money
As a corollary, the minimum salary exception allows a team looking to cut payroll to trade away more than the “150% plus $100,000” that its trading partner would otherwise be able to accept. In the above hypothetical trade, though the deal was based on talent and fit rather than financial concerns, Team B, or Dallas, ended up cutting $2M from its payroll even though its outgoing salary typically would allow roughly a $1.7M savings at most. That team could trade away additional minimum salary players in the deal to cut more payroll, limited only by roster size constraints. Thus, if the Wizards created roster space to add 2 players, at the deadline they could trade Oubre and Temple for Harris, Powell, Dalembert, and Villanueva* (the latter 3 all on minimum contracts), saving Dallas approximately $4 million in team payroll in the process.**
*Charlie Villanueva cannot be traded without his consent. See CBA Article VII, Section 8(b) (“A player with a one-year Contract (excluding any Option Year) who would be a Qualifying Veteran Free Agent or an Early Qualifying Veteran Free Agent upon completing the playing services called for under his Contract cannot be traded without the player’s consent.”) (p. 169); see also Larry Coon FAQ #100.
In a nutshell, any player who re-signs with his former team on a 1-year deal (excluding option years) has full trade protection by operation of the CBA. Put another way, in addition to Kobe, Melo, Duncan, Dirk and any other established stars with a formal no-trade clause, players such as Charlie Villanueva, Lou Amundson, James Jones, Aaron Brooks, Leandro Barbosa, Lance Thomas, and Matthew Dellavedova have trade veto power as well.
**Though Dalembert and Villanueva each will earn approximately $1.5M this season as veterans with 10+ years of experience, for payroll purposes their salary is the 2-year veteran minimum of $947,276. The league reimburses the difference so that the system does not provide a disincentive against signing older players. See Larry Coon FAQ #16; see also CBA Article IV, Section 6(k)(2) (“The Compensation paid to any player with three (3) or more Years of Service who signs a one-year, 10-Day or Rest-of-Season Contract for the Minimum Player Salary in excess of the Minimum Player Salary for a player with two (2) Years of Service shall be paid by the player’s Team pursuant to the terms of such player’s Uniform Player Contract, and then reimbursed to the Team out of a League-wide fund created and maintained by the NBA.”) (pp. 72-73).
(3) Create or maximize trade exceptions
Perhaps a less obvious benefit of minimum salary contracts is their ability to help generate trade exceptions for non-simultaneous trades.
As a hypothetical, suppose that Team C is prepared to send a $6M player and a $4M player to Team D for two $5M players. By structuring this trade as two separate deals, each team ends up with a $1M traded player exception (TPE or “trade exception”), which is not particularly valuable. Each team would then have one year to use its TPE to acquire a player or players earning up to $1.1M, as the value of an exception in the non-simultaneous trade context is the traded player’s salary, minus incoming salary from the trade, plus $100,000. [See CBA Article VII, Section 6(j): Traded Player Exception (pp. 155-56); Larry Coon FAQ #85]. The minimum salary exception already covers most players that would fit into such a trade exception.
If the teams each added a minimum salary player to the equation, however, Team C could gain a much more valuable $4M trade exception. The aggregated salaries of Team C’s $6M and minimum salary players would be large enough (approx. $7M) to acquire the two $5M players ($10M) without including the $4M player in the transaction. Team C could then effectively trade its $4M player for nothing, resulting in the full $4M TPE, while absorbing Team D’s minimum salary player into the minimum salary exception.
Moreover, Team D could throw in an additional minimum salary player to generate its own $5M trade exception. One of its $5M player salaries would be aggregated with its two minimum salary contracts for the same roughly $7M in outgoing salary to acquire $10M, Team C’s minimum salary player would be absorbed into the minimum salary exception, and Team D could trade its other $5M player for nothing, resulting in the $5M TPE. Since each team can structure the trade however it wants to its own advantage, both Team C and Team D end up with a substantial trade exception.
To that end, suppose that the Hornets contemplate trading Michael Kidd-Gilchrist ($6.3M) and Cody Zeller ($4.2M) to the Lakers for D’Angelo Russell ($5.1M) and Nick Young ($5.2M) [That’s right, a year ago I made D’Angelo Russell and Nick Young a package deal. On some level I must’ve known how well they’d get along].
Perhaps the Hornets are unwilling to pay MKG’s asking price for an extension and fear losing or overpaying him in free agency, and strongly prefer four years of a rookie scale contract for the more recent #2 overall pick as a result. The Lakers, meanwhile, may be more confident in their ability to sign Kidd-Gilchrist long-term and believe that the 21 year-old, elite defensive wing and a solid young center are worth the risk of trading away a potential franchise point guard (plus Swaggy P).
If the Hornets added Troy Daniels and the Lakers added Robert Sacre and either Jabari Brown or Tarik Black (all on minimum contracts), the trade could net the Hornets a $4.2M trade exception and the Lakers a $5M+ TPE.
With knowledge of these potential benefits, teams can and should strive to maximize their opportunities to take advantage of them. Filling the last few roster spots with minimum salary players is a good start, and when contemplating or executing any trade, consider whether any such players could provide additional value for one or more parties through the use of the minimum salary exception.
The Jersey
The Charlotte Bobcats only existed as an NBA entity for a decade, yet they changed the style of their jerseys several times. Originally they used dark orange as a main color (2004), then they switched to light orange (2008), then they mostly replaced orange with blue, completely overhauled the font and added pinstripes (2009), and finally went with the totally different look seen above before becoming the Hornets.
You can attribute this schizophrenic branding to the team’s first owner, Bob Johnson. To put it mildly, Johnson was not a fan-friendly owner. After the Charlotte community submitted team-naming suggestions and market testing revealed “Flight” to be the winner, Johnson decided to name the team after himself instead—sort of like the ultimate vanity license plate. According to the CEO of the company initially contracted to select the name and branding:
Bobcats was sort of handed to us by Bob Johnson because of his first name. We bantered about it and we said, “Hey, you know, Flight tested better…” and he’d go “I’ve got 300 million reasons why I think it should be Bobcats,” and that was it.”
Johnson’s tenure as owner went so poorly that he ended up selling the team at a loss in 2010, for $25 million and assumption of the team’s substantial debts.
New owner Michael Jordan immediately set out to change the team name and otherwise erase Bob Johnson from fans’ memories. Rather than waiting for the approved name change back to the Hornets in 2014 to rebrand once again, the team quickly removed “Bob” from its jerseys in favor of simply “Cats” to drive home the beginning of a new era.
Here’s a link to the MKG “Cats” jersey shown above, though if you really like the original Bobcats design there are plenty of places to find those jerseys too (even a Sean May jersey).
I couldn’t find a Bogans jersey though, so you’ll just have to settle for this autographed card:
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