Trade Kicker (’16 Carmelo)

I.Pre Trade Deadline Trade Implications

Carmelo has a 15% trade kicker that is complicated by maximum salary restraints, for if Melo’s kicker was invoked over total remaining salary (including prorated for the remainder of this season & each of the following three cap years) his salary would exceed the max, disallowed by the CBA.

*Melo is permitted to waive all or part his kicker if it is necessary to make a trade legal, ala Roy Hibbert with the Lakers

Maximum Salary Constraint

Melo was eligible to receive a max salary (hypothetically) this cap year at the greater of the maximum amount for his experience tier ($22,970,500 like LeBron), or 105% of his salary last year ($22,458,401), or $23,581,321.05. The latter being the greater figure, that is the maximum amount Melo’s salary can reach if dealt before the deadline.

Trade Kicker Amount

The difference between Melo’s current salary of $22,875,000 and that maximum salary figure of $23,581,321.05, or $706,321.05 is Melo’s kicker amount this cap year. That amount is applied to the current cap year for the receiving team, and in each of the next 2 seasons preceding his ETO year. Being as though Melo signed his current contract in the current CBA, the Knicks are on the hook for paying his kicker. Melo’s total kicker amount spread over 3 seasons (since Melo’s contract is fully guaranteed it is applied equally in each year preceding the ETO season) would thus equal$2,118,963.15, payable by the Knicks.

Trade Salary Implications

Melo’s outgoing salary for trade purposes would be his pre-kicker salary of $22,875,000, and his incoming salary for the receiving team would be his post-trade kicker $23,581,321.05 salary. This makes it slightly more difficult to match salary (normally much more difficult), but Melo’s contract is close enough to the max that his trade kicker has little effect.

Team Salary:

Overall, if Melo is dealt pre-deadline his team salary for the receiving team over the reminder of his contract would be as follows:

2015/2016: $23,581,321.05

2016/2017: $25,265,701.05

2017/2018: $26,950,081.05

2018/2019: ETO $27,928,140

II.New League Year Trade Implications

If Melo is dealt after the Moratorium in July, the trade kicker calculus changes significantly.

Maximum Trade Kicker

In an uncapped (via the maximum setting), Melo’s total remaining salary would hypoethically be $78,731,280 (no proration). Per the CBA, total remaining salary includes ETO years (not options), but the trade kicker is only applied to salary cap years prior to the ETO. Thus, 15% of Melo’s remaining salary in July would be $11,809,692, meaning $5,904,846 would be charged to 16/17 and $5,904,846 in 17/18 because Melo’s contract is fully guaranteed.

Likely Trade Kicker Based on Current $92M Cap Projection

However, even with the cap recently projected to rise to $92M, and thus creating an approximate $30,300,000 max for Melo’s 10+ year service tier, Melo would still get capped just short of his full amount. At this expected number, the difference between Melo’s 16/17 salary of $24,559,380 and his projected max of $30,300,000, or $5,740,620, would be the maximum amount Melo’s contract could rise to the max via the trade kicker. $5,740,620 would thus be applied to both 16/17 and 17/18, for a total of $11,481,240 (of which NY would again be responsible for).

Trade Salary Implications

Here, the difference between Melo’s outgoing salary for the Knicks at $24,559,380 pre-kicker and his post kicker incoming salary of $30,300,000 for the receiving team would make matching slightly more difficult, but most teams will have the cap space to accommodate this.

Team Salary Implications

Melo’s team salary for the receiving team in the new league year would take the following form:

2016/2017: $30,300,000

2017/2018: $31,984,380

2018/2019: ETO $27,928,140

Essentially, Melo misses out on $9,362,277 if he is dealt prior to the deadline, and slightly more than that if the cap comes in even higher. There are certainly many intangible factors for Melo to weigh in considering whether or not to waive his no trade clause (family in NY, legacy etc). We know that $ is a very tangible factor for him to wait.