Trade Rules (’15 LAC/CHA Trade)

I.The Clippers Reacquiring Barnes Issue

There has been some confusion in regards to whether Matt Barnes could conceivably (as reported) get waived by the Hornets and return to the Clippers next season. My interpretation:

Article VII Section 8 (h) states the following in regards the Clippers’ ability to re-sign Matt Barnes if waived by the Hornets (likely prior to his contract moving from a partial guarantee of $1M if unclaimed to the full contractual amount of $3,542,500 if waived by or on July 1st):

(h) If a Team trades a player and the assignee Team subsequently places the player on waivers, the assignor Team shall not be permitted to sign the player to a new Contract (or claim the player off of waivers) before the earlier of: (i)one (1) year following the date all conditions to the trade were satisfied; or (ii) the July 1 following the last Season of the player’s Player Contract.

The former is relatively easy to understand: Barnes could not be re-signed by the Clippers in this scenario for a calendar year following the trades approval, or a year from yesterday (6/15/2016), assuming all conditions were indeed satisfied. The latter is similarly clear, even considering the inclusion of defined terms. “Season” is defined in the definitions section (jointly with NBA Season) as the period beginning the first day of training camp and ending immediately after the last game of the NBA finals, and Player Contract is defined via a cross-reference to Uniform Player Contract as essentially the standard form agreement players enter into for employment. Neither definition is especially helpful here, but the idea seems simple.  There is also policy for implementing this latter sentence, which is to avoid the situation under the previous CBA when players would be included in trades, usually as fillers, in wink-wink agreements where the player would be waived by the assignee team and return to the assignor team after 30 days. Now, players can’t return for at minimum the duration of that salary cap year, avoiding those scenarios.

This is all rather simple for expiring contracts , but Barnes’ contract is not an expiring contract (which is why he could be traded after the trade deadline in the same salary cap year). Barnes’ contract is partially guaranteed next season as described above, and could be waived by the Hornets on or prior to July 1st to incur additional team salary savings (or complete savings if claimed off waivers). The ambiguity here is largely based on “the last season of the player’s Player Contract” as it relates to the potential termination of Barnes’ Player Contract within the next few weeks.

I think the proper interpretation/reading of the section is that Barnes’ Player Contract encompasses next year’s partial guarantee as currently constituted regardless of potential waiver, and thus the last season of his player contract is the 15/16 season, rendering July 1, 2016 the date the Clippers could reacquire Barnes in any capacity under the second scenario above. This would hold true whether Barnes had an ETO or Player Option as well. Thus, the earliest Barnes can be reaquired by the Clippers is 6/15/2016.

II. Trade Mechanics

From a birds-eye view just eying salaries, the swap of Stephenson for Barnes and Hawes appears simple, but Hawes’ 15% trade kicker adds to the complexity of what appears to be a straight-forward trade.

Hawes’ Trade Bonus Rules

Hawes’ 15% trade kicker applies to the “Remaining Value of the Contract” solely based on base compensation (not incentives) and per the CBA option years are not included in this calculation. In terms of how the trade bonus effects team salary, it is allocated based on contract guarantee amount in each of the remaining years.

Applying these rules to Hawes’ contractual situation, Hawes’ remaining base compensation (not including his player option in 17/18 for $6,021,175 ) years are $5,543,725 in 15/16 and $5,782,450 in 16/17, as he has already earned his base compensation this season. Despite that latter point, the trade bonus is still allocated towards the 14/15 team salary. The following is the calculation for Hawes’ roster bonus:

15/16: $5,543,725

16/17: $5,782,450

$11,326,175 x .15 = $1,698,927

$1,698,926.25/3 = $566,309

Thus, $556,309 is added to Hawes’ team salary in each of 14/15, 15/16 and 16/17, all in equal installments because Hawes’ contract is fully guaranteed (note the option year in 17/18 remains unchanged).

Now that the trade bonus has been ascertained, its effect on the trade itself can be explored.

Trade Rules: Bonus Allocation

For team salary purposes in trades, a trade bonus for the assignor team (in this case the Clippers) treats the player’s pre-bonus salary as outgoing salary. Thus, Hawes’ outgoing salary for the Clippers was $5,305,000, even though the Clippers pay Hawes’ actual bonus given that the contract was signed in the current CBA.

However, the assignee team, here the Hornets, treat Hawes’ post-bonus salary as incoming team salary for matching purposes. Thus, Hawes’ incoming salary for the Hornets adds the prorated $566,309 bonus to Hawes’ pre-bonus salary for a total of $5,871,309 in incoming salary.

Overall Trade Construct

1.Clippers:

Outgoing Salary:

Spencer Hawes: $5,305,000

Matt Barnes: $3,396,250

Incoming Salary:

Lance Stephenson: $9,000,000

*Added $298,750

Trade Rule: Satisfies Incoming Salary = Outgoing salary x 125% + $100,000 Trade Rule. Trade is simultaneous because Hawes and Barnes need to be aggregated to permit Stephenson’s incoming salary.

2.Hornets:

Outgoing Salary:

Lance Stephenson: $9,000,000

Incoming Salary:

Hawes: $5,871,308.75

Barnes : $3,396,250

*Added $267,559

Trade Rule: Satisfies less stringent Incoming Salary = Outgoing salary x 150% + $100,000 trade rule.

*Also, the Hornets were able to exceed the 15 man roster limit for non-hardship situations because technically that limit only applies to regular season roster maximums, as right now is considered the “off-season”, though this is not clearly established in the CBA.

III.Clippers Luxury Tax, Apron and 2015 Offseason Team Salary Implications

Apron/Hard Cap

More concerning for the Clippers, being hard capped after utilizing the full non-taxpayer midlevel exception this past summer to sign Spencer Hawes, is hard/cap Apron team salary. The Clippers inched closer to the hard cap, and are now $498,153 below that figure. It is worth monitoring through June 30ththis amount, especially if the Clippers decide to trade another piece like Crawford, because their ability to take back greater salary will be impinged.

2015 Offseason Cap Operation/Projection

With Stephenson on the books and re-signing DeAndre to an estimated $18.84M deal assuming the expected $67.1M cap (the max figure is of course computed using a lower cap number), it looks like the Clippers will be relegated to using the taxpayer midlevel exception this summer to improve, likely signing a third big man, unless they can trade Crawford’s contract for a low-cost asset as the following will exemplify (I included 2 yr vet minimum 1 year contracts at reduced cap charges because that looks like the likely endgame for the Clips to fill out the roster):

2015 Projection
Aggregate Guaranteed Salary
Chris Paul $21,468,696
Blake Griffin $18,907,725
DeAndre Jordan $18,840,000
Lance Stephenson $9,000,000
J.J. Redick $7,085,000
Jamal Crawford $5,675,000
C.J. Wilcox $1,159,680
Min Salary 2 Yr Vet $947,276
Min Salary 2 Yr Vet $947,276
Min Salary 2 Yr Vet $947,276
Min Salary 2 Yr Vet $947,276
Min Salary 2 Yr Vet $947,276
$86,872,481
Apron Team Salary $86,872,481
2015 Projected Apron $85,100,000
Amount Over/Under Apron ($1,772,481.00)
Taxpayer MLE $3,376,000

IV.Hornets 14/15 Team Salary and 2015 Offseason Team Salary Implications

2014/15 Team Salary

The Hornets current team salary is $65,953,611, putting them $2,888,611 over the salary cap. Given that the Hornets are not hard capped at the Apron and don’t face any imminent luxury tax concerns, their cap position is straight forward.

2015 Offseason Team Salary

As far as 2015 is concerned, with Jefferson opting in and Henderson likely to follow, the Hornets are not looking at possessing any cap space. Even if they waive Barnes as expected and he gets claimed, eliminating his team salary from their books entirely, they’d have just a slight amount of cap space, and it would behoove them to keep another cap hold such as Mo Williams on the books to stay over the cap and utilize the larger non-taxpayer mle instead of the cap room midlevel exception. For now, I kept Barnes’ contract on ’15 team salary:

2015 Projection w/ Henderson
Aggregate Guaranteed Salary (13):
Al Jefferson $13,500,000
Kemba Walker $12,000,000
Marvin Williams $7,000,000
Michael Kidd-Gilchrist $6,331,404
Spencer Hawes $6,110,034
Gerald Henderson $6,000,000
Cody Zeller $4,204,200
Matt Barnes $3,542,500
Brian Roberts $2,854,940
Noah Vonleh $2,637,720
2015 First Round Pick Cap Hold $2,177,100
P.J. Hairston $1,201,440
Troy Daniels $947,276
$68,506,614
Estimated Cap $67,100,000
Cap Room ($1,406,614)

V.Overall Thoughts on the Trade

Clippers

Taking on Stephenson’s de-facto 1 year expiring contract for $9,000,000 is an understandable risk, especially when it came at the trade-off of unloading likely 3 more guaranteed years of Hawes. From strictly that vantage point the trade is sensible. However, from a fit perspective I’m skeptical. Stephenson is duplicative with Crawford as far as a secondary ball-handler to Paul who can create. What the Clippers really needed was a 3 & D wing who didn’t need the ball, like a superior Matt Barnes. They dealt away a starter who was the closest thing they had to filling the skill-set they needed most, and acquired a player who doesn’t fit that mold. If the Clippers are able to trade Crawford to either get far enough under next years apron to utilize the enhanced non-taxpayer mle on a wing or for a returning wing, this trade will make a lot more sense fit wise, although now they are almost forced to use their limited spending mechanisms on a third big.

Hornets

The Hornets it seems are trying to replace the spacing and passing Josh McRoberts provided them in 2013 with Hawes, while shedding Stephenson’s attitude. From a straight swap of Stephenson’s de-facto $9,000,000 expiring next season to now 3 years and $18,479,968 of Hawes, it is a bit perplexing. Also, the Hornets have a ton of frontcourt depth on their roster with Big Al, Marv, Zeller, and Vonleh. This seems like a short-term indictment of Vonleh especially.

The Hornets can trade Barnes if his salary is not aggregated again prior to his waiver date (he was not acquired with cap space so his salary can’t be aggregated), and should try to do so if they are intent on waiving him. The Hornets desperately need more shooting, but having Barnes as a rotation wing behind MKG and Henderson wouldn’t be the worst thing. He’s the best player they received in the trade.

Overall, the trade just seemed like two franchises who wanted to divorce themselves of their respective players, with Barnes getting thrown in to make the numbers work.

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