Daryl Morey painted a masterpiece today
A self-taught cap nerd, I’m still learning the ins and outs of the CBA, especially when it comes to trades. Well, I and the rest of the NBA world got a great lesson in how to play the trade rules to your advantage when Daryl Morey went hunting around the league for all sorts of small contracts and then transformed that collection into Chris Paul, who we all thought was going to be a free agent in three days. Paul won’t exercise his ETO and will instead play the final year of his contract with Houston with a small raise above the $24.3 million he was expected to receive (more on that in a bit).
In all, the Rockets made six trades on Wednesday, grabbing DeAndre Liggins from Dallas, Tim Quarterman from Portland, Ryan Kelly from Atlanta, Darrun Hilliard from Detroit, and Shawn Long from Philadelphia in exchange for a whole lot of cash considerations and a 2018 second-rounder to the 76ers. I imagine that the Rockets had to include that second-round pick to Philadelphia because NBA trade rules stipulate that teams must trade at least one of the following: a player under contract, a future draft pick, draft rights to a future prospect, swap rights, or at least $75,000 in cash. However, a team can’t send out more than $3.5 million in total cash throughout the 2016–17 season, so perhaps the Rockets didn’t have enough cash left to make the $75k minimum or they didn’t want to spend $75k on a guy who made just $89,513 last season, so they included that second-rounder. I would guess that pick is top-55 protected (though it’s possible that pick still conveys since the Rockets will be pretty good next year).
All of these transactions were possible because the Rockets were under the $94,143,000 cap for 2016–17 by $3,112,464. By staying under the cap, they opened themselves up to this opportunity, where they not only can take on money with no salary being returned, but they can immediately trade that incoming player. The most important aspect, from a CBA perspective, of what they did is that they were able to turn around and trade Liggins and Hilliard, something that wouldn’t be possible if they had been over the cap. Over-the-cap teams have to wait two months before trading incoming players, but the Rockets were able to trade them immediately.
After buying up a couple of these contracts, it was apparent what the Rockets were after: players who made very little last season and had a non-guaranteed year on their contract for 2017–18 (since you can’t trade upcoming free agents after the trade deadline, they have to have something in their contract for next season; it could also be a team option). Once they had completed the Hilliard trade, the fourth of the five pre-Paul trades they made, I went through the rest of the league and made a list of remaining guys for whom they could trade with the rest of their space and came up with the following list (Long is no longer listed since the Rockets traded for him shortly after I made the list):
They could have traded for any combination of these guys that added up to less than $302,363, the remaining space they still had under the cap after acquiring Long. I ran a quick Solver to figure out which combination would be best and it spit out David Nwaba, Wayne Selden, and Chasson Randle as the combination that would make the most of that $302,363 left under the cap. Of course, the Rockets can’t just go grab these guys, the other team involved has to agree, but it was a fun thought exercise to figure out the optimal path for Houston. This list no longer matters since they’ve consummated the Paul trade, but I still wanted to present it.
Once they had all their non-guaranteed deals in place, the next step was figuring out what made the math work on a Paul trade and in which league year the trade should take place. For Houston, it might not have mattered as much, but for Los Angeles, it made a difference, as at least one of the non-guaranteed contracts they were picking up in the deal would have become fully guaranteed when the clock struck midnight on July 1. For that reason, the teams decided to push the trade through immediately, so it took place in the 2016–17 league year:
Paul was entitled to a 15 percent trade bonus, which would have been split across the two years, so he left a significant amount of money on the table by agreeing to waive the majority of it to make the deal work. The Rockets could have just as easily included Quarterman, Kelly, and Long in the deal, which would have pushed Paul’s trade kicker up by almost $600,000 in both years, so he left a little less than $1.2 million on the table alone there, to say nothing of the remainder of his kicker if he had demanded the full 7.5 percent (because he technically was traded in 2016–17, the 15 percent kicker would be applied evenly across the two years).
This was an absolute masterpiece from Morey and his staff, no two ways about it. To get these six deals done before the end of the league year in three days and to get Paul to agree to lower his trade kicker…just wonderful work from Houston. Of course, the word “tampering” comes to mind heavily in circumstances like this where the deal came together so quickly, but tampering is just a fact of life in the NBA. It’s technically against the rules, but unless the NBA steps in to enforce it, teams are going to continue to do this kind of thing. I have no evidence that the Rockets did tamper with Paul, it’s just a gut feeling with how quickly everything happened today.
For Los Angeles, this was probably the best outcome of the Paul free agency — they got a ton of value back for a guy who would have been leaving anyway or to whom they would have had to give a massive contract. Lou Williams can get buckets, Patrick Beverley is a quality defender, and Sam Dekker might be my favorite player in the deal for the Clippers as a prototypical wing of the modern NBA who can switch defensively and is developing the rest of his game.
For Houston, now they move forward with their full mid-level and bi-annual exceptions intact for the 2017–18 season and they still have Quarterman, Kelly, and Long to put in other trades if they would like. Ryan Anderson and Eric Gordon are also still in town and can be traded if Morey has yet another trick up his sleeve.