It won't be easy for the Cavs to acquire Dwyane Wade
by Jacob Rosen
With the playoffs over and the draft upon us, it’s officially silly season time again in the NBA. While the summer of 2015 isn’t likely to be as earth-shattering for the Cleveland Cavaliers as last July, there are still an awful lot of decisions to make.
Just three weeks ago, I wrote an FAQ on some basic starting points for the Cavs and their salary situation. I’d highly recommend checking out that post, along with my January explainer on Kyrie Irving’s max deal, and my February article on Brendan Haywood’s odd contract. Trying to explain NBA salary math isn’t easy. And there are many more questions that keep popping up.
Today, I’m focusing again on the stipulations of trading Haywood’s contract and how it could apply to a certain long-time Miami Heat star named Dwyane Wade. If you have any further salary questions at all, feel free to share in the comments or over on Twitter at @WFNYJacob.
Q: Before going into specific players and specific scenarios, what does the Cavaliers current salary cap situation look like again?
A: As I mentioned last time, the Cavs project to be well, well over the salary cap. This shouldn’t be news to anyone. And that’s even the case right now, before any new contracts hit the books for any of the team’s players. Below is an updated screenshot from my Cavs salary scenario spreadsheet that I mentioned last time1.
This screenshot includes “default” settings of the qualifying offers for Tristan Thompson, Iman Shumpert, and Matthew Dellavedova; the player options for LeBron James, Kevin Love, J.R. Smith, and Mike Miller; the all-but-guaranteed team option for Timofey Mozgov; and the oft-discussed unguaranteed contract of Brendan Haywood. Previously, I had omitted Haywood’s contract. I’ve left it here to show the other side of the coin.
The salaries for these 13 players add up to $102 million. That’s about $34.9 million over the cap ($67.1 million) and about $20.4 million over the tax line ($81.6 million). Thus, the Cavs would receive an additional $46.5 million tax bill — as you can also calculate on my CBA Tax Calculator. So, as I’ve been stating for months, prior to any new contracts or extensions, the Cavs are going to be paying an incredible amount of salary-related money next season. I’d probably put the odds at 50/50 that they eventually break Brooklyn’s record $90.1 million tax bill from the 2013-14 season.
Q: So the Cavs will be well over the cap and will be paying millions in taxes, you’ve said that millions of times. What does that mean as far as how they can acquire players this summer?
A: Unsurprisingly, it won’t be easy! Unlike last summer when the Cavaliers actually created the real cap space — through the Jarrett Jack trade, etc. — to sign LeBron James as an outright free agent to a maximum contract, there will be no such wiggle room this time around. You might counter and say, “What if LeBron and Love just opt out? Or if the Cavs don’t retain Tristan Thompson? Or Shumpert or J.R. Smith leave?” Those won’t help much either!
The NBA’s Collective Bargaining Agreement has something known as “cap holds” for all of these potential free agents2. Until those free agents sign officially (either with the existing team or a new team), or their rights are renounced by the existing team, they have salary amounts that exist on the books. So even if LeBron or Love opt out, they’d still have figures — proportional to their 2014-15 contract — taking up potential cap room for the Cavs. Adding up Kyrie Irving’s 2015-16 salary, Anderson Varejao’s salary, Mozgov’s player option, and the cap holds for LeBron/Love, and the Cavs already are at $69.8 million. That’s over the cap. There’d be no cap room.
There is no logical situation where the Cavaliers retain LeBron and Love — even if they both opt out — and ever have salary cap space this summer. It won’t happen3. And that’s before even getting into Tristan Thompson’s assumed long-term extension and his large cap hold that also exists on the books. As an over-the-cap team, the Cavs then have only certain methods for acquiring new players. And as a team that will end up being well over $4 million over the tax line (the NBA’s “apron” line), they have to follow even more specific rules.
These “apron” rules include: Using the smaller taxpayer mid-level exception ($3.376 million in 2015-16), not being able to also use the biannual exception, not being able to receive players in sign-and-trade deals, and only being able to receive up to 125 percent of outgoing player salaries in a trade. All of these rules will become very important in discussing potential personnel scenarios. Of course, like any team, the Cavs still will be able to offer minimum salary contracts and can only hold 15 players on their roster.
Q: Everyone seems to be talking about it lately. But how can the Cavaliers actually acquire Dwyane Wade this summer? What are some of the possibilities?
A: It’s not going to be easy, by any stretch of the imagination, as you might expect from the previous answer. Wade, the 33-year-old undoubted future Hall of Famer, owns a $16.1 million player option for the 2015-16 season. If you recall, he signed a similar — albeit much smaller — deal as LeBron James signed last summer, giving him ideal year-to-year flexibility with the rapidly increasing cap environment.
If Wade opts out of his contract, there are only two methods by which the Cavaliers could acquire him. These are using the veteran’s minimum (about $1.5 million for a 10-plus year veteran in 2015-16) or the taxpayer mid-level exception mentioned ($3.376 million). For Wade, this would mean taking a very, very significant pay cut. Miami reportedly initially offered a deal just under $10 million annually. Other teams, such as the Los Angeles Lakers, might be willing to offer even more. A starting salary under $3.5 million is laughable for a player of Wade’s caliber and fame. He might not be reliable for 2,000 minutes anymore, but it’d still be shocking to see him take such a deal.
Recall from above that the Cavaliers, acting as a team over the apron, cannot receive a player in a sign-and-trade deal. So Wade also could not sign a new contract with Miami and then simultaneously be traded to Cleveland. If these rumors are actually serious, he’d have to play next season for the Cavs making $16.1 million, $3.376 million, or about $1.5 million. Those are the only three options in total.
Q: So you’re saying the more realistic scenario is that Wade opts in to his $16.1 million contract and a trade ensues. Could it just be Haywood-for-Wade straight up, then?
A: Unfortunately, no. As a team acting over the apron, the Cavaliers can only receive up to 125 percent of outgoing player salaries in a deal. Brendan Haywood’s odd unguaranteed deal for the 2015-16 season, which vests on August 1, is about $10.5 million. In a one-for-one deal, that means the maximum salary amount the Cavaliers could receive in return is about $13.1 million. That’s far less than Wade’s player option.
Thus, the Cavs would have to send about $2.4 million more worth of salaries over to Miami to make the trade math work. They’d have to be creative about how they find that $2.4 million since no player on the roster, besides Mike Miller — which would be a cruel bit of irony — makes around that amount. Matthew Dellavedova could be signed-and-traded (the Cavs can trade away such players, but just can’t receive them). Joe Harris and this year’s two signed draft picks could all be packaged together, 30 days after the draft. There are some options, although they aren’t that pretty.
Q: All right, the Wade scenarios are not easy, that makes more sense now. But what about other trade options involving Brendan Haywood? What’s the minimum a team has to send over?
A: The answer about a minimum contract is not necessarily easy because a few select NBA teams still remain significantly under the salary cap, even with cap holds and roster charges. That means that they could receive Brendan Haywood for nothing, and create a traded player exception in exchange for his unguaranteed salary amount. This could create a cycle of Brendan Haywood-like scenarios — the Cavs would have another potential trade asset to use over the next 12 months. Similar to Haywood’s deal, such a trade exception would likely be difficult to use and would have serious tax ramifications. But this might be the most likely possibility, outside of just a release by July 31.
For a non-taxpaying team4, with outgoing salaries up to $9.8 million, the maximum they could receive in return is 150 percent of the outgoing figure. So conceivably, at a minimum, a team could trade about $7 million worth of player salaries in exchange for Haywood’s $10.5 million unguaranteed deal. This is perhaps the standard minimum, with $13.1 million as the max.
So if you’re looking for dream scenarios to play around with ESPN’s Trade Machine or RealGM’s Trade Checker, the general ground rules of a Haywood-only trade involve total combined incoming salaries between $7-13.1 million. This is what makes Dwyane Wade’s situation, and his $16.1 million player option, pretty difficult when you consider all of the complicated salary math.
More from Waiting For Next Year: