Wednesday, June 28, 2017

The Fascinating Mechanics of the CP3 Trade

Rockets get:

16-1717-18
Chris Paul$22,868,828$24,268,959

Clippers get:

16-1717-1818-19
Lou Williams$7,000,000$7,000,000
Patrick Beverley$6,000,000$5,513,514$5,027,028
Sam Dekker$1,720,560$1,794,600$2,760,095
Montrezl Harrell$1,045,000$1,471,382
DeAndre Liggins$1,015,696$1,577,230
Darrun Hilliard$874,636$1,471,382
Kyle Wiltjer$543,471$1,312,611
Houston's 2018 1st round pick (top-3 protected)
$661K in cash

These are the final details of this morning's #Wojbomb that Chris Paul has decided to join the Houston Rockets, but there were a lot of steps to get to this point in the waning days before the new league year starts. Chief among them was Paul facilitating the trade by opting into the last year of his contract and reducing his trade kicker from $3.6 million to $661K, which LA technically has to pay but is being offset by the cash Houston is sending. However, after trying to grasp the idea of CP3 playing with fellow top-10 player James Harden (we'll get to that), my next thought was that the initial terms of the trade weren't legal from the Rockets' side of things. And then more details emerged that demonstrated the salary cap genius of Daryl Morey and the Rockets front office that I'll try and summarize here.

Trade rules specify that if you're sending out between $9.8 and $19.6 million in salaries, you can only take back that amount plus $5 million, so in order to trade for Paul, $17,868,828 or $19,268,959 would have to be dealt in outgoing contracts depending on whether the deal is completed before or after July 1st. The principals of the trade that were first reported by Woj -- Lou Williams, Patrick Berverley, and Sam Dekker -- added up to less than $15 million regardless of which league year the trade fell under, and the $3.1 million of cap space that they ended the year with wasn't enough to make a difference by itself. Thus, they opened the checkbook and burned the phone lines to buy as many non-guaranteed contracts as they could to add to the deal. Since rosters can expand to 20 during the offseason, they traded cash for DeAndre Liggins, Tim Quarterman, Ryan Kelly, Darrun Hilliard, and Shawn Long in five separate transactions today, and with the combined salaries totaling just over $2.8 million, they were absorbed into cap space and can thus be aggregated in other trades immediately.

Dallas was going to decline the team option on Liggins, whose salary is still only guaranteed for $26,773 anyway, per Eric Pincus at BasketballInsiders.com, so they got some financial gains for instead picking it up and trading with Houston. Likewise, the July 1st guarantee date for Hilliard's contract meant Detroit had to make a decision on him soon, so it's well worth it for them to help out the Rockets. Adding these two along with backup big man Montrezl Harrell and the Kyle Wiltjer non-guaranteed contract that they already had brings the total outgoing salary to $18,199,363, meaning that they can receive $23,199,363...which just so happens to be the new cap number for Paul after he lowered his trade bonus, as Albert Nahmad of HeatHoops.com points out. Now, they'll go into the new league year as a team operating over the cap, giving them access to the full Mid-Level Exception of $8,406,000 and the Bi-Annual Exception of $3,290,000 to fill out the roster.
The Clippers had to officially waive the retiring Paul Pierce in order to clear the roster spot and make this 7 for 1 trade work, but you can't complain about their haul here. Once it became apparent that their star point guard was leaving, they could have watched as the Rockets went through other salary cap gymnastics to clear adequate space and lost him for nothing, but instead they played along to help him get where he wanted to go and picked up some nice assets, including a pick that's hilariously protected just in case. A 1st round pick can still provide a helpful player on the rookie scale even if in the late 20's, and Dekker and Harrell showed this year that they can be solid rotation players on the cheap. I hope Williams didn't sell his place in LA and was only renting in Houston after being traded from the Lakers in February, but in any case, he's a good bench scorer on a cheap expiring deal that could even be flipped in another trade. Beverley still has two ridiculously cheap years on his contract and like Paul was just named 1st team All-Defense, a nice starting point in the back court if they are able to bring back Blake Griffin with the idea that he can take control of the offense. If they lose Griffin, J.J. Redick, and Luc Mbah a Moute like Paul, then they'd only be able to get to around $22 million in cap space, so I'd expect them to pay up despite any concerns over injuries, age, or shooting.

I was surprised that Paul didn't make LA couch up the cash for his maximum possible contract of 5 years and around $201 million (depending on whether the cap does fall at $99 million this year) since he helped negotiate the moving of the Age-36 Rule that would have limited his earnings to the Age-38 rule. Perhaps 6 months from now he'll take advantage of the new extension rules instead and add on 4 years and a little over $132 million to his $24.6 million this year, or they have a gentleman's agreement that he'll sign his five year deal next summer instead since this trade allows his Bird rights to be preserved. No state income tax in Texas will help make up for any money left on the table, but the more fascinating part about his choice in new team is certainly the fit with Harden, who has always been a ball-dominant guard in Houston even if it was just last year that he notably switched to the "point guard" title in Mike D'Antoni's vaunted offensive system. The Beard reportedly helped recruit Paul, who he played with on the 2012 Olympic team that D'Antoni was an assistant for, so maybe he didn't want to carry the load as much after setting the NBA record for turnovers. Hopefully everyone will show up in shape and the coaching staff won't have an upheaval this time so that this will work out better than when Ty Lawson re-worked his deal to facilitate a trade to play with him. Paul is obviously a much better talent than Lawson, and he and Harden are both such effective spot up shooters that they can try to make this more like the '17 Warriors than the '11 Heat. Playing at their breakneck pace should help them both get their touches, staggering minutes should help offset the fact that they can both be control freaks in the half court at times, and Harden showed in Oklahoma City that he can be a dangerous threat off the ball.

Even if the idea of them playing together seemed silly to me at first when I heard it was a possibility last week, I am cautiously optimistic that it can work for them. With Ariza as a 3-and-D wing, Ryan Anderson as a stretch four, Clint Capela as both a shot-blocker and lob-threat, and Eric Gordon as a flamethrowing sixth man, this team could have a nice balance between offense and defense if things do go smoothly, and they're not done yet. In addition to the MLE and BAE options I already mentioned to add depth, they still have the Quarterman, Kelly, and Long contracts that they acquired today. They could try packaging them again as $4.2 million of salary filler as they ambitiously chase a third star like Paul George, even after the July 1st hits. In the new CBA that goes into effect this weekend, only guaranteed money will count towards outgoing salary, but ESPN's Kevin Pelton clarified for me that these current contracts' non-guarantees are grandfathered in. Kelly does have a guarantee date of July 7th, but by then, we should already see the dust settle for the stars.

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