Cleveland Cavaliers general manager David Griffin has played the leverage game perfectly this summer, turning water into wine when he sent center Brendan Haywood, Mike Miller and two future second round draft picks to the Portland Trail Blazers, creating cap space where there was none via two trade exceptions.
Any time a team over the cap completes a trade that sheds more salary than it takes on, the difference between the incoming and outgoing salaries are calculated into a trade exception. Active for one year, the exception allows the Cavaliers to acquire one player via trade whose contract is of equal or lesser value regardless of cap circumstance; in this case a $10.5 million and $2.94 million exception.
In essence, it’s a way for teams over the salary cap to get around having to match contracts dollar-for-dollar in a trade.
There are restrictions when using a trade exception. They cannot be used in sign-and-trade, nor can teams combine multiple trade exceptions to take in a player with a larger salary slot. Still, they’re the safest, most prudent and financially viable option for a team with limited roster building options imposed by salary cap and luxury tax restrictions. It was, after all, a similar exemption generated by trading Keith Bogans to the Boston Celtics that enabled last year’s season-changing deal that brought Timofey Mozgov to Cleveland.
The $10.5 million trade exception generated by dealing Haywood’s contract is the largest in the NBA and can net the Cavaliers an upgrade to the starting lineup at the trade deadline, reduce owner Dan Gilbert’s luxury tax bill, or at the very least work as an insurance policy should injury claim one of their top rotation players. With the trade occurring so late in the summer, they’ll have the exception through next July.[newsbox style=”nb1″ display=”tag” tag=”Cavaliers” title=”More Cleveland Cavaliers articles” number_of_posts=”2″ show_more=”no” nb_excerpt=”0″]
Such roster flexibility is not a bad return for a player who was largely bench fodder. A DNP-CD for most of last season, Haywood’s contract—unique in nature and value—was simply too important for Cleveland to let go without the right deal presenting itself. And with Haywood’s contract only unguaranteed until August 1st, this move buys the Cavaliers another year to seek out the best deal instead of cashing in for whatever is immediately available.
The two draft picks are certainly worth the cost of renting another team’s cap space—a trending practice being utilized by rebuilding teams far below the cap that place higher value on draft picks than free agents. Especially when considering the higher prices some teams have spent to clear space; most notably this summer’s trade between the Sacramento Kings and Philadelphia 76ers.
The Cavaliers trading Mike Miller seemed like a blow to their depth and chemistry on the surface, but it is a great financial and flexibility move as well. As with Haywood, the Cavaliers gain a trade exception (worth $2.9 million) and a roster spot they can fill with a minimum deal. In total, it could save the Cavaliers around $9 million when considering luxury taxes.
Haywood’s contract was considered one of the best assets on the market because the price to move it was considerably less due to the fact that a team can immediately clear his salary off its books by waiving him by the August deadline. Even though the rest of the NBA knew Cleveland wanted to deal Haywood, it was still a seller’s market with more than Sam Hinkie’s 76ers available to facilitate the deal.
The Portland Trail Blazers had more than enough cap room to accommodate Haywood and Miller’s contracts after undergoing a massive salary purge, losing four-fifths of their starting lineup and regrouping with a younger, cheaper and more malleable roster. The only real cost to them was some cash sent to the Cavaliers in the trade and whatever the ultimate buyout cost will be on Miller’s contract, which is certainly worth two draft picks.
What type of player the Cavaliers target will have a lot to do with health as they approach the trade deadline. The Cavaliers were rumored to be flirting with the idea of acquiring Joe Johnson earlier in July, but no longer have the ability to do so without gutting foundational pieces thanks to the provision preventing trade exceptions from being packaged with other salaries. Now, the Cavaliers have the luxury of waiting to see if a need arises midseason, as was the case when Anderson Varejao was lost for the season last year.
A luxury of having such a loaded, balanced roster is that the Cavaliers don’t have any pressing needs. They can afford to wait for the right deal, which will be important considering their cap situation and roster composition for the near future.
As of this moment, the Cavaliers have 10 players under contract—LeBron James, Kyrie Irving, Kevin Love, Iman Shumpert, Mozgov, Varejao, Mo Williams, Joe Harris, James Jones, and Matthew Dellavedova—with Richard Jefferson agreeing to a minimum contract and contracts pending for Tristan Thompson and J.R. Smith to round out a roster already wading deep into luxury tax territory. With James expected to opt out and take advantage of each significant salary jump, these exceptions will be one of the few avenues through which to add talent.
If the Cavaliers use the exception, it’s not likely to be on another expiring contract. They could potentially use the smaller exception to shore up depth midseason, and the larger one to become a major player next summer in what could be a volatile offseason for the entire NBA. With Love, Irving and Shumpert locked up for at least the next three seasons (and Thompson expected to follow suit), the Cavaliers are not looking at free agency as the means for tightening up the top of their rotation. If they re-sign Mozgov next summer (and they can since they retain his Bird rights) they will have five players and LeBron to marginally build around. A trade exception for a long-term contract gives them a seventh and avoids free agency in doing so.
Griffin’s remaining work this summer revolves around nailing negotiations with Thompson and Smith. While it appears that Gilbert has given carte blanche to the front office to spend whatever is necessary, that doesn’t mean Griffin should roll over and simply sign them just to get it done.
All the leverage lies with the Cavaliers, who can pay more than anyone else remaining and offer the chance to play with LeBron and win a title; especially in the case of Smith, who has to have a severe case of remorse after opting out and now likely having to swallow a smaller deal to stay with Cleveland.
There may not always seem to be a method to the madness, but Griffin has perfectly played this summer; ordering the signings in a way that enabled them to add Williams while using Bird rights to retain a team that went to the NBA Finals in its first year as a group. Haywood’s contract may have been tailor-made to be dealt this summer, but Griffin never rushed to make a move because he knew options would present themselves by the end of July.
This is how you navigate the cap to field a once-in-a-lifetime contender, patiently working the market to rent salary space at the cheapest price; even finding a way to unload Miller’s contract in the process while gaining an additional trade exception. Finding roster flexibility from a team that has already maximized most of its resources is more than wringing blood from a turnip, it’s turning water into wine.