The Case for Acquiring “Bad” Contracts (or, I’m addicted to bulletpoints)

February 26th, 2012 by Kevin Hetrick

I’m going to advocate for something that will leave some Cavs fans questioning my sanity; trading Jamison and Sessions and taking back “bad” contracts that end in 2013 – 2014 as a return, to some extent for the sake of having the bad contracts. Benefits of owning and trading expiring contracts include:

  • When trading these assets, the other team relinquishes a more tangible, “this is going to help us win” related asset, in exchange for taking a “bad” contract off their books.
  • Free agency has a pretty poor track record.  Unless a team is signing a no brainer max-contract player or signs inexpensive players at solid cost / benefit, a majority of $4 to $12 million annual contracts have been poor value.  Trading expirings allows a team to build where they have more control, through trades and the draft.
  • Almost all lopsided trades include an expiring, salary balancing contract; Theo Ratliff and Wally Szczerbiak in the Kevin Garnett and Ray Allen trades to the Celtics, Kwame Brown for Paul Gasol to the Lakers, Erick Dampier brought Tyson Chandler to the Mavericks …honestly, this list could be long.

For the Cavs, I think there is almost no downside to taking back deals that expire by 2013 – 2014.  Reasons include:

  • Kyrie or any other youngsters won’t need extended until after that.  There is no reasonable way the Cavs run up against salary cap issues in this timeframe.  Cleveland will need to pay someone over the next two years; it’s likely better as a short term commitment through a trade than an overpaid free agent.
  • Once the more prohibitive luxury tax kicks in, the NBA could see heavily lopsided trades.  Trading for contracts with a couple of years remaining right now has a dual benefit.  It gives the Cavs expiring contracts to include in those robberies,  and also helps restrict long-term payroll obligations, so they can take on money while staying under the luxury tax themselves.

Finally, other examples of team’s using cap space or trading expiring contracts to their benefit are:

  • Dallas built their champion by continually trading expiring contracts to upgrade their roster.
  • Oklahoma City used their available cap space to take on Matt Harpring and Mo Petersons contracts.  The payoff was that, as a bonus for taking those deals, they acquired Eric Maynor and the 11th pick in the 2010 draft.

On a parting note, I’ll offer a wild trade that requires the Cavs to take on $18 million of salary next year and $12 million through 2013 – 2014.

  • Cavs gets Hedo Turkoglu, Luke Walton, first choice of Magic, Lakers or Mavericks (owned by Lakers) 2012 1st round pick, Andrew Goudelock, DeAndre Liggins and Lakers 2017 1st round pick
  • Orlando gets Andrew Bynum, Antawn Jamison, Omri Casspi, second choice of Magic, Lakers or Mavericks 2012 1st round picks, Lakers 2013 1st round pick, their own 2014 2nd round pick back from Cleveland, and the Lakers 2015 1st round pick
  • LA gets Dwight Howard, Ramon Sessions, third choice of the three 2012 first round selections.

The ESPN trade machine says it works, and it has benefits for all three teams.

For Cleveland

Certainly some Cavs fans are screaming at their computers right now, and I understand that some of you still will be after my explanation.  Maybe converts can be won by breaking it down this way:

  • Jamison’s expiring contract for Turkoglu and Walton’s near-term expiring contracts.  Walton expires next season and Turkoglu in 2013 – 2014.  Basically until youngsters start needing extensions, Cleveland has short term filler instead of over-paying a free agent.  Ideally Turkoglu’s contract can facilitate grand larceny at the trade deadline in 2014; at a minimum, it can be traded to acquire additional assets.  The Cavs keep plenty of salary cap flexibility, with an extension for Gee and 4 eventual first rounders; they have 12 players for $50 million in 2012 – 2013, 9 players for $42 million in 2013 – 2014, and only Varejao & rookie contracts in 2014 – 2015.
  • Sessions for a mid-first round pick in 2012.
  • Casspi and the 2014 2nd round pick for Goudelock, Liggins & the 2017 Lakers 1st round pick.  Basically a known, below average player for a couple of unknown youngsters.  Goudelock and Liggins were the 46th and 53rd picks in 2011.  The players received combined salaries are lower than Casspi’s, plus the acquisition of a future first round pick.  Piling up first round picks from now until forever can’t be a bad thing.

None of the three players that were traded are major parts of the Cavs’ future, this trade won’t result in salary cap concerns, and there are six new assets brought in (includes Walton and Hedo’s expiring deals).   This is a trade with little downside that continues building on the Cavs’ future flexibility.

For Orlando

They move a big contract, allowing a match on offers for Ryan Anderson this summer without worrying about the salary cap.  In 3 months time, they go from being a franchise severely over the luxury tax, looking at Dwight Howard’s impending departure, to possessing:

  • An under-25 front court of Andrew Bynum and Ryan Anderson.  One a center fresh off averaging 16 points & 13 rebounds a game; the other a floor stretching, offensive rebounding power forward that lead the NBA in made three pointers.
  • Six 1st round picks in the next 4 years.
  • A team that’s under the salary cap in 2012 – 2013 and has $15 million worth of expiring contracts after that season.

This seems like the groundwork for a relatively smooth transition out of superstar abandonment.

For LA

The Lakers instantly become serious contenders again, with upgrades at center and point guard while taking on minimal additional salary.

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