Question about non-guaranteed contracts

[drj]

What are the rules and limitations with regard to non-guaranteed contracts? It seems like non-guaranteed contracts are great trade bait--better than expiring contracts--insofar as the other team can just waive the player at no cost.

So for instance consider the following scenario: the Knicks now have two open roster spots, and may have a third if Marbury is bought out. So they sign three D-league players for 2 year contracts, each with the second year non-guaranteed, at the highest salary slot possible. The Knicks then go into the offseason with these three contracts as trade chips, essentially being able to offer multi-million dollar instant cap relief. Would this be legal??

[skorff26]

I'm not an expert, but I think it would be plausible except there wouldn't be any multiple million dollar a year savings since the most that they could sign a player for is at minimum salary since they do not have cap space or available exceptions. So maybe next year they could have 3 players with 1 million dollar each unguaranteed that they could move, but that's about it.

[drj]

Thanks skorff.
I didn't mean to focus exclusively on the Knicks scenario (though I admit that it is what I had in mind.)
I was more thinking in general as a way to circumvent the cap rules, and in effect take on more salary than one is trading away.

[JES12]

I think other exaples include Bowen, Oberto, Stackhouse, Najera (2010), Dooling (2010).

[skorff26]

The best way is if you have free agent rights to someone who isn't in the league anymore and you sign him to an unguaranteed contract for just enough to complete a trade (you probably would have to guarantee that player for 500,000 or so, so that he would sign); an example is what dallas did with keith van horn to get jason kidd; they had his rights so they signed him to an unguaranteed contract with a little bit of guaranteed money so Van Horn would sign, and that signing gave Dallas enough salary to match Kidd's salary in a trade.

[Three34]

When you sign and trade someone, the first year of the deal has to be fully guaranteed, and the deal has to be three years long. So you can't sign and trade someone to a completely (or largely) unguaranteed deal - the player will get a tasty chunk.

[Dunkenstein]

But. . .

You can sign a player any time up until the end of the season to a guaranteed, prorated rest-of-season contract with the second year non-guaranteed. If done late enough in the season, the player doesn't get such a large "tasty chunk" of the largely non-guaranteed deal.

[loserX]

When you sign and trade someone, the first year of the deal has to be fully guaranteed, and the deal has to be three years long. So you can't sign and trade someone to a completely (or largely) unguaranteed deal - the player will get a tasty chunk.

But that is a sign-and-trade...I think the OP was asking about the Knicks (in this instance) signing somebody NOW and trading them later, when the restriction is lifted, and with next year's salary unguaranteed. It'd be a way for teams without capspace-to-use-in-trade to get the next best thing. It's an interesting question.

[Three34]

That would be odd. Denver have done that before, with Bobby Jones and Howard Eisley, whose expiring deals were used to get Renaldo Balkman and J.R. Smith respectively. But they were for the minimum salary, and the team ostensibly wanted them as players first, not just trade chips.

I don't think any owner is keen on spending unnecessary dead money, though, so I think it would be unlikely. Amusing, though.

[FGump]

But. . .

You can sign a player any time up until the end of the season to a guaranteed, prorated rest-of-season contract with the second year non-guaranteed. If done late enough in the season, the player doesn't get such a large "tasty chunk" of the largely non-guaranteed deal.

Your observation is very apt as regarding the OP ie sign a player to the minimum with the intent of creating a vanishing contract to use in the summer.

If I recall the discussion accurately, unless it's a minimum salary deal, contracts are NOT prorated. The EXCEPTIONS are prorated but the deal is paid as written. This is especially applicable on creating a new contract for trade purposes, where the deal is being written to satisfy a needed amount of trade filler. For example, if Van Horn's deal needed to be a $4M deal to make the trade rules work last year, he got every cent of the $4M even though he didnt sign the deal until about 2/3 of the season was already done.

Only problem I see with this scenario is that few if any teams are currently looking for loopholes to use to ADD salary - most are looking for creative ways to shed it.

[shrink]

So maybe I'm over-stating here, but is it the player's contract demands the only thing that prevents teams from offering the years at the end of a contract as unguaranteed, rather than "team-option?"

The unguaranteed players would still be cap space trading chips, where the team option players would have to have their options picked up, guaranteeing the year of salary, before they could be traded, right?

What other differences exist between, say, an unguaranteed final year versus a team-option final year?

[Three34]

1) If you have an unguaranteed final year, you can have a declining salary, which you can't with a team option.

2) As you said, you can start trading after your season ends, but not people who will be free agents this summer, or who could be with an option. With an unguaranteed final year, though, this is not applicable.

This is why Portland have done that with Blake and Outlaw. They now have choices - they can examine the free agency field and see if they want to waive either or both of them for the cap space, they can trade them to teams needing the relief (of whom there are many), or they can keep them for themselves at a lower price.