Van Horn's S&T "is not just a formality"

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[HammJ]

Feel free to call me nuts, but it seems to me that the concept of matching salaries in a trade is now antiquated thanks to the Luxury Tax.

As long as there have been salary cap rules, there have been GM's and owners to find the holes and plow thru them. And we're already subjected to trades where one or more players are tossed in just to make numbers match, even if the other team has no interest in the player other than his cap figure. Now we're in the era of throwing retired players into trades just to get numbers within a percentage of each other.

But look at the recent blockbuster trades. All Memphis really wanted from the Lakers in exchange for Gasol was Crittenton and the draft picks. They obviously had no interest in Kwame Brown as a player. But even if the antiquated salary matching trade rule was not in place, the Lakers probably would have insisted Brown be included in the trade anyway. Why? The Luxury Tax.

(on the other hand, without the antiquated salary matching trade rule the Lakers might not have had the best shot at acquiring Gasol. But that's a debate for another time.)

The Shaq/Marion trade could have happened without requiring Marcus Banks' salary, although the Heat actually had a need an interest in Banks. But if the antiquated salary matching trade rule was not in place, the Suns probably would have insisted Banks be part of the trade anyway. Why? The Luxury Tax.

Now we have the Kidd trade where New Jersey obviously just wanted to get their hands on Harris and the draft picks. And that would have been a fair trade in and of itself. But thanks to that good old antiquated salary matching trade rule, a whole bunch of other players had to be unnecessarily included. Chances are that even if that antiquated rule were not in place, the Mavs might have insisted on including Hassell, at a minimum. Why? The Luxury Tax.

See, I think the NBA has proven over the past, oh, forever that the highest payroll does not equal the best success. (Someone might want to jot that down in a memo and slide it over to Jim Dolan.) So if Mark Cuban wants to trade Harris and picks for Kidd and tack on $20M in additional cost in the process, more power to him. If the Lakers wanted to trade Gasol AND assume the added cost of keeping Kwame, fine by me.

I'm certain there are flaws in this line of thinking, so please feel free to point out any that appear fatal.

[lakerfan10770]

Good point,

and btw, that must be a record for the most times the word "antiquated" has been used in a single post. In fact, I bet it has probably never been used on this message board.

[LarryCoon]

I just got off the phone with someone who does this for a living and I may not have an accurate understanding of proration. Sorry.

I had a phone conversation last week with someone who does this for a living as well. I don't think I correctly understood it either. Neither did he, it turns out, although this person promised to figure it out and get back to me.

This person did point me to Aaron McKie's contract as an example. Aaron got:

07-08: $750,000
08-09: $1,262,275
09-10: $1,306,455

These are the cap figures the league is using. Since the first raise is obviously higher than 10.5% (McKie was Early-Bird), it means a pro-rated amount was recorded for 07-08, and the raise is based on the non-pro-rated amount.

[bgwizarfan]

so the question then becomes, did McKie receive the FULL prorated amount that he could have received via the EB Exception? And it looks like he clearly didn't, since the maximum he could have received was 108% of last year's Average Player Salary.

Larry, when the CBA says the LB, EB, and NB exceptions begin to reduce Jan 10, does that mean that the maximum amount allowable to that player under the applicable exception is the amount prorated?

Thanks for the help on this...very interesting

[LarryCoon]

Yeah, it looks like there are two forms of proration, and this is where I (and the team exec to whom I spoke) wasn't completely sure. There appear to be two distinct pro-rations. One is with the maximum amount for which you can sign the player. This pro-ration is the one that's referred to in the CBA in that section where it starts going down daily starting January 10. The second is a simple pro-ration based on how far into the season the player signed.

So using Early Bird as an example, after January 10 the amount of that exception goes down. Once the player signs (which can be for any amount from the minimum to the amount of the EB exception on the day he signs), then that amount is pro-rated based on how much of the season is elapsed. I.E., in a 170-day season, then if the player signs on the 85th day, the amount he gets (and the amount that's recorded) is 50% of the full-season value of the amount he signed for. What also happens (and what threw me before), is that things like raises are based on the full value -- i.e., ignoring that second pro-ration, but not the first one. I was also thrown by a league official telling me, "we always go by the full-season value." Turns out, not always.

I'm still seeking final confirmation (the team official hasn't gotten back to me yet), but I think I've got a pretty good handle on how it works now.

[Three34]

Every time I try to work out Keith Van Horn's cap numbers in all this, I get scared and assume the foetal position.

[bgwizarfan]

Larry, I'm still trying to figure out your numbers for McKie. I think i finally figured out his situation.

The 2nd and 3rd year numbers ($1,262,275 and $1,306,455) are the Minimum Salary for a player with 10 years of experience in 2008-2009 and 2009-2010 respectively.

So we can only assume the full-non prorated amount is the minimum for this year, $1,219,590. The problem is, though, the league doesn't look at this contract as a Minimum Salary Contract, since it's for 3 years. But even though it's an early bird contract, McKie still must make the minimum salary, which is $1,219,590 prorated on February 1st (let's say Feb 1st is 85 days into the season and half the amount, so around $610,000 - it doesn't matter to get the exact amount since they gave McKie $750,000, which is more than this minimum amount).

So this is a special case -- they technically just gave him $750,000 the first year (since prorated, it is more than the Minimum of around $610,000 calculated above). Therefore, the next year, the raise would still technically only be 8% of $750,000, but since it has to be at least the full minimum, it gets amended to the minimum for 10+ years of service (and since it's a multi-year contract, the league does not reimburse any of it).

So i think this is still in light with our original thinking of pro-ration. He signed for a portion of the maximum EB exception they were allowed to sign him for, and then gave him the usual 10.5% raises (since it's not raises for the full amount, but of the original amount they have him in year 1) - that 10.5% raise, however, is automatically amended to the minimum salary.

So i think we're still right in our original thinking

[Dunkenstein]

I'm still seeking final confirmation (the team official hasn't gotten back to me yet), but I think I've got a pretty good handle on how it works now.

My guess is that your team exec is busy with all kinds of pre-trade deadline business as are the league officials he would need to call. I suspect, however, that when he gets his answers from the league guys, it'll differ from the way you described it above.

[Dunkenstein]

So this is a special case -- they technically just gave him $750,000 the first year (since prorated, it is more than the Minimum of around $610,000 calculated above). Therefore, the next year, the raise would still technically only be 8% of $750,000, but since it has to be at least the full minimum, it gets amended to the minimum for 10+ years of service (and since it's a multi-year contract, the league does not reimburse any of it).

So i think this is still in light with our original thinking of pro-ration. He signed for a portion of the maximum EB exception they were allowed to sign him for, and then gave him the usual 10.5% raises (since it's not raises for the full amount, but of the original amount they have him in year 1) - that 10.5% raise, however, is automatically amended to the minimum salary.

So i think we're still right in our original thinking

I think I agree with you that raises are based on the actual amount the player is paid in year one. What appears to be pro-rated is the maximum a player can be paid using a given exception.

I just heard from my agent friend who got approximations of KVH's salary. Year one is around $4.2M, year two is $3.75M and year three is $3.3M. Apparently 10.5% decreases from his year one salary.

Of course, no matter what a player is paid in year one, he has to be paid at least minimum in years two and three.

This seems to contradict Larry's belief that "once the player signs [for a full value amount], then that amount is pro-rated based on how much of the season is elapsed" and that "raises are based on the full value". If that was true, then the full value of what I believe Larry would consider McKie's pro-rated contract of $750K would be over $1.6M since he was signed with around 76 days left in the season, yet he's only being paid minimum next year which is much more than a 10.5% decrease from a so-called "full value" contract.

Further KVH's numbers are based on simple 10.5% decreases of his first year salary. Maybe when the league officials told Larry that raises are based on full value, they consider the first year salary (which falls under the pro-rated maximum for the exception used) to be a full value salary.

However, if bgwiz is correct in his upcoming post that if a player is paid the maximum allowed under the pro-rated exception, then he is entitled to the full value of the exception in subsequent with raises based on the full value of the exception.

[bgwizarfan]

But we still think that if McKie had signed for the maximum prorated EB exception (whatever 108% of last years APS prorated by about 20 days), then he'd be eligible to receive the raise as if he had been signed by the original full exception amount. Yet if he was signed to even a dollar less than the full prorated amount, he'd only be eligible for raises based on the exact amount he was signed to and not the full exception before it began prorating.... that's where I believe we're left standing, but just wanted to put it out there in case the thought has changed on this also.

[Dunkenstein]

But we still think that if McKie had signed for the maximum prorated EB exception (whatever 108% of last years APS prorated by about 20 days), then he'd be eligible to receive the raise as if he had been signed by the original full exception amount. Yet if he was signed to even a dollar less than the full prorated amount, he'd only be eligible for raises based on the exact amount he was signed to and not the full exception before it began prorating.... that's where I believe we're left standing, but just wanted to put it out there in case the thought has changed on this also.

We know it's true of minimum contracts, but I don't know whether MLE, BAE, EB or Bird contracts are handled the same way. I can't think of a real-world example to either prove or disprove your contention with non-minimum contracts signed after January 10.

[FGump]

It sounds to me like the teams can push it either direction, according to what suits their purposes.

[Dunkenstein]

I spoke to the guy who does this for a living and he said that after looking at the McKie and KVH contracts last night, he basically came to the same conclusion that bgwiz and I did last night:

1) after Jan 10, pro-ration only affects the maximum amount of a given exception.

2) raises or decreases are based on the actual amount of the first year of the contract.

3) if the first year of the contract is less than the league minimum, then it will be raised to the league minimum in years two and three.

I asked him if a player signs for the full pro-rated amount of an exception, whether raises in year two are based on the full (non-pro-rated) amount of the exception or on the actual pro-rated amount paid in year one. He didn't have an answer to that question but would try to find out.

[LarryCoon]

The 2nd and 3rd year numbers ($1,262,275 and $1,306,455) are the Minimum Salary for a player with 10 years of experience in 2008-2009 and 2009-2010 respectively.

Very good. I didn't notice that during the original call, or subsequently when I was trying to figure it out.

[LarryCoon]

My guess is that your team exec is busy with all kinds of pre-trade deadline business as are the league officials he would need to call.

That's why I didn't call a league guy myself. They've been known to take a month to get back to me.

(And just so you know, I didn't mean for my previous post to be a complaint in any way.)

I suspect, however, that when he gets his answers from the league guys, it'll differ from the way you described it above.

Could very well be.

[NetsForce]

You guys are confusing the hell out of me... But nevertheless it has been interesting reading all this stuff and it's helping me to update my Nets Team Salary thread on the Nets board...

[NetsForce]

I was wondering if anyone had any additional information regarding Devin Harris' contract extension, I'm under the impression that the total value of the extension was worth roughly $42.35 million but I'm trying to figure out how much he is going to get paid in each individual year (and have had no success in finding any leads / starting points which I can use to make my own predictions / estimations).

Any help would be greatly appreciated.

[lakerfan10770]

I was wondering if anyone had any additional information regarding Devin Harris' contract extension, I'm under the impression that the total value of the extension was worth roughly $42.35 million but I'm trying to figure out how much he is going to get paid in each individual year (and have had no success in finding any leads / starting points which I can use to make my own predictions / estimations).

Any help would be greatly appreciated.

Sham's site is an excellent place to start.......

http://www.shamsports.com/content/pages/index.jsp

[FGump]

No specific numbers have hit the public, to my knowledge. If you know for a fact that his deal is exactly $42.35M, then a deal that size can be exactly $7M with max raises each season. But I'm not sure that's the right total.

I had him penciled in at about $43M, which would make his starting salary about $7.1M. But I've also seen places saying he got as much as $50M total on that extension.

We'll get a much better idea once the annual salary snapshot is released in November, unless someone with some inside contacts can get a peek at the league's numbers before then.