Structure of the Melo trade

[lakerfan10770]

So all of this Melo trade stuff is finally over and he has finally been dealt to the Knicks. This transaction seems to have some interesting factors and I thought perhaps we could discuss some of them here.

First the deal is being reported as:

Denver trades: Carmelo Anthony, Chauncey Billups, Renaldo Balkman, Anthony Carter & Shelden Williams
Denver acquires: Raymond Felton, Timofey Mozgov, Danilo Galinari, & Wilson Chandler

New York trades: Eddy Curry, Raymond Felton, Timofey Mozgov, Danilo Galinari, Wilson Chandler & Anthony Randolph
New York acquires: Carmelo Anthony, Chauncey Billups, Corey Brewer, Renaldo Balkman, Anthony Carter & Shelden Williams

Minnesota trades: Corey Brewer
Minnesota acquires: Eddy Curry & Anthony Randolph

Couple of things:

Carmelo has a TK for the lesser of 5% or $1M. Seems like enough salary is going out from the Knicks perspective that this won't cause a problem with salary matching. But does this impact his expected max extension? My thinking is that it would since his 2011-2012 salary is an ETO. So his salary for this season & next should be adjusted upwards by $500K. This may all be a moot point though because the TK would cause his 2010-2011 salary to exceed the max for a player with 7-9 years of experience ($16,324,500). Although his salary is already over that amount as is, so I am not sure how that factors in.

Eddy Curry has a 15% trade kicker, which I originally thought would cause a problem, but it turns out that Ricky Rubio's cap hold is not counted during the regular season, go figure. Anyways, that is something that needs to be calculated, but it shouldn't impact the trade.

There should also be some TPE's created, mostly from the Nuggets. Just quickly figuring it Chauncey's salary is enough to cover the 4 players that they receive. So a TPE should be created for Melo's entire salary as well as smaller ones for Balkman, Williams & Carter.

[lakerfan10770]

So it seems that Melo did sign his extension, two questions:

1. Shouldn't he be eligible to sign a 4-year extension?

My thinking is that he is resigning with his "own team" so he should be able to be under contract for 6 seasons. That would include this season plus next years ETO (that he'd obviously decline). Then add on a 4-year extension and he should be good, right?

2. How are the raises calculated?

I know that the 1st year of his extension will be for 105% of his 2011-2012 salary, which would come to $19,444,503. I think that the subsequent years of his extension would be based on 10.5% of $19,444,503, but I am not sure.

[answerthink]

Answers to your questions:

Carmelo Anthony's trade bonus will be voided because it would cause his salary to exceed the maximum. His ETO will be voided to allow for the extension.

Eddy Curry’s salary for 2010-11 was $11,276,863.
Half of it was paid going into the season, leaving $5,638,432.
He was traded on February 22, 2011, with 51 days remaining in the 170-day regular season.
(51/170) x $5,638,432 = $1,691,529 of “remaining salary” subject to the trade bonus.
His trade bonus was 15% of his "remaining salary."
Trade bonus is calculated as 15% x $1,691,529 = $253,729.
Minnesota's incoming salary is $11,276,863 + $253,729 = $11,530,592.
Unless I am mistaken, this is how things will be reported when they are finalized.

All extensions, other than rookie scale extensions, are limited to five seasons, including the seasons remaining on the current contract. The current season counts as one season. The 2011-12 season counts as another. Therefore, Anthony is only eligible to sign a maximum three-year extension.

The salary in the first year of the extension is limited to 110.5% of the salary in the last year of the existing contract. However, it also can't exceed the greatest of (i) for a player with 7-9 years of experience, 30% of the adjusted salary cap at the time the extension takes effect, (ii) 105% of the salary in the final season of the original contract, and (iii) $11 million.

You can't always know at the time the extension is signed whether or not it will exceed the maximum salary. Therefore, the extension is written incorporating the maximum 110.5% increase, and then amended down as necessary. In Anthony's situation, point (ii) above will almost certainly be the limiting factor.

Raises are limited to 10.5% of the salary in the last year of the existing contract.

Therefore, a true maximum extension would look as follows:

Original Contract
2010-11: $17,149,243
2011-12: $18,518,574 (ETO Voided)

Extension
2012-13: $20,463,024
2013-14: $22,407,475
2014-15: $24,351,925

But the extension would get amended downward at the beginning of the 2012-13 season, to the following:

Adjusted Extension
2012-13: $19,444,503
2013-14: $21,388,953
2014-15: $23,333,403

Carmelo could always save himself the amendment hassle and simply sign an extension that reflects the adjusted figures above.

[lakerfan10770]

Thanks for the info, my confusion on the length of his extension is because I didn't read all of the relevant info on Larry's website. I only looked at the box in question #47, without looking at #52.