Why did this trade happen? 2004

[FGump]

Does anyone recall the motivation behind this trade for the Suns in 2004? Obviously there was something quite tasty in the deal for them, because they gave up cash and two #1s to swap scrubs, but I'm not sure what it was. Can anyone help?

From the archives at Utah's team website ...

February 19, 2004
Jazz acquire Gugliotta

Salt Lake City – Utah Jazz Vice President of Basketball Operations, Kevin O’Connor, announced today that the team has acquired forward Tom Gugliotta, two conditional first-round draft picks, a 2005 second-round draft pick and an undisclosed sum of cash in exchange for forward Keon Clark and forward Ben Handlogten.

Utah will receive the least favorable of Phoenix’s two first-round picks in the 2004 NBA Draft, either Phoenix's or New York’s selection, which was acquired from the Knicks in a trade on January 5. The second conditional first-round pick was also acquired from New York and is protected through 2010.

Gugliotta has appeared in 30 games for the Suns this season and averaged 2.3 points and 1.9 rebounds per game. The 6-10 forward out of North Carolina State has appeared in 691 career games and averaged 13.8 points and 7.6 rebounds per game.

The Jazz acquired Clark from the Sacramento Kings on August 5, 2003. He appeared in two games for the Jazz this season and averaged 2.0 points and 3.5 rebounds prior to having surgery on his right ankle to remove a bone spur.

Handlogten joined the Jazz this season as a free agent and appeared in 17 games and averaged 4.0 points and 3.2 rebounds prior to tearing the anterior cruciate ligament in his left knee.

[Modern_epic]

I don't know the specifics of the contracts involved, but that was going into the offseason when the were clearing cap space to make a run at Kobe, was it not?

[answerthink]

This article may help from Phoenix’s perspective:
http://findarticles.com/p/articles/mi_m ... 113805506/

It provides the following rationale:

“Jerry Colangelo’s wallet… the trade of Gugliotta provided immediate financial relief. Gugliotta was being paid more than $11 million this year, and swapping him for Keon Clark ($5 million) and Ben Handlogten ($350,000) keeps the team out of luxury-tax range.”

According to Wikipedia, both Keon Clark and Ben Handlogten never played for Phoenix.


This article may help from Utah’s perspective:
http://sports.espn.go.com/nba/columns/s ... ets-090130

It provides the following rationale:

“The Jazz got rid of Handlogten, along with Keon Clark, in that deal with Phoenix in which they took on Tom Gugliotta's expiring contract along with two future first-round picks, plus a second-rounder.

When Gugliotta came off the books a couple of months later, the Jazz used the cap room to sign Carlos Boozer and Mehmet Okur. They used one of the first-round draft picks on Kirk Snyder, and the second-rounder was Robert Whaley.

The other first-rounder?

The Suns had acquired it from the Knicks in the Stephon Marbury trade, and Isiah Thomas put so much protection on it (1 through 22 was the least of the protection) that the pick has not yet changed hands.”

Another article suggests that the Jazz had more than $7 million of cap room at the time.

[Three34]

I've wondered that in the past, too. All of the players involved were expiring contracts. Utah got absolutely creamed in free agency in 2003, with boatloads of cap space yet absolutely nothing to show for it (the two significant moves they tried, RFA's Corey Maggette and Jason Terry, both got matched). But they made up for it with some ace trades, such as this one. They also got two picks for taking Clark from the Kings in the first place, and got two more out of Houston for taking Glen Rice's contract. And then they nailed their cap space the following year with Boozer and Okur.

A great lesson in how not to panic.

[Dunkenstein]

Phoenix's sole motivation to do the trade was to get under the LT threshold. And Utah held them up for two #1s in order to get the deal done.

[chakdaddy]

Also...didn't the luxury tax wind up not being assessed that year?

I remember seeing that trade and thinking it was one of the most obnoxious things I'd ever seen. Phoenix's cheapness is/was pretty annoying - I'm always bothered how they sell off their first round picks (but not to Boston, when Boston wants a pick they have to trade a future #1, so Phoenix can wind up selling that one instead...)

[answerthink]

The trade was made during the 2003/04 season. The tax was triggered in that year, and produced a per team return for teams under the tax threshold of $5.2 million.

Here's a direct quote from the man himself… “This deal was clearly driven by the luxury tax. The end result puts us comfortably under the expected tax threshold,” said Suns President and General Manager Bryan Colangelo.

[Scoot McGroot]

So, Phoenix essentially sold two 1st round picks for about $10.5 million (cash made through savings on potential payroll/luxury tax owed)?

[Dunkenstein]

So, Phoenix essentially sold two 1st round picks for about $10.5 million (cash made through savings on potential payroll/luxury tax owed)?

That's around $5M a pick. If you remember, in other years they sold picks before or during the draft for $3M. So for them, this deal was a windfall.

[FGump]

1. Phoenix also gave up cash, presumably to pay the difference in salaries for the balance of the year. On $5.35M, that would have been about $1.75M. Also while they lowered their cap figure by $5.4M based on the answers above, they presumably weren't over the tax line by that exact amount (they ended up "comfortably under" the guesstimated tax threshold), so they probably saved somewhat less than $5M in tax.

$5.2M + (less than) $5M - (approx) $1.75M ...puts the net savings in the $8-8.5M range.

2. Utah made out like a bandit. They probably got reimbursed for the extra salary, so it cost them nothing.

3. Did Phoenix get a bargain for the $8-8.5 in savings they put in Sarver's pocket? LOW first-rounders net $3M ...but what would much higher ones net?

The first was a mid-teens pick in 2004.
The second was a NY Knicks pick that is now an unprotected 2010 Knicks #1, which should be gold.

[answerthink]

I imagine the savings were likely closer to $11M, based on assumed salaries of Gugliotta ($11.7M), Clark ($5.0M) and Handlogten ($367k):

1. Tax distribution: $5.2M
2. Tax payment avoided (probably less than the $6.3M salary difference but large enough not to qualify for any cliff distribution): ~ $6.0M
3. Unpaid portion of salary difference (assume 1/3 of $6.3M, based on trade date): $2.1M
4. Cash distribution (likely offsets salary difference, but certainly $3.0M or less): -$2.1M

$5.2M + $6.0M + $2.1M - $2.1M = ~ $11M

[FGump]

Answerthink "I imagine the savings were likely closer to $11M, based on assumed salaries of Gugliotta ($11.7M), Clark ($5.0M) and Handlogten ($367k)"

Probably that's not even close. As far as I can tell, the Suns ended up nowhere near the tax threshold. Don't lose sight of the fact that Colangelo opined afterwards they were "comfortably under the expected tax threshold" without having any certainty as to what that number might be, leaving the idea they were not going to cut it close and confirming my supposition earlier and further research now.

Finding the final roster and cap numbers years later is a challenge. Here's the best I can find ...

FINAL ROSTER FOR CAP PURPOSES
Stoudemire 1.899
Johnson 1.85
Barbosa .674
Marion 10.067
McDyess 13.5
Jacobsen 1.011
Cabarkapa 1.221
Harvey .664
Lampe .865
Eisley 5.845
White 5.394
Voskuhl 1.55
Williams 1.07
Clark 5.0
Handlogten .367

TOTAL 50.977
PRETRADE (replace Gugliotta 11.668 for Clark-Hand. 5.367) 57.278
TAX LINE 54.6

Pretrade ....
Tax 2.678
Welfare - they apparently would have qualified for some under the cliff provision, right at 1.2M based on the numbers above
Net .... Payment of 1.478M to league

Posttrade ...
Salary savings 0 (since they apparently paid the salary difference in cash to Utah)
Tax paid 0
Welfare ... 5.2M
Net ...Received $5.2M from league

Net gain was only $6.678M, which is even less than I guessed earlier.

[answerthink]

FGump,

Your analysis appears to exclude Charlie Ward.

The Suns traded Penny Hardaway, Stephon Marbury and Cezary Trybanski for Howard Eisley, Charlie Ward, Antonio McDyess, Maciej Lampe, draft rights to Milos Vujanic, and two 1st round draft picks on January 5, 2004. Ward was waived the day after the trade.

I don't know how much of his salary counted toward the Suns' team salary (because his contract appears to have been un-guaranteed), but I would guess it had to have been around $2.6 million of his $6.0 million total salary (reflecting the pro-rated amount of his salary from the beginning of the season through the time he was waived).

Using your numbers, this would mean your analysis would need to be adjusted as follows:

1. The $1.2 million cliff distribution you describe would be eliminated
2. The $2.7 million tax payment you describe would be $5.3 million
3. The $6.7 million in total savings you describe would be $10.5 million

My estimate of $11 million in total savings is due to slightly differing player salary figures.

The "comfortably" under the tax threshold you refer to would have been about $1.0 million under (as opposed to the $3.6 million under your analysis implies).