One Month to the Trade Deadline

The February 19th NBA Trade Deadline has the potential to be one of the biggest in recent memory.  A sluggish economy has hurt the value of many franchises, their earnings, and the overall wealth of many owners.  Fourteen teams still remain over the luxury threshold.  The looming threat of work stoppage grows as a new Collective Bargaining Agreement must be reached in 2011.  There are several teams that are geared to win-now, and many others that need to regroup.  We may see major changes over the next month.

However, Timberwolves fans may wonder whether their team should get involved in a deal right now, or wait until this summer, when they carry a very valuable trade commodity with their raw cap space.  Let's take a look at the two major options

1.  Trading Production to increase our 2010 Cap Space:  While fans of rebuilding point to our accumulation of young talent and picks, one of the most important jobs has been to rid the Wolves of bad contracts.  Right now, our team has no truly bad contracts.  It is filled with either expiring deals, or players that are producing at market level or higher.  A player like Ryan Gomes is valuable here at his current salary, but he would also be a solid addition to the depth of a championship team.  Obviously, he has more trade value now than at the deadline, simply because he could help a team in the 2010 Play-offs.  Gomes has the additional benefit of a partially guaranteed deal which gives teams options.  Players like Sessions, Gomes, or our young multi-year contracts could bring back expirings plus future assets, which would help not just our 2010 cap space, but provide other assets to use in the future.  This might be an area to explore by the deadline, because while I believe Gomes is well-worth his $3.87 mil contract, he may not be worth $4.235 mil to Minnesota in additional cap space this summer.

The advantages to increasing our 2010 cap space, which I currently estimate to be about $9.5 mil, have been discussed many times.  More cap space under the estimated $53 mil salary cap allows the team to offer a larger salary in free agency, or have more space they can use as a trade commodity.  At a minimum, its less dollars for our owner to spend.  Reducing our talent for the rest of the season may alienate some fans, but it may improve our lottery pick and our future.

2.  Trading Expirings and more to add production, but decrease 2010 Cap Space:  The Timberwolves flexibility allows them to go in a different direction as well -- to make a play for talent before the summer.  I'd like to spend more time on the less-discussed option of a deadline deal.

Let me give an example first.  Suppose the Wolves made a trade of expirings + CHA pick for Caron Butler, and his $10.8 mil contract next season.  If we made no further moves, with Butler's 2010-11 salary, our current salaries, the cap holds for Rubio and the pick(s), and cap holds to reach roster minimums, the Wolves could be sitting just above the estimated $53 mil salary cap.

Pro

a.  If you're over the salary cap, the next limitation on total payroll is the luxury threshold, at an estimated $63 mil next year.  If Glen Taylor is willing to pay, the Wolves may field a more competitive team at a payroll near $63, than one near $53.  The team would be better for the rest of this season as well, which would help ticket sales.

b.  If a team wants to use its cap space, it must renounce its exceptions (to the salary cap).  Next year's Mid-level Exception (MLE) is projected to come in at around $5 mil, and would provide suitable funds to sign Pekovic.  We would also be able to keep our Traded Player Exceptions $796,088 on Etan Thomas, and $732,625 on Quentin Richardson.  These are nice trade commodities for early summer (they only last one year), for the many teams that may want to reduce salary under a luxury threshold that may decline as much as $6 mil.  Finally, we could still retain the free agent rights to players like Latrell Sprewell ($19 mil), Kirk Snyder ($7 mil) and Michael Doleac ($6 mil).  With these rights, we could sign these players for any amount up to that value.  Teams have used this in the past to sign-and-trade a player as an expiring (3 year deal, last 2 team option) to complete a trade that needs salary.  David Stern has said he'll look closely at deals like this, but I can't imagine he'd block a deal where an owner wants to pay a player if he had to face the Player's Association -- especially before negotiations for the new CBA.

c.  Much larger deals are possible if we do them now.  After the trade deadline, expiring players like Mark Blount cannot be traded.  We have over $24 mil in expirings, and with a 125% + $100,000 matching restriction, MIN could take in $30 mil in salary in expirings alone.  If we allow the expirings to disappear, this summer we may have only $9.5 mil in cap space.

d.  The Timberwolves are $8 mil under the 2009-10 luxury threshold, and that space could be very valuable to one of the 14 teams that are over the lux right now, as I've demonstrated in previous articles.  Expirings would be an attractive way for cost-conscious teams to remove salary, even if we simply swap expirings-for-expirings.  In any event, Mr. Taylor could get great value for a little additional spending now.

Cons

a.  While adding a talented player now may help our attendance and revenues, it may improve our record enough to hurt our 2010 pick.  With our current record, we are not competing for the play-offs this season.

b.  For smaller deals, raw cap space is certainly more valuable than some of our expirings.  If another team wants to shed $8 mil from their 2010-11 payroll, they would rather trade for our raw cap space this summer, than trade for Mark Blount now and let him expire.  The simple reason -- the Wolves have to write the checks to Blount for the rest of the season.

c.  If we traded for a player now at the expense of our raw cap space, we would preemptively remove ourselves from 2010 free agency.  Its possible that deals may be found this summer, as Mr. Kahn did with Ramon Sessions last year.  Jumping ahead of other teams by doing a deal this summer may have tactical advantages, but we lose opportunity costs this summer by sacrificing flexibility.

 

I think its quite possible that we will see several large trades in the NBA as we lead up to the trade deadline.  With expirings, young assets and picks, the Timberwolves have positioned themselves nicely, either as a major participant or by getting well-compensated for using their flexibility to broker a deal between other teams.  Its gratifying to see Wolves finally in a strong position, and I look forward to the next month.  We may see something profound.

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