As a Timberwolves fan with a working knowledge of the Collective Bargaining Agreement, I hope that we do not see the Wolves acquire Kevin Martin through a simple free agent signing with cap space. In order to generate that cap space, the Wolves would be forced to renounce both the Mid-Level Exception and their rights to Andrei Kirilenko to eliminate their cap holds. The best direction for the team to acquire Martin is through the use of the sign-and-trade.
STEP ONE: Acquire Kevin Martin in a Sign-and-Trade, not a straight free agent signing.
The Wolves need to incorporate a third team who would like to acquire one of our PG's for cap space, such as rumored interest in Ridnour from UTA or MIL, or Barea from DAL.
MIN GIVES: Barea or Ridnour + Steimsma (unguaranteed)
MIN GETS: Martin
OKC GIVES: Martin
OKC GETS: 2nd rounder + $7 mil TPE created
THIRD TEAM GIVES: 2nd rounder (+ cap space)
THIRD TEAM GETS: Barea or Ridnour + Steimsma
MIN and OKC should agree to do a sign-and-trade deal because they both get exceptions that allow them to spend over the salary cap -- MIN doesn't have to renounce the MLE or the rights to Kirilenko, and OKC creates a brand new $7 mil Traded Player Exception. The third team gets their player, then waives Steimsma to get his cap space back.
STEP TWO: Sign Kirilenko or Convert him to a TPE
My first preference is to sign Kirilenko with the non-Bird exception, and sort out minutes through trades later. On a reasonable deal starting at around $8 mil, the Wolves can still keep their payroll under the luxury threshold, even before trades.
However, if Kirilenko doesn't want to return, they don't have to lose his exception. With a sign-and-trade to his new location, they would convert his rights into a Traded Player Exception. To be legally signed-and-traded, Kirilenko's new deal would have to fit the CBA's standard guidelines: 3-4 years, Year 1 guaranteed, but the actual deal would certainly guarantee more than the first year.
MIN GIVES: Kirilenko S&T + 2nd
MIN GETS: top 59-protected 2nd + TPE created
SECOND TEAM GIVES: top 59-protected 2nd
SECOND TEAM GETS: Kirilenko S&T + 2nd
The Timberwolves can negotiate the compensation with the second team for the team to receive the TPE - if it takes more than a second rounder, they'd have to decide it's worth to them, but the other team is getting something for nothing here. For the Wolves, keep in mind that a TPE lasts for one calendar year - not an NBA year. Even if they didn't use it this season, it could give them options in the first few days of the 2014-15 off-season as well.
Using these two steps, the Timberwolves end up getting the same players, but maintain more options for the future by not needlessly throwing away their exceptions.