After last night's narrow loss increased our chances for keeping the future pick we owe the Clippers, I thought this would be a good time to review the Collective Bargaining Agreement's rules on picks. There are a lot of myths and misconceptions out there, and since picks will be an important part of Minnesota's future, it'd be worth a look.
Imagine being so bad an owner, that the NBA actually creates a rule to stop others from doing something so inept! The so-called "Ted Stepien Rule" arose after the owner of the 80-83 Cavaliers traded away several years worth of first round picks in bad trades, leaving fans with a team with no talent and no hope for the future. The rule prohibits teams from trading away future picks so that they may get no first round pick for two consecutive years.
This has been a source of confusion, so let me debunk some myths:
1. This rule only applies to future picks. Once a team drafts a player, they can still trade the player's rights.
2. The rule doesn't say you're required to retain one of your future picks.
Let's look at the Wolves situation, where they owe a Top 10 protected 1st to LAC. Even if they get to retain their 2010 pick, they can't trade it right now because they may have to give LAC their pick in 2011. However, there are ways to solve the problem if MIN wanted to trade the pick. To get past #1, they could simply draft the player, and trade his rights to another team. If Rule #2 was a problem, they may be able to trade their pick if they were keeping the CHA or UTA pick instead, or they could even try to buy a late pick from a championship team.
See if you know these ten other facts about picks
1. Picks carry no salary consequences when it comes to cap matching trades of teams over the salary cap. If a trade works financially within the 125% + $100,000, adding a pick doesn't affect it in any way. This $0 value disappears when the player signs a contract, and obviously that value is used.
2. First round picks are assigned a cap hold based on 100% of their rookie scale once they have been drafted. If MIN was to get the third pick in the 2010 Draft, the 2010 NBPA Rookie Scale would show we have a cap hold of $3,444,400 cutting into our available cap space
3. First round picks can be signed for a minimum of two guaranteed years, and two more with a team option before their they are restricted free agents their fifth season with a qualifying offer. The initial offer can be within 80%-to-120% of the rookie scale, though it is common to always use 120%. The actual salary would obviously replace the cap hold.
4. First round picks that do not play for an NBA team, like Ricky Rubio, carry a cap hold for their draft position, but only during the summer -- when most free agent find new homes. Last summer, Rubio's cap hold was $2,724,300. Next summer, his cap hold will reset to the 2010 5th pick, $2,812,200
5. First round picks that come over within three season of being drafted have salaries based on rookie scale. If they come over after three years and didn't play college ball, teams have the choice whether to use the rookie scale, or signing him like any free agent with an exception or cap space.
6. Second round picks, like Nikola Pekovic, do not carry a cap hold or guaranteed salary. This is what makes early second rounders more appealing to teams seeking to sign a prospect that may not be in the NBA for several years.
7. Picks can't be traded away more than seven years in the future. In the current season, we could trade a 2016 pick, but not a 2017. Teams rarely trade distant picks because of the uncertainty of their value.
8. Draft picks can't be traded for 30 days after they sign.
9. First round picks can be sold, but for no more than $3 million dollars in cash. Several late 1sts have been sold for $3 mil in cash in recent years, and its highly likely we'll see it again this year. Since these picks have guaranteed two-year contracts and cap holds that cut into cap space, 2010's falling salary cap and luxury tax may encourage more teams to sell their first rounder.
10. The current first round picks and protections for the Timberwolves are:
OWE LAC a MIN 1st, Top 10 protected through 2011
UTA PICK: protected top 17 in 2010, top 15 in 2011, top 16 in 2012, top 16 in 2013
CHA PICK: protected top 12 in 2010, top 10 in 2011, top 8 in 2012, top 3 in 2013, unprotected in 2014
Any other questions? Email me at nba_economist@yahoo.com and your question may appear in a future mailbag!