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Grading The Deal: Wizards, Hornets Shuffle Contracts

For a guy who loves math and statistics, John Hollinger sure has trouble figuring out how the salary cap works. In his piece ridiculing the Washington Wizards for their trade of Rashard Lewis and the #46 pick to New Orleans in exchange for Emeka Okafor and Trevor Ariza, Hollinger laments the “fact” that the trade kills Washington’s chances of making a splash in the offseason this summer using their cap space.

(“This effectively takes the Wizards out of any potential free-agent deals beyond the midlevel; additionally, it also takes them out of amnesty auction bids, or cap space trades, or any other maneuvers that rebuilding teams typically take to begin stockpiling talent.”)

The problem with his analysis is that the Wizards never had that flexibility in the 2012 offseason to begin with.

Let’s start with the basics: The Wizards have 10 contracts on their books for next season in the form of John Wall, Andray Blatche, Nene, Jan Vesely, Kevin Seraphin, Chris Singleton, Trevor Booker, Jordan Crawford, Shelvin Mack, and the No. 3 overall draft pick (which has a cap hold until the player signs).

Even excluding Rashard Lewis entirely, that group will make a combined $39,377,297. Using the current salary cap figure as the estimate for 12-13, that would leave Washington with approximately $18.667 million to work with. Sounds good, right?

Unfortunately, when thinking about free agents and trades, there are exceptions that cut into this number. The Mid-Level exception (which would otherwise have to be renounced) and the two minimum salary cap holds with 10 players on roster cut the space down from $18.667M to $12.134M. The buyout figure for Lewis’ contract would still count against Washington’s cap and sits at $13.95 million.

Keeping all that in mind, the only ways the Wizards were going to be able to do the amnesty auction bids, cap space trades, or “any other maneuvers” Hollinger discussed would have been by burning their amnesty card on a bought-out Rashard Lewis or eating the remainder of Andray Blatche’s deal except whatever either got in the amnesty bid process.

As such, Washington lost exactly nothing in terms of flexibility for the 2012 offseason by making this trade and adding in the extra money they spent on two rotation players who will replace one player who would not have been on their roster next season in all likelihood.

That said, Washington loses flexibility for the 13-14 season and that clearly marks a downside of the deal. Even though a shallow and still heavily flawed Wizards team would not have won enough to get serious momentum in terms of free agent signings next summer, they could have used that space in an unbalanced trade or an amnesty pickup even though very few teams will be using their amnesty that season because of how contracts are structured that year. What mitigates this loss to a degree is the fact that Washington will have space the following year or can trade the suddenly more valuable expiring contracts of Ariza and Okafor next summer if they want to parlay their 2014 space into players who can be a part of their future. On top of that, the brunt of the new CBA downshift will come into play that season and having close to $42 million committed to those same 10 contracts discussed above plus whatever pick(s) and players would go on the 2013 books between now and then means that the space if any they gave up could be pyrrhic after considering factors like the MLE and cap holds for that summer. The loss of some financial flexibility for next season is a net negative that could be largely inconsequential if the salary cap goes where I expect it to next season.

Since the financial flexibility component of the piece on Washington’s end has little weight behind it, what they received in terms of players takes center stage. In the worst case scenario, Washington gained two quality rotation players on a team that sorely needed them. Both Okafor and Ariza are good enough to play meaningful minutes for this team while not being so good or long-term to make them obstruct the acquisition or development of other potential talent. On top of that, the fact that both expire in 2014 makes them incredibly movable next summer should any blockage occur, such as the drafting of Michael Kidd-Gilchrist or Andre Drummond instead of Bradley Beal next Thursday. Beyond that, adding two quality players who have experience in the league should add two more experienced individuals to a locker room that deeply needed more sanity and direction. What’s more, Okafor’s defensive ability allows the Wizards to make Nene a more effective defender by hiding him against many team’s worse offensive big man. Depending on his swingman partner, Ariza could do the same.

While fundamentally possible that the Wizards could have used whatever space they would have had in 2013 to improve their team, it is wholly unlikely that it would have yielded players that still gave the team the ability to make a splash in 2014 when John Wall is a Restricted Free Agent and the simple truth is that they would not have had the chance in 2013 to get a high-end difference maker with somewhat limited cap space all things considered.

Wizards grade: B+

As far as the Hornets are concerned, they had so many fewer salary commitments than the Wizards that it made sense for them to clear out those contracts.

Considering the squad already has Anthony Davis and Gustavo Ayon as two frontcourt players they like, the loss of Okafor’s ability will not be as heavily felt in either 12-13 or 13-14.

While Ariza could have been a rotation player and a figure on the team the next two years, an unbalanced trade (since the Hornets have a lower cap burden than Washington even without considering their amnesty card to actually use it) could get the Hornets a better player while also allowing them to make moves after matching whatever deal Eric Gordon signs this summer.

I consider Jarrett Jack to be an unlikely amnesty target unless the team gets a perfect point guard fit this summer since the only way amnestying Jack makes sense is using that financial flexibility this summer due to his expiring contract. Since few teams heavily valued either Okafor or Ariza since neither provides surplus value under their contract, gaining flexibility and opening up playing time by moving them puts New Orleans in a better situation even if they have trouble getting free agents to come to the Crescent City.

In addition, getting the 46th overall pick could yield the Hornets a low-end rotation player in this draft, a nice bonus.

Hornets grade: A

 

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