How The Cavs/Jazz Trade Worked Financially

It seemed from the moment that news of Tuesday’s trade between the Cavs and Jazz surfaced, the deal was somehow more significant than a swap involving four backups normally would be. The Cavs reportedly see some value in John Lucas III, Malcolm Thomas and Erik Murphy as players rather than simply as non-guaranteed contracts, but an earlier report indicated the team had been looking for non-guaranteed deals specifically to strengthen its bid for Kevin Love. The trio doesn’t represent an overwhelming step toward Love, but the move gives the Cavs more options they can present to the Wolves, which might make the difference as Minnesota president of basketball operations Flip Saunders sorts through several competing packages.

A key part of the trade involves a separate transaction. The Cavs struck a deal that same evening with No. 33 overall pick Joe Harris worth precisely $2,710,369 for three years, including a guaranteed $884,879, according to Mark Deeks of ShamSports. That it runs three years indicates that the Cavs need to use cap space to complete the transaction, since neither the minimum-salary exception nor the room exception, the two vehicles other than cap space the Cavs have for signing free agents, allows for contracts longer than two seasons.

The Cavs have yet to officially announce their deal with Harris, but that doesn’t necessarily mean they haven’t officially signed him. Sometimes teams never make official announcements when they sign draft picks, for any number of possible reasons. The Bulls never announced having signed 2008 No. 1 overall pick Derrick Rose to his rookie scale contract, as Deeks pointed out earlier this month (on Twitter). The RealGM transactions log shows the Harris signing as having taken place, and the presence of his salary figures on Deeks’ database is further indication that the Harris signing is official. That means the signing had to have taken place prior to the trade, which the Cavs did officially announce, since Cleveland wouldn’t have had the cap room necessary to sign Harris to his deal had they executed the trade first.

The Cavs entered Tuesday evening with $56,030,677 in salary and a cap hold of $4,592,200 for Andrew Wiggins, who remains unsigned. That left them with $2,442,123 worth of space beneath the $63.065MM cap. The Harris signing brought that room down to $1,557,244. The Cavs, as the NBA allows them to do, then appeared to split the Jazz trade into two parts. The first involves taking on Lucas’ $1.6MM salary and Murphy’s $816,482 salary in exchange for Felix’s $816,482 salary. Murphy and Felix essentially cancel each other out, so it amounts to an absorption of the $1.6MM Lucas salary, putting the Cavs over the cap by $42,756. The NBA lets teams complete trades that take them as much as $100K above the salary cap without conforming to salary-matching rules, so the Lucas salary just barely squeezes in under this requirement.

That move puts Cleveland over the cap, leaving the Cavs to execute the rest of the trade, a simple acquisition of Malcolm Thomas, using the salary-matching rules required of a capped-out team. The incoming $948,163 salary of Thomas is obviously greater than nothing, which is what Utah is getting in this side of the deal, but fortunately for Cleveland, players on minimum-salary contracts don’t count as incoming salary in the NBA’s matching game. Thomas makes the minimum, so the trade is kosher.

The Jazz needn’t worry about splitting the transaction or dealing with any salary-matching requirements, since they were well under the cap before the trade and are even further beneath it in the aftermath of the deal. The Cavs must continue to deal with the ripple effects of having landed over the cap. By all appearances, that bars them from aggregating Thomas in a subsequent trade for two months. While the Cavs can trade Thomas by himself, no trade limitation applies to either Lucas or Murphy, since Cleveland acquired them while under the cap. Cleveland nonetheless appears ready to sign Wiggins, triggering a 30-day waiting period before he can be traded, and since the Wolves are insistent that Wiggins be a part of any deal for Love, it doesn’t appear as though Cleveland is in any position to rush to make a Love trade official.

All of this hinges on the Harris signing truly having already taken place, as all indications suggest. If it weren’t official, it’s possible the Cavs could have structured the trade differently with the intent of later opening up the cap room necessary to formalize the Harris signing. Still, it appears as though deft management of timing gave Cleveland the opportunity to sign its second-rounder to a three-year deal, which is significantly more valuable to the team than a two-year contract would be, as I explained last year. The Cavs did so while still acquiring non-guaranteed contracts that they can flip, sooner or later. Utah receives some more cap space, as well as Felix, ostensibly the player with the most upside in this transaction, having been picked 33rd overall just a year ago. Time will tell if it was indeed a trade that helped both teams, but the deal has the makings of being just that.