The trade between the Suns and Wizards agreed to this morning won’t be finalized until Monday, when the league office opens back up for the week, but since it’s still fresh in everyone’s mind, we wanted to take dive into the financial impact now and in the future for both Phoenix and Washington.
How salary-matching works in the trade:
Trevor Ariza‘s $15,000,000 cap hit is the largest salary involved in the trade. Because the Suns will be a non-taxpaying team after the trade and Ariza’s salary is between $6,533,334 and $19,600,000, it alone allows the Suns to take back up to $20MM in salary (the outgoing salary, plus $5MM). As such, using it to absorb both Austin Rivers‘ ($12,650,000) and Kelly Oubre‘s ($3,208,630) contracts is permissible under the NBA’s Collective Bargaining Agreement rules.
As for the Wizards, Rivers’ salary alone is able to absorb Ariza’s salary. Specifically, because the Wizards will remain a tax-paying team after the trade, they are permitted under the CBA to acquire up to $15,912,500 for Rivers’ salary (125% of $12,650,000, plus $100K), which is more than the $15MM owed to Ariza. And because the Wizards are therefore essentially trading Oubre for nothing in return, they’ll acquire a traded player exception worth the amount of his salary – $3,208,630.
[RELATED: Outstanding NBA Traded Player Exceptions]
As we noted before in these series of posts on financial ramifications after trades, the rules for the amount the Suns can take back using Ariza’s $15MM vs. the amount the Wizards can take back using Rivers’ $12.65MM are different because the rules are different for teams in the tax. We explain that in more depth in our glossary entry on the traded player exception.
The luxury tax ramifications for the Wizards:
While the deal last week for Sam Dekker appeared to be primarily financially motivated for Washington, this deal seems to be more about bringing Ariza back to help the team win now and improve the locker room dynamics.
However, the Wizards do also improve their projected tax bill with this trade. The team’s payroll will be reduced by $558.6K, which equates to tax savings of about $1.5MM (h/t to Albert Nahmad).
Future cap ramifications:
All three players – Ariza, Rivers, and Oubre – will be free agents next summer, so their isn’t really any ramification for either team’s 2019 cap outlook. However, it’s interesting to note that the Wizards were probably wary about having to pay for Oubre next summer, who will likely be looking for a large payday coming off his rookie contract.
The Wizards already have $111.2MM in guaranteed salary for next season for only five players, so it’s unlikely they would have been willing to spend big on Oubre considering the team’s struggles so far this season.
Excellent post. Simple and to the point.
Agreed. Good work
Zrds have Satoransky to replace Rivers– who is better anyway– and replacing Oubre, #1 pick Troy Brown, who is looking good so far.