Thinking about sign-and-trade and CBA complexities makes Amare irritated. (Photo by Max Simbron)
Although a Suns source I talked to recently thinks that Amare staying in Phoenix is now the most likely outcome, it is still also quite possible that he will opt out of his contract and test the 2010 free agent market.
If that happens, the Phoenix Suns hope the demand from available teams with cap space is greater than the supply of free agents. That competition for Amare's services creates more teams willing to do a sign-and-trade with the Suns to get him.
If there aren't teams jockeying to sign the all-star power forward, he will make less money and the chances of him walking and leaving the Suns with nothing in return increase.
What the Suns get from a possible sign-and-trade ranges from a legit starter whose contract is moved to make room for Amare, to draft picks or perhaps a trade exception, which could prove to be very valuable to Phoenix down the road.
It's a complicated mess but if you clear your mind and sit down with a few minutes of undisturbed reading time, we'll walk you through it. Carefully.
The 2010 Amare Market
There are three teams - New York, Miami, and New Jersey - who have over $20m in cap space and the need and desire to spend it. New York, with over $32m, leads the pack and is quite clear about their intent to go after two of the big name guys. Miami is trying to entice Wade to stay in South Beach by bringing in a running mate for him. The Nets, with their new billionaire Russian owner, will spend like a drunken sailor on a St. Petersburg shore leave.
Other teams with significant space include Washington ($19m), Chicago ($18m), Sacramento ($17m), LA Clippers ($15m), Minnesota ($12m) and Oklahoma City ($11m).
It is much less clear that these teams will even spend the cap space they have available on signing another long-term deal headed into the new CBA world of 2011. Chicago and Washington already have long term deals on their books and Minnesota, Sacramento and Oklahoma City are young teams that might not be ready to invest too much in a free agent that doesn't fit their immediate roster needs.
Only the Clippers from this group sounds like they are willing to spend their money. The Clippers, however, need a wing player to match with Blake Griffin and Chris Kaman. That means LeBron, Rudy Gay or Joe Johnson. It is hard to imagine either LeBron or Joe choosing Donald Sterling's Clippers over New York or Chicago, which takes them out of the game.
Those are the hunters that will be chasing their foxes. But when you look at the list of available players, there's only six who can be considered prize catches: LeBron, Wade, Bosh, Amare, Joe Johnson, and Boozer.
The next tier down includes Ray Allen, Manu Ginobili, and David Lee. Rudy Gay is a restricted free agent, which means the Grizzlies can match any offer, and while they don't have a lot of space under the salary cap, they do have lots of room under the luxury tax to keep Gay should they choose to match.
Say, for example, that New York gets James and Johnson and Wade stays with the Heat. Miami and New Jersey then choose from Amare, Bosh or Boozer. But maybe Chicago and Washington also get in the mix to land a power forward. The Bulls need a big man to go with Deng, Rose and Noah and the Wizards need to replace Jamison and Haywood in their front court.
In this scenario there are four teams vying for three players. If, however, either LeBron or Bosh stays put, that leaves even more teams in the mix. The result is a bidding war where teams are in competition for Amare and may be forced to make a deal with the Suns so they can offer him more money. That leads to a sign-and-trade scenario (more on that later).
If however, Johnson, Wade, LeBron, Boozer and Bosh sign quickly with New York, New Jersey and Miami and the remaining teams decide to conserve their money, then Amare could find himself in a buyer's market where the remaining teams aren't willing to give him a big deal and don't need to deal with the Suns to get him.
To recap, the Suns benefit from a scenario where LeBron and/or Bosh don't opt out and the number of teams shopping exceeds the number of big names available. This creates greater demand for Amare and gives the Suns leverage. If, however, there ends up with only one or two teams interested (but not desperate) for Amare, then his value goes down and the Suns are more likely to get nothing in return.
Fortunately for the Suns, when you look at both the names and teams that are out there in the mix, the more likely scenario is a bidding war.
One More Wrinkle
Of course, there is one other wrinkle. Teams with cap space don't have to spend it on free agents. Lets say the Clippers really want Corey Maggette back from the Warriors. They can trade for him without having to match salaries and can include some other enticement like a draft pick and a box of chocolates. In return, the Warriors also get a trade exception (more on those later).
So this means that just because there are a lot of teams with cap space, some of them might use that space to do trades with other teams looking to dump salary and rebuild. You definitely could see the Thunder, Kings and Timberwolves go this route to fill in rotation players instead of fighting with each other for a limited pool of free agents.
Assuming Amare doesn't stay a Sun either through an extension or picking up the final year of his contract and assuming there's demand for him on the free agent market, what would a sign-and-trade look like for the Suns?
The sign-and-trade basics are simple (basic even). Amare opts out of the final year of his contract by June 30th, 2010, making him a free agent as of July 1st, 2010. But until he's signed by another team the Suns hold his Bird Rights. Under the current CBA, a free agent's current team has the ability to sign him to a longer max deal (one extra year) and offer a greater annual increase (10.5% vs 8%). For more on this CBA mumbo-jumbo, check out Larry Coon's fine CBA FAQ.
Shout out to Larry for answering a couple of specific questions for this story. Yo, Larry. Thanks!
So the Suns will retain Amare's Bird Rights until they renounce him or he signs elsewhere. Until either happens, Amare will be a hold against the salary cap for the Suns which means they can't use any cap space created by his leaving to sign someone else.
But that's not a big problem, since even without Amare's salary on the books, the Suns don't think they will have much cap space anyway when you factor in the cap holds for Channing Frye and Grant Hill, along with space reserved to fill a couple open roster spots and the Mid-Level Exception (MLE). The math and timing here is fuzzy, but the Suns have told me that even if Amare walks, they won't have more than the MLE to spend on a free agent. The MLE should be around $5m to $6m.
This brings us to July 8th when free agents can start signing with new teams. At this point the Suns only have the MLE and Amare's Bird Rights which allows them to sign Amare to a bigger/better deal than he could sign with any other team.
That's the crux of the matter.
If multiple teams are trying to attract Amare and one team offers him a straight free agent deal and the other is willing to do a sign-and-trade with the Suns, that second team can make the bigger offer.
Even if neither team is offering a true "max deal," one might be willing to use the Suns' Bird Rights to offer that extra 1.5% in annual increases which is a lot of money when you consider we are talking about a salary that will likely start around $15 or $17m in the first year.
That was pretty basic stuff. Right?
The Other Reason
There is another reason a team might want to do a sign-and-trade with the Suns. If they have a contract they want to move either to get rid of enough space to fit Amare onto their roster or just to dump a bad deal, they could use the sign-and-trade to make it happen.
Let's say, for example, that Chicago wants Amare, but they want also want to clear Luol Deng off their books. The teams could swap players, with Amare first signing a contract with the Suns that he agreed to with the Bulls and then the Suns immediately trade Amare and his new contract for Deng. Because the Bulls are under the cap, they can take on more salary than they are giving up and the Suns get the difference in the form of a trade exception (more on that later).
Or, let's say Miami wants Amare to come play with Wade but they really want to dump Daequan Cook's remaining $2m contract. So the Suns sign-and-trade Amare so the Heat can use the Suns' Bird Rights to give him a better deal AND in the process Phoenix takes back Cook's lousy contract and as a parting gift for our trouble, a first round draft pick.
Traded Player Exceptions
The Traded Player Exception (TPE), commonly called the Trade Exception (TE) by those rubes who don't study their CBA closely enough, turns out to be the biggest and best and most likely prize the Suns would get back for Amare.
Here's how it works. If two teams do a trade and Team A is under the salary cap, they don't have to match the salary of the incoming player from Team B. To keep it simple, let's assume Team A has $15m in cap space and everyone has agreed that Amare will sign a contract that starts at $15m in the first year. The Suns sign Amare to that deal and trade him to Team A and in return get no players or draft picks. What they do get is a TPE worth $15m.
If Team A included a player with a $2m contract in the deal, the Suns would get a $13m TPE.
So a TPE is created through a lopsided trade where a team over the cap trades with a team under the cap and whatever the balance in cap space not taken up by a matching contract(s) becomes the TPE. The rules treat it like an uncompleted part of the deal which has to be finalized within one year.
Get it? If not, you better just call me so I can explain on the phone because that's the best I can do in writing.
Now, let's say the Suns do a deal with Miami that nets them a $15m TPE. What good is that?
Well, it acts basically like cap space that they can then use to acquire other players without having to match salaries. They cannot, however, use it to sign free agents UNLESS they did another sign-and-trade. I just blew your mind right there, huh? I am going to let you figure that one out on your own since it's not very likely anyway.
The most likely scenario for the Suns is that they end up with this giant pool of money that they can use to acquire players from teams looking to dump salary ahead of 2011 CBA or to avoid paying the luxury tax next year.
It is hard to predict how that could play out but consider that Seattle was able to extract two first round draft picks from the Suns in exchange for taking on Kurt Thomas because they had the cap space to do the deal and they were well under the luxury tax. That's exactly the position the Suns would be in come next February. Teams could be doing all kinds of crazy deals looking to shed salary that would put the Suns in the driver's seat for a change.
Or it could be something much more simple than that. How about a Barbosa for Iguodala trade? Doesn't matter that Iggy makes twice as much as LB. The TPE fills in the gap.
The Suns believe that having that kind of asset would be very valuable come February 2011. I'm not convinced but at least it would be better than nothing.