Explaining the Celtics/Nets Trade and How the Celtics Just Became 2014 Free Agency Players

Got this great piece of Reddit, thought it might interest you folks.
Credits to /u/dangercart

http://www.reddit.com/r/nba/comments/1igbmp/explaining_the_celticsnets_trade_in_1000_easy/

Beware, HUGE Wall of Text incoming

This conversation started over[1] on /r/capology[2] and then continued[3] on /r/bostonceltics[4] but I thought it was interesting enough to call up to The Association. Some real experts on this stuff have written for HoopsWorld[5] and ShamSports[6] on this trade, too.
The Celtics/Nets trade may be one of the most complicated in NBA history but is also a really good study in how a smart front office can use the CBA to their advantage. Everyone focused on the draft picks in this trade but it turns out that the way the Celtics have positioned themselves for next year's free agent class might be just as important. Here's a break-down of what exactly happened in this trade. How did the Celtics end up with a big trade exception? Why did D.J. White appear in the trade at the last minute? Read on to find out...

Important Concepts

The NBA doesn't always consider a trade to be a single transaction. Trades can be simultaneous[7] or non-simultaneous[8] , and a single trade can be treated one way for one team and the other for the other team within a single trade.
When a team trades a minimum salary player[9] , only the portion of the salary paid by the team is counted and that salary only counts for the "outgoing" team but not the "incoming" team. That means minimum contracts can be used to get to a "salary match" because they only count for one side of the trade equation.

A free agent who made under $1.2M in the prior season that is included in a trade as a sign-and-trade player only counts half of their salary when trying to reach a salary match. This is known as a base year compensation[10] player.
Trade kickers[11] have to be salary matched by teams accepting the player but the kicker does not count for the team trading the player away.
Teams under the luxury tax have different trade rules than taxpaying teams and the rules are dependent on the size of the trade.

What Went Down

The Celtics and Nets decided they wanted to make a trade built around Pierce and KG. The Celtics made the Nets agree to take on Jason Terry's contract but the Nets really only had a few players they could include from their end. The problem was that the Nets are above the cap so they can only take in contracts equaling 125% + $100,000 of what they are planning on receiving. Also, Jason Terry had a trade kicker that made him more expensive for the Nets to receive by $400k/year.

Nets Get Salary
Paul Pierce $15,333,334
Kevin Garnett $12,433,735
Jason Terry (w/ trade kicker) $5,625,313
Total $33,392,382

To match this, the Nets would have to send out at least $26,633,906 in salaries because the Nets are over (way, way over[12] ) the luxury tax. However, all the Nets had that the C's were willing to take was:

Celtics Get Salary

Kris Humphries $12,000,000
Gerald Wallace $10,105,855
MarShon Brooks $1,210,080
Kris Joseph $788,872
Total $24,104,807

The Nets were $2,529,099 short. However, they had the rights to one Keith Bogans. Bogans only made the veteran's minimum last year which means if he were included in a sign-and-trade his contract would only count for half in the trade. This is to keep teams from gaming the system because it's expensive. The Celtics apparently didn't care because they just signed Bogans to twice the amount the Nets were short: $5,058,198. This made the trade valid from the Nets perspective, and that's all that really mattered.

Nets Get Salary
Paul Pierce $15,333,334
Kevin Garnett $12,433,735
Jason Terry $5,625,313
Total $33,392,382

Celtics Get:
Keith Bogans: $2,529,099
Kris Humphries: $12,000,000
Gerald Wallce: $10,105,855
MarShon Brooks: $1,210,080
Kris Joseph: $788,872
Total $26,633,906

Now that the trade was valid, the Celtics could break it up into multiple trades that give them the greatest benefit, even though it has to be viewed as a single trade by the Nets. Knowing that, the C's went to work.

First, minimum salary players never need a salary match so they traded nothing for Kris Joseph and then waived him. His salary only mattered to the Nets for contract matching purposes.

Nets Get Salary
Nothing
TOTAL $0

Celtics Get:
Kris Joseph $788,872

Next, the Celtics tried to put together the most beneficial multi-player trade possible. This is important because they could only get a trade exception from a trade where they only send one player so it was important that they preserve the largest contract possible for that purpose.

Originally, the plan was to trade Pierce and Terry for Humphries, Wallace and Brooks.

Nets Get Salary
Paul Pierce $15,333,334
Jason Terry (w/o trade kicker)
MarShon Brooks $1,210,080
TOTAL $20,558,334

Celtics Get:
Kris Humphries $12,000,000
Gerald Wallace $10,105,855
MarShon Brooks $1,210,080
TOTAL $23,315,935

This would have worked fine, and left KG for creating a nice exception, but wasn't ideal. It would be better to include KG instead of Pierce but each trade has to be legal for the Celtics and that means they can only accept $5,000,000 more what they're sending out and with KG's smaller salary they didn't quite make it because $12,433,735 + $5225000 +$5,000,000 = $22,658,735 which is less than the salaries of Humphries, Wallace and Brooks.

Enter D.J. White. White has a league minimum, non-guaranteed contract. Minimum contracts only count for the outgoing team's salary so the Celtics could add him to any of their trades without the Nets having to add any more salary of their own. The Celtics were going to waive White, anyway, so instead they added him to Garnett and Terry to get over the salaries of Humphries, Wallace and Brooks. This only works because the Celtics are currently under the luxury tax. If they were over they could only accept 125% + $100,000 of outgoing salaries and they would have been $37,100 short. Instead, a trade of under $19.6M for a tax paying team is a match if the teams are within $5M, which they now just barely were.

Nets Get Salary
Kevin Garnett $12,433,735
Jason Terry $5,225,000
DJ White $884,293
TOTAL $18,543,028


Celtics Get:
Kris Humphries $12,000,000
Gerald Wallace $10,105,855
MarShon Brooks $1,210,080
TOTAL $23,315,935

The teams were then left with Pierce and Bogans. The Celtics can make the trade because, from their perspective, they're sending out more than they receive in contracts and that's always allowed. Because the Celtics are only including one player in this trade, they receive a trade exception for the difference.

Nets Get Salary
Paul Pierce $15,333,334
TOTAL $15,333,334

Celtics Get:
Keith Bogans $5,058,198
Trade Exception $10,275,136
TOTAL $15,333,334

So? What Does That Do?

This trade exception expires on 7/12/14. The signing moratorium ends on 7/10/14. Keith Bogans' contract is completely non-guaranteed for 2014-15. This means that, during the moratorium at the beginning of next year's free agent period, the Celtics could arrange a trade, or a sign-and-trade, for over $10M without sending any guaranteed contracts back plus they have Bogans' "super expiring" for over $5M more. They could throw in some of their many draft picks to entice a team to agree to a sign-and-trade if they get a free agent to agree to sign in Boston. They could take someone else's expiring contract. They could help someone get below the luxury tax. They only have a few days to work with, but the Celtics not only picked up three draft picks (and the right to swap another) to build the future, they also made themselves real players in next year's free agent super class, if they want to be one.

 

Maybe we can win the 2011 championship!