A Way to Sign-and-Trade Artest for Ariza That Actually Works

In response to several questions from Rockets fans asking why the team doesn't simply do a sign-and-trade of Ron Artest for Trevor Ariza with the Lakers, Jonathan Feigen has (correctly) mentioned that such a deal would be difficult given the base-year compensation issues with Ariza's new contract. The following is a proposal that, if (a) Les Alexander is willing to spend the extra money and (b) that trade/money is worth the Lakers' while, could allow the Rockets to acquire Trevor Ariza and still have its entire MLE to use in free agency.

For those who don't know what "base-year compensation" (or BYC) is, the simple explanation is this: When a player re-signs to a new contract with his team that pays him a salary increase of more than 20%, he cannot be used in a trade at his new salary amount for about a year. Instead, during this time, the player's team can only count that player's outgoing trade value at the GREATER of (i) that player's prior salary or (ii) 50% of the player's new salary. Unfortunately, the team to which the player is traded must fully count the player's new salary for its incoming trade value. This makes trades very difficult, especially if both teams are over the cap and must comply with the "125% + $100k" rule. For a more detailed discussion of base-year compensation issues, refer to Larry Coon's FAQ:

http://members.cox.net/lmcoon/salarycap.htm#Q73

Trevor Ariza is set to make at least the full MLE amount next season, expected to be about the same as last year's MLE amount of $5.585M. Last year, Ariza made $3.1M. Since his new salary is going to constitute more than a 20% raise over his 2008-09 salary, if the Lakers were to do any sort of sign-and-trade of Ariza, he would be a BYC player. This means that the Lakers could only count Ariza in a trade at the greater of $3.1M or 50% of his new salary. If they were to S&T him for an amount equal to the full MLE, then this figure would be $3.1M. But the team to which Ariza is traded must count the full $5.585M as incoming salary. Hence, Feigen's point about a sign-and-trade of Ariza being difficult to accomplish.

With that in mind, here is one proposed Artest-for-Ariza sign-and-trade that actually works under the salary cap and might make some sense to both teams:

Ron Artest and Brian Cook
for
Trevor Ariza, Adam Morrison and D.J. Mbenga

There are four parties involved in this deal that would all have to agree:

RON ARTEST: This deal would allow Artest to sign a larger contract. Based on a proposed three-year deal starting at $5.585M, Artest is due to receive approximately $18.13M over the life of his Lakers contract. However, if a sign-and-trade can be worked out, the Rockets could instead sign Artest to the exact same starting salary, but (due to the fact that the Rockets can offer Artest 10.5% annual raises instead of the 8% annual raises under the MLE) the total contract value would be $18.58M. Sure, that ~$450,000 difference doesn't seem like much, but Artest might not think so. Also, under this trade proposal, the Rockets could sign-and-trade Artest to a starting salary as high as ~$8.25M. Over 3 years, with raises, that comes out to a $27.42M contract. Artest and his agent might not sneeze at that amount.

TREVOR ARIZA: This deal would allow Ariza to likewise sign a larger contract. Based on a proposed five-year deal starting at $5.585M, Ariza is due to receive approximately $32.76M over the life of his Rockets contract. However, if a sign-and-trade can be worked out, the Lakers could instead sign Ariza to the exact same starting salary, but (due to the 10.5% annual raises) the total contract value would be $34.44M. That's another almost $1.7M in Ariza's pocket (and, in part, in his agent's pocket). And with this trade, Ariza could technically sign a Lakers contract as large as 6 years, $66.93M. Of course, the Rockets would never do that, but you get the idea that Ariza could make more money on a contract this way.

LOS ANGELES LAKERS: This deal probably helps the Lakers the least of all parties concerned. It was unlikely that the Lakers would need to tap into their MLE going into the offseason. However, this trade does allow the Lakers to dump Adam Morrison's pathetic $5.26M in dead weight in exchange for the lesser $3.5M in dead weight that is Brian Cook. Plus, the team has little use for Mbenga and his $960k salary. Assuming that the Rockets sign-and-trade Artest at exactly the same starting salary as the MLE amount, then the Lakers save about $2.72M in team salary (which means, after luxury tax implications, a total savings of $5.44M). Maybe the Rockets also throw in some cash to sweeten the deal, since they'd need this trade more than the Lakers. Also, getting back the MLE would give the Lakers some added flexibility on the off chance that they lose Lamar Odom to another team. It also allows them to sign 1-2 quality bench players using a portion of the MLE or to possibly sign Chinemelu Elonu (their second round pick) to a 3-year deal with a team option on the third year. Elonu is a young center and is a cheaper replacement for Mbenga.

HOUSTON ROCKETS: This deal would most greatly benefit the Rockets, assuming that Les Alexander is ready to pay up . . . big time. Doing the sign-and-trade deal would completely open up the MLE for the Rockets to use on a center and perhaps to re-sign Von Wafer. It would also give them flexiblity to sign Jermaine Taylor and/or Chase Budinger to 3-year deals (team options on third year). But there would be a price. As mentioned before, he would be paying Ariza a larger salary. Maybe not much larger, but larger nonetheless. Also, the Rockets would be paying Adam Morrison $5.26M to sit at the end of the bench and let people look at his 'stache. (Who knows? Maybe he could contribute to the Rockets next season, but I wouldn't be holding my breath.) The team also gets Mbenga as a moderately competent 7-footer who can block shots and rebound. The biggest downside to this deal is that, if the Rockets end up using most of the MLE, it will cut into the team's 2010 cap space. But this would be totally within the Rockets' control, and they could still use the MLE on one-year deals to preserve that cap space.


Bottom line: This trade could benefit all parties involved. I could see it working especially if Artest and Ariza agree to the same starting salaries to which they had previously verbally committed; however, my fear is that opening up this avenue will be too tempting for the agents to start demanding too large a salary increase. But assuming they'll play ball (heck, they still make more money and their new teams aren't giving anything else of value in the trade), and assuming that Les is willing to dole out the cash to make this happen, then the Rockets could once again become players in the free agent market.

 

That's why G-d created agents . . . and Ron Artest's petulance.

With Yao Ming's latest injury, I don't see why Jerry Buss would be too threatened by the Houston Rockets as competitors for the title during the Lakers' current run. Objectively speaking, especially when factoring in how much he's going to have to pay to keep Odom, it makes a ton of sense for Buss to do this deal. We're talking about up to $8M in savings next year in a down economy.

Les, get on the phone with Jerry Buss and talk some sense into him.

 

Perhaps this blurb from the New York Post might change things:

http://www.nypost.com/seven/07042009/sports/knicks/david_may_lee_ve_the_big_apple_177540.htm

 

Teams cannot "back out" of a S&T and trick the player into staying. The contract itself contains a provision requiring the trade to be completed.

 

If the reports are true that the Lakers are interested in acquiring Nate Robinson, then LA all of a sudden has some incentive to want to have its MLE available once again.

The Rockets DEFINITELY want to have their MLE to use. Sure, they're over the luxury tax as it is. But Morey doesn't need to use all of it. Just having that flexibility gives the team additional options. For instance, the MLE could be split and used to acquire Zaza Pachulia, re-sign Von Wafer, and sign Jermaine Taylor and/or Chase Budinger to three-year deals (team option on third year) instead of the maximum two-year deals otherwise permitted under the CBA.

The Lakers wouldn't be throwing any additional consideration the Rockets' way here. I think the Rockets need their MLE back more than the Lakers do. But, again, the Nate Robinson rumors may lend some credence to the notion that, when push came to shove, the Lakers would be willing to think twice about refusing a S&T.