NBA: Breaking Down the Idea of Financial Flexibility

| by Hoops Addict

By Ben Fisher

So you’ve focused on adding assets for your NBA team that are more finance-based than relevant to on-court performance, picking up a trade exception here and an expiring contract there. Seems like a sound business plan – the trade exception should help land a marquee name for little in return, while the expiring contract could also be a hot commodity on the trade market – and it has worked in the past.

Just don’t expect it to be too effective this time.

It turns out that plenty of general managers had the above idea. As SI NBA blogger Zach Lowe points out in a recent post, the league currently features more existing significant trade exceptions and expiring deals than there are available players of quality who could be had for such financial flexibility.

This isn’t an ideal situation for teams that hold significant trade exceptions like the Cleveland Cavaliers, teams that control players with expiring contracts like the Milwaukee Bucks or, in the case of the Toronto Raptors, teams with both.

The Cavs are sitting on the $14.5 million trade exception gained from the Miami Heat in the LeBron James sign-and-trade, along with an additional $500,000+ exception gained from losing Delonte West. The Bucks can look ahead to a nice financial windfall once the oft-injured Michael Redd’s mega-deal ($18.3 million this season) comes off the books at the end of the year. The Raptors, meanwhile, boast most of their own $14.5 million exception from the Chris Bosh sign-and-trade and another $14 million from the expiring deal of newly acquired Peja Stojakovic.

While it’s never bad to have the kind of future flexibility that these financial assets provide, the advantages are more minimal than in the past. What was once distinct has now become commonplace – seven NBA teams hold trade exceptions set to expire within the next year worth at least $7 million, while a whopping 13 players have contracts of $11 million or more coming to an end this summer.

On the flip side, the list of potential star players that could be had for trade packages centred on what amounts to cap space is underwhelming.

Sure, Gilbert Arenas and his $126 million contract may be made available with little talent going the other way in return, but a ‘me-first’ point guard with character questions who hasn’t turned his Wizards into a contender is hardly a hot commodity, especially at that price. The 76ers could listen to offers for Andre Iguodala, but they could command a high price with so many cap relief-armed suitors, and it isn’t as though Iguodala has shown a penchant leading his team to the promise land, either.

The common theme among the previously mentioned financial tool-rich but talent-poor (except for maybe Milwaukee) clubs is that the momentum of the franchise doesn’t hinge on success this season.

The Bucks have much of their young core, including Brandon Jennings and Andrew Bogut, under their control for at least another two years. If they simply allow Redd’s deal to expire, they would be providing the cap space to re-sign defensive stopper Luc Mbah a Moute and have plenty left over to dig into a surprisingly deep free agent field.

Meanwhile, no one expects the jilted Cavs and Raptors have a contender-worthy foundation in place for a while, but if they simply allow their trade exceptions to expire, it’s a wasted asset. If, however, they use the trade exception and agree to take on a bad contract (such as Arenas), they could also stockpile draft picks to go along with the selections acquired in their respective dealings with the Heat.

Of course, the biggest domino which has yet to be discussed is the threat of a looming lockout, which only serves to further inspire teams to limit their spending instead of becoming enamoured by the possibility of a big name. While Cleveland and Toronto could prioritize the need for draft picks and young talent over penny pinching, most clubs would do well to save their funds and avoid a situation like the Heat – an 8-7 team with at least $65 million in salary commitments each year up to 2015-16.