The Risk and Reward of Salary Dumps

As NetsDaily posters have suggested, and Adrian Wojnarowski has confirmed, the Brooklyn Nets may very well seek salary dump trades this summer. In absorbing a large salary, Sean Marks would seek compensation —either a young player or a draft pick— for absorbing the financial burden, as Woj stated.

The methodology is similar to the Wizards deadline deal that sent a first round pick and Andrew Nicholson to the Nets. But therein lies the risk.

The summer of 2016 saw the salary cap jump from $70 to $94 million, with the NBA transitioning to a new national TV deal. Every team was flush with cap space. Free agency featured several huge deals, with many of us unaccustomed to the sheer volume of money thrown at free agents, not all of them stars, around the league.

$72 million for Joakim Noah? Sure.

$64 million for Timofey Mozgov? No problem.

$226 million for Evan Turner, Meyers Leonard, Allen Crabbe and Mo Harkless over four years? “My body is ready,” said Neil Olshey (not an actual quote.)

Basically, players got PAID.

Not even halfway through the season, buyer’s remorse arose with disappointing production. Many of the players signed last summer agreed to four-year deals. The contracts of Mozgov, Noah, Luol Deng and others are a horror to some, with compounding declines in production for large chunks of salary cap. (As I stated before, “I Know Who You Signed Last Summer” should be the NBA GM horror film. “Dawn of the Dead Money” could be another.)

After failed restricted free agency dalliances in 2016, the Nets preserved their cap space last summer —and through the season, signing veterans to short term deals. The Nets are projected to have the third most cap space in the NBA, behind only the 76ers and the Heat, per RealGM’s (and CelticsBlog’s and 16 Wins A Ring’s) Keith Smith. The final number will be dependent on the Nets’ decisions on the team options and guarantees this summer. Brooklyn is primed to sign free agents to big money, or acquire big contracts via trade.

Throughout his interviews with the media, Sean Marks preached patience and a systematic building of the Nets’ future. Marks frequently spoke of finding the right deal, not just for his current roster, but also in building a sustainable roster going forward. Acquiring a big contract could damage the Nets’ contract flexibility next season and beyond, even with the acquisition of high upside assets.

Specifically, here’s what he told beat writers at the end of the season.

“If you go after one of the top-tier guys, you obviously would hope to get him, but does that really make you better?” Marks asked. “Does it get you to 30 wins, 35 wins?

“You don’t want to go and sign free agents and then the next thing you know your payroll is capped out and you’re a 25-win team. We’re going to have to build this strategically, have patience with it.”

In talking about the Nets desire to dump salary for picks, Woj explicitly mentioned the Lakers 2016 veteran signings of Timofey Mozgov and Luol Deng as dump candidates.

The Portland Trailblazers’ trove of big contracts could be another. In fact, Keith Smith tweeted Tuesday night that Portland may be willing to dump one of its salaries in return for one of its three first round picks (at Nos. 15, 20 and 26).

Smith speculated that Allen Crabbe might be the bait. Portland, of course, matched on the Nets offer sheet tendered him last July 10.

For the record, the Blazers owe Crabbe $19.33 million next season and $18.5 million in 2018-19. He has a player option for $18.5 million in 2019-20 as well. Crabbe recently underwent foot surgery. Leonard and Harkless are owed about $33 million each over next three seasons. No options.

The contracts of Ian Mahinmi, Miles Plumlee, Joakim Noah (no thanks), and Raptors Jonas Valanciunas and DeMarre Carroll (both signed in 2015) could be other contracts teams would seek to deal to the Nets.

For example, if the Nets acquire Timofey Mozgov via trade with the Lakers, his contract would eat into the Nets’ cap room. Mozgov is slated to make $16 million per season until 2019-2020. That would slash the Nets’ max cap space of $34 million nearly in half. A maximum restricted free agent offer (currently slated at $25,250,000, per Keith Smith) would not be plausible for the Nets, unless another guaranteed contracts is moved for a smaller asset. While Mozgov’s season was decent for a sixth or seventh option in 2016-2017, his salary may have outweighed his production at age 30. The same could be said of Ian Mahinmi, Luol Deng, Chandler Parsons and others.

Looking to future offseasons, if the Nets decide to sign Rondae Hollis-Jefferson, Brook Lopez or others to extensions, the salary acquired from salary dumps could leave Sean Marks with difficult decisions. Extensions, paired with a dumped contract could possibly force the Nets into the luxury tax bracket. The Portland Trailblazers’ 2017-2018 payroll is an example, with Paul Allen possibly footing luxury tax payments for a team that barely made the playoffs.

One alternative, stretching an unwanted contract, would leave dead money on the payroll for years, as seen by Deron Williams’ buyout. Williams will be paid $5.47 million by the Nets through 2019-2020 – five seasons after his last game in Brooklyn. Every 1st and 15th of the month, he gets a check of more than $200,00 and will through July 1 of 2020.

And trying to trade away an albatross contract would involve the shedding of assets. That could be counterintuitive for the Nets, who have searched every avenue for talent. Keep in mind, one aspect of the dreaded Celtics trade was the absorption of the last three years of Gerald Wallace’s deal at $30 million, which cost the Nets a first round draft pick. Pair that with the pick used to acquire Wallace initially, and he cost two first round picks for 85 games. Sorry for that reminder.

The Brooklyn Nets are slowly building an arsenal of assets. Cap space may be the biggest asset, especially in the wake of a rising salary cap and teams filling their payrolls.

How that cap space is manipulated could play a major role in the Nets’ fortunes going forward. Brooklyn could acquire buzzworthy young assets to pair with the large contracts, but the financial burden may eat away at the Nets’ future flexibility.

The salary dumps of this summer could turn into the albatrosses of the future down the line. The Nets’ offseason is a “choose your own adventure” book of possibilities. Or is it poison?