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NBA AM: It Was All About Luxury Tax

The HEAT and Cavaliers will finalize trades today and they have to do with basketball… The Kevin Durant Watch may be anticlimactic.

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It’s About The Tax:  The Miami HEAT have agreed to send point guard Shabazz Napier to the Orlando Magic in exchange for a highly protected second round pick. That deal should become official today.

The Cleveland Cavaliers have reached a deal to send the non-guaranteed contract of Brendan Haywood along with swingman Mike Miller and two second-round picks to the Portland Trail Blazers in exchange for cash.

If you are scratching your head about the basketball logic of both moves, there is none. The deals were strictly about managing the salary cap and avoiding luxury tax.

The HEAT are going to be “repeater” luxury tax payers this year, a designation that almost doubles the taxation penalty on teams that have paid the tax in at least three of the four previous seasons. In Miami’s case, they are currently looking at being $11.23 million over the $84.740 million with a “repeater tax” bill of $30.57 million prior to completing the Napier trade. After the trade, the HEAT will save $1.294 million on Napier’s salary and $4.49 million in repeater tax savings for a total savings of $5.784 million.

The Cavaliers, on the other hand, had to complete a trade involving Haywood’s contract prior to August 1 as his deal becomes fully guaranteed on that date. The Cavs had explored numerous scenarios that would have returned a quality player, but found little interest in the Haywood contract – especially not for players the Cavs were interested in.

The deal with the Blazers achieves a couple of things for Cleveland: First, they were able to move Haywood and Miller into Portland’s cap space, turning both salaries into Traded Player Exceptions valid for one year. This allows Cleveland to preserve the value of both deals as future trade chips without consuming roster spots or incurring additional tax themselves.

After the trade is complete, the Cavaliers will have $87.484 million in guaranteed salaries and that’s not including restricted free agents Tristan Thompson and Matthew Dellavedova. That salary commitment puts the Cavaliers $2.744 million over the tax line and creates some breathing room to finalize deals with Thompson, Dellavedova and potentially guard J.R. Smith.

Portland is expected to immediately waive Haywood, who will seek a new team in free agency, while Miller is expected to receive a contract buyout for less than his $2.854 million salary and will also pursue a new team. Miller also received a $430,000 trade bonus from the Cavaliers, which is often called a Trade Kicker, that was written into his original contract in case a deal like this ever went down.

While neither the Cavaliers nor the HEAT got anything that helps their roster immediately in return for the players they are sending out, both teams gain the ability to add future salary via their respective Traded Player Exceptions.

The TPEs can be used at any point in the next year, so none of them have to be used this season, meaning they could be deferred to the NBA draft in June or into July depending on how both manage their cap holds.

While cap business is never sexy, given where both teams are in regards to luxury tax, these are the kinds of moves you have to make as a franchise when you are spending at the levels that the HEAT and Cavs are spending as the tax bill becomes not only excessive, but down right punitive.

Durant Watch?:  With the bulk of the 2015 NBA Free agents off the board, more and more teams are talking about next year, not just because of a ballooning salary cap that could have every team in the NBA possessing significant cap space, but because there could be some very big fish willing to listen to new situations. No free agent fish will be bigger than Oklahoma City Thunder forward Kevin Durant.

Durant’s potential free agency is a year away, but there are some teams that are planning for the opportunity to pitch their team and situation to Durant and the list of teams includes some of the usual suspects – the Los Angeles Lakers, New York Knicks and Dallas Mavericks. The Portland Trail Blazers are well positioned for a run at Durant as are the Washington Wizards – long rumored to be a situation Durant would strongly consider if he decides to leave the Thunder.

Sources close to the situation say that despite the pending opportunity to change, Durant does not seem overly interested in talking about next year; rather, his focus is on getting healthy and back to playing his style of basketball, something he’s been removed from for almost a year.

Another wrinkle in the equation is new Thunder head coach Billy Donovan. While some labeled the Donovan hire as a “life after Durant” move, it seems the match between Donovan and Durant is blossoming in an interesting way.

The two seem to be hitting it off, as Durant has spent a lot of time around Donovan and is beginning to understand how his new staff will manage the team and the roles that each player on the roster will play.

Durant was very close with former Thunder coach Scott Brooks and the change at head coach was not easy for Durant, but like all change Durant seems to be warming up to the new situation and is starting to understand the possibilities.

That bodes well for the Thunder.

From an organizational point of view, no one is trying to ignore Durant’s pending free agency, but at the same time there is a sense that a strong season and a chance to compete gives them the best shot at keeping Durant long-term, much more so than starting to panic or be overly reactive to a situation they do not control.

Sources close to the situation have been fairly emphatic that Durant simply doesn’t want to engage any conversations about next year and that’s absolutely fine with the Thunder. They understand that their best chance at re-signing Durant is to win and win big and talking about free agency won’t help them achieve that.

That’s not going to stop media outlets and insiders from speculating, but one thing is pretty clear: Durant isn’t going to talk about it and neither are the Thunder. Other teams may covet Durant next season and it’s very likely that he listens to pitches, but sources close to the process say any decision on free agency likely does not happen until after the upcoming season plays out and that gives the Thunder a chance to put their best foot forward. That’s why they made the moves they made this summer, feeling like they have as good a shot as anyone in the West if everyone is healthy.

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Steve Kyler is the Editor and Publisher of Basketball Insiders and has covered the NBA and basketball for the last 17 seasons.

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