http://offthedribble.blogs.nytimes.com/2009/10/21/how-a-creative-trade-can-benefit-both-parties/

How a Creative Trade Can Benefit Both Parties
By Larry Coon

This is the second of three posts by Larry Coon of NBA Salary Cap FAQ on the options for Donnie Walsh, the Knicks’ president, as he tries to create more salary-cap room for the 2010 free-agent class.


Center Eddy Curry will not be easy for the Knicks to move. One might say his cost-benefit ratio does not make him an attractive commodity. If Donnie Walsh, the Knicks’ president, wants to divest himself of Curry, he will have to be creative.

Curry has played in only 62 games the past two seasons because of injuries and conditioning issues. He is scheduled to earn $10.5 million in 2009-10, and — deadly to Walsh’s plans — $11.3 million in 2010-11. Curry possesses a player option that allows him to become a free agent after the 2009-10 season, but there is virtually no chance of that happening because it is very unlikely Curry would command as much as $11.3 million on the open market. Walsh therefore needs to make other plans if he wants to have Curry off his books next summer.

Walsh has preferred using trades to solve his problems rather than buying out players, and he will first try to find a willing trade partner. The ideal partner would have a player whose contract ends after this season, with a salary big enough to make a trade for Curry legal. Because other teams will not be jumping at the opportunity to land Curry, that other team would need a good reason to make this trade — and in this case, that reason would be financial. If the other team is a taxpayer (with a payroll of $69.92 million or higher this season), then every payroll dollar it cuts saves $2. By acquiring Curry, that team would effectively amortize an ending contract over two seasons, reducing its payroll and tax obligations this season.

The best fit for a trade partner appears to be the Houston Rockets. With the loss of Yao Ming, Houston will not be a contender, yet its $75.9 million payroll positions the Rockets squarely among the taxpaying teams. They have their own salary albatross in Tracy McGrady, who is due to make $22.5 million this season and has long battled knee problems. Yet his contract ends after this season, which makes him attractive — from a 2010 free-agent standpoint — to the Knicks.

According to the N.B.A.’s salary-cap rules, to acquire McGrady the Knicks would have to send out a little over $17.9 million in player salaries. Speaking strictly hypothetically, Curry plus Darko Milicic ($7.54 million this season) would be enough to make the trade legal. For the Knicks, McGrady would come off the books next July and leave Walsh with $36.0 million to $39.2 million in cap room — more than enough to sign two premier free agents. Houston would get two centers to try to plug in for Yao Ming. More important, the Rockets would cut a little more than $4.9 million from this season’s payroll, saving them over $9.8 million in combined salary and tax. They would also end up just $1.1 million over the tax threshold, which means that by shedding a little additional salary by the February trade deadline, they could be tax beneficiaries rather than payers.

Of course, it’s much easier to construct a hypothetical trade on paper than it is for general managers to do it in real life, and one has to think that if a trade like this were feasible, it might have been done already.