Tuesday, June 17, 2014

Can the Knicks Sign-and-Trade Carmelo Anthony to Houston?

A sign-and-trade for Anthony is complicated. (ballslife.com)
Now that the NBA finals are (mercifully) over, it's time to look ahead to the NBA offseason. New York Knicks fans have been looking ahead for two months now, knowing that star forward Carmelo Anthony can opt out of the final year of his contract and become a free agent.

New Knicks president Phil Jackson has given Anthony until June 23 to make his decision, and all signs point to Anthony opting out rather than staying for his final year, valued at $23.33 million against the cap. Even if he decides he wants to stay in the Big Apple, opting out will land him a longer contract with more job security.

The two early frontrunners for Anthony's services appear to be the Houston Rockets and the Chicago Bulls. The Rockets have both Dwight Howard and James Harden signed to big contracts, but are lacking a third star to complete their version of the "Big Three." Backup center Omer Asik and former Knicks point guard Jeremy Lin have expiring contracts that will pay them just under $15 million total (only $8.37 million against the cap), which could intrigue the Knicks.

The Bulls, on the other hand, have just one player (Derrick Rose) making over $12.2 million for the 2014-15 season. Forward Carlos Boozer is set to make $16.8 million, but could be a victim of the amnesty clause to unload his expiring deal. That contract could also be of interest to a Knicks team looking ahead to the 2015-16 season, when they will have only $13.4 million allocated against their salary cap.

Pulling off a sign-and-trade with Houston could be tricky, as the new NBA collective bargaining agreement prevents teams from acquiring a player via sign-and-trade if they are above the luxury tax "apron," a fancy way of saying that a team more than $4 million over the luxury tax cannot acquire a player via sign-and-trade. The NBA luxury tax is projected to rise to $77 million this season, meaning the "apron" would be $81 million.

As of right now, the Rockets fall just under $64 million in 2014-15 salaries. Taking on Anthony's $23.33 million and shedding either Lin or Asik's $8.37 million would put the Rockets at about $79 million of payroll for next season, about $2 million under the apron. While this is doable for Houston, the $81 million would become a hard cap of sorts, according to ESPN and Basketball Insider's Larry Coon:
"Starting in 2013-14 if a team acquires a player in a sign-and-trade, the apron -- the point $4 million above the tax line -- effectively becomes a hard cap for the remainder of that season." (via CBA FAQ)
This trade would limit Houston's cap flexibility, but is certainly doable. The only remaining question is what additional compensation the Knicks would receive besides an expiring contract. The Rockets have all of their future draft picks intact and New York should request multiple first-round picks, the earliest of which they can get being 2014 and 2016, thanks to the Ted Stepien Rule prohibiting picks from being dealt in back-to-back years.

So is the combination of Jeremy Lin or Omer Asik along with the 25th overall pick in 2014 and a (likely) non-lottery pick in 2016 enough for Anthony? I say no, especially considering what the Knicks gave up to get him from Denver in a similarly-leveraged situation in 2011. Enter Chandler Parsons.

A 2011 second-round pick out of Florida, Parsons set career-highs in minutes (37.6), points (16.6), rebounds (5.5) and assists (4.0) last season. As the stats bear out, Parsons is a well-rounded player who also uses his height (6-9) and long arms to play above-average defense in addition to his offensive skills. In Jackson and coach Derek Fisher's new triangle offense, he would be an ideal fit in the "point forward" role where Scottie Pippen and Lamar Odom have thrived in the past.

Houston will reportedly decline Parsons' team option this summer, which will make him a restricted free agent. Since he met the contract criteria to be considered a starter, he would then count for $2.87 million against the cap. Declining his option gives the Rockets the ability to match any offer that comes in for Parsons but, if he receives an offer sheet from another team that the Rockets match, he will become ineligible to be traded, according to Coon.
"To qualify for a sign-and-trade, all of the following must be true:
  • The player must re-sign with his prior team -- a team cannot include another team's free agent in a sign-and-trade.
  • The player must finish the preceding season with that team (deals are no longer allowed that sign-and-trade players who are out of the league, such as the sign-and-trade that sent Keith Van Horn from Dallas to New Jersey as part of the Jason Kidd trade in 2008).
  • The player cannot be a restricted free agent who has signed an offer sheet with another team (see question number 44).
  • Starting in 2013-14, the team receiving the player cannot be above the "apron" ($4 million above the tax level) after the trade1, 2. A team above the apron can receive a player in a sign-and-trade if the trade reduces the team's payroll and the team finishes the trade below the apron.
  • Starting in 2013-14, the team cannot receive a player in a sign-and-trade if they have used the Taxpayer Mid-Level exception (see question number 25) that season.1
  • The trade must be completed prior to the first game of the regular season (sign-and-trades are not allowed once the season begins).
  • The player cannot be signed using the Non-Taxpayer Mid-Level exception, the Taxpayer Mid-Level exception, or any exception that cannot be used to offer a three-year contract (see question number 25)." (via CBA FAQ)
This is another complication in a potential Knicks-Rockets trade, which would have to be completed before Parsons receives an offer sheet from another team. If Parsons was signed to a new contract, the Knicks would be ineligible to receive him back, since the trade would not get them under the tax apron, as is required for a team who is acquiring a newly-signed player.

That is the key here. This L.A. Times article from 2013 discusses the Lakers' situation with Dwight Howard when they were above the apron. As it states:
"The Lakers are legally permitted to sign and trade Howard to another team. It's the acquiring of a player that is banned for teams above the tax apron. As an example of the distinction, the Lakers can technically sign and trade Howard to the Hawks for Al Horford (who is under contract) but not for Josh Smith, in a dual sign and trade."
If Parsons got a new deal, it would be considered a dual sign and trade which is not possible with the Knicks' roster, which will be worth over $92 million against the 2014-15 cap. They would need to shed over $10 million to get below the apron, which would become a hard cap for them upon completing a sign-and-trade as well. The combination of Parsons and Lin/Asik would save the Knicks over $12 million under the cap, and get them just below the apron.

Based on the new CBA, it looks like there is one way for the Knicks and Rockets to work out a sign-and-trade involving Parsons. It would need to get done before he is eligible to receive an offer sheet on July 1. The money would work out and, while the Knicks would owe either Lin or Asik an extra $6 million as part of the poison pill provision that got Lin to Houston in the first place, that should be a small price to pay to get something back for a player who seems ready to leave.

If a deal didn't work out with Houston, the Bulls are far below the apron as well with just $66.5 million counting against their 2014-15 cap. With two first-round picks in this year's draft, the Bulls could trade the same picks (2014 and 2016) as the Rockets, along with Boozer's contract. The Knicks would likely also want a young piece, like shooting guard Jimmy Butler, who makes just over $2 million in 2014-15.

New York would be over the apron in this case by about $6.5 million, which I don't believe is an issue since they aren't receiving a newly-signed player. If it were a problem, they could always throw in a few contracts. J.R. Smith makes almost $6 million and Raymond Felton almost $3.8, or the Knicks could eschew adding Butler to the trade as well. It's questionable whether the Bulls would even trade Butler at all, as they have high hopes for the former second-round pick.

It's certainly possible the Bulls may deal Butler to get Anthony, but the Knicks would prefer a trade that included Parsons, who doesn't fit in Houston's long-term plans if they acquire Anthony. They wouldn't have to give up any extra assets and Parsons' fit in the triangle would be exquisite. Much remains to be seen in this case but as you can see, things are much more complicated than they were under the old CBA.

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