The dreaded BYC and BBD/Green S&T Scenarios

[LooseCannon]

Some people are proposing trade ideas that revolve around a Glen Davis sign-and-trade.  I find it a bit ridiculous to believe that any team covets Big Baby enough to want to do a sign-and-trade for his services (assuming sign-and-trades are even possible in the next CBA...another reason why I find all this armchair GM trade wankery so ridiculous).

Here are some suggestions I have seen:

BBD S&T to Charlotte for Tyrus Thomas ($7.3 million in 2011-2012)
BBD S&T and Jermaine O'Neal ($6.23 million) for Rip Hamilton ($12.5 million) and Ben Wallace ($2.25 million)
BBD S&T, Rondo ($10 million), and the Clippers pick for Steve Nash ($11.7 million), Marcin Gortat ($6.8 million), and a second round pick, with a third team somehow involved to help salaries match.

But even if Davis is somehow a widely coveted free agent, a sign-and-trade deal offers problems due to base year compensation rules.

As Larry Coon states in [urlhttp://members.cox.net/lmcoon/salarycap.htm#Q76]his NBA Salary Cap FAQ[/url]:

Base year compensation (BYC) prevents another salary cap loophole. Without BYC, a team over the salary cap that wants to trade a player, but can't because of the Traded Player exception (which says teams can't take back more than 125% of the salary they trade away), could just sign the player to a new contract that fits within the desired range, then do the trade. BYC says "if you re-sign a player and give him a big raise, then for a period of time his trade value will be lower than his actual salary."

Translation: Even though Boston has BBD's Bird rights, it can't just sign him to whatever amount makes a trade work.

In 2010-2011, Glen Davis made $3.3 million.  A 20% raise would be to $3.96 million.  In the summer of 2010, the MLE was $5.765 million.  Let's say that, if the CBA continued the same way, it would be about $6 million, a nice, easy round number to work with.  And a sign-and-trade usually involves a salary more than the MLE.  If it didn't, a team that wanted Big Baby would just sign him using the exception.  Most posters proposing trades seems to assume Davis would get at least that much.

So, we can assume that BBD would get a raise to at least $6 million in most S&T scenarios.  If it is more than $3.96 million, BYC matters, and I have shown that it likely will.  If his first-year salary is $6 million, then his base year compensation is $3.3 million (since it is more than half of $6 million).  The Celtics would be able to bring back no more than $100k + 125% of $3.3 million, or $4.225 million in salary.  If the other team sent out $4.225 million in salary, then it could bring back no more than $5.38 million in salary, which is less than the $6 million Davis would be pulling in.  The more you pay Davis, the wider the gulf.

The way around this usually involves adding more players to the deal so that the difference between BYC and actual salary is a smaller percentage of the salaries involved or having a third team renting out its cap space or a traded player exception in exchange for compensation.  Thus, a sign-and-trade involving Glen Davis is probably not a likely avenue for improvement in the off-season because of BYC.  I was originally going to write this up as one reason why a S&T with Krstic (who would be more likely to sign a contract for an amount without BYC complications) was a better idea than a S&T with Davis, but Krstic has apparently scampered off to Russia.

These problems also exist if you give Jeff Green a big raise over the $4.46 million he received this past season in a sign-and-trade.

The bottom line is that, even if it wasn't silly to talk about sign-and-trades without knowing what is possible under the next CBA, this is probably not a method of improving the team due to base year compensations rules. It's not impossible, but it probably requires moving one (or more) of the Big Four, and I just don't see that happening.  Either that or I am reading the rules wrong.

[Spilling Green Dye]

Good points, until you got to the MLE...

Glen Davis is not getting the MLE or anywhere near $6million / year.  Also, the new CBA will likely lower player salaries.. especially the guys towards the bottom of the payroll. 

[PortCelt]

Good points, until you got to the MLE...

Glen Davis is not getting the MLE or anywhere near $6million / year.  Also, the new CBA will likely lower player salaries.. especially the guys towards the bottom of the payroll. 

That may only be related to max. contracts. For instance if the max. salary rate is 30% of the cap it may be lowered to 25%. Either way you're probably right about salaries skewing lower even for MLE. Maybe the league will make that adjustment, eliminate the LLE and have two MLE's? It may be a cause and effect of creating a bigger middle class, but it's up for debate and you're spot on about Davis being overvalued, but he may go for $5m/.

Would you guys consider Davis (S/T) + $475K (TPE: Erden or Gody) for Mayo? Or Davis straight up for Landry in a s/t for both teams?

[LooseCannon]

Good points, until you got to the MLE...

Glen Davis is not getting the MLE or anywhere near $6million / year.  Also, the new CBA will likely lower player salaries.. especially the guys towards the bottom of the payroll. 

If someone doesn't want to pay Davis that much, then a team is not likely to bother with a S&T to get him.

[BballTim]

Good points, until you got to the MLE...

Glen Davis is not getting the MLE or anywhere near $6million / year.  Also, the new CBA will likely lower player salaries.. especially the guys towards the bottom of the payroll. 

If someone doesn't want to pay Davis that much, then a team is not likely to bother with a S&T to get him.

  It depends on what the new CBA looks like. What if a team wanted to bring in a MLE player and Davis?

[PortCelt]

Good points, until you got to the MLE...

Glen Davis is not getting the MLE or anywhere near $6million / year.  Also, the new CBA will likely lower player salaries.. especially the guys towards the bottom of the payroll. 

If someone doesn't want to pay Davis that much, then a team is not likely to bother with a S&T to get him.

Then by default they may resign him if the market determines his value falls under the MLE.

Unrestricted FA - Glen Davis, Earl Clark, Shane Battier, Kenyon Martin, Josh McRoberts, Leon Powe, Hilton Armstrong, Ethan Thomas, Kurt Thomas, Josh Powell, Troy Murphy, Brian Cardinal, Reggie Evans & Ryan Hollins, Boris Diaw (Player Option)

I would rank him third behind K.Mart and Battier. Still, the first year of the MLE is under $6m, and I doubt the new CBA will kick in immediately. I understand you're process, but not wild over the trade proposals. In fact, if he's worth in upwards of $6m+ package him with JG, QUIS (TPE), Bradley and cash for J. Smith. I'm just sayin'.

[CelticG1]

Good points, until you got to the MLE...

Glen Davis is not getting the MLE or anywhere near $6million / year.  Also, the new CBA will likely lower player salaries.. especially the guys towards the bottom of the payroll. 

If someone doesn't want to pay Davis that much, then a team is not likely to bother with a S&T to get him.

I don't think Baby is going to be raking in the dough but I don't think it is unrealistic for him to get the MLE or "anywhere near 6 mill". If you've only seen Baby play the last month of this season and the playoffs than maybe he won't get that much otherwise I think that number is fine for him. I don't necessarily want him at the price but I think it is decent value and wouldn't consider that overpaying him

[LooseCannon]

Would you guys consider Davis (S/T) + $475K (TPE: Erden or Gody) for Mayo? Or Davis straight up for Landry in a s/t for both teams?

My point is that these deals are probably not permissible under current rules due to base year compensation.  I'm pretty sure the first one isn't.  The second would be allowed if you were paying both players something like $3-4 million.

[nickagneta]

Some people are proposing trade ideas that revolve around a Glen Davis sign-and-trade.  I find it a bit ridiculous to believe that any team covets Big Baby enough to want to do a sign-and-trade for his services (assuming sign-and-trades are even possible in the next CBA...another reason why I find all this armchair GM trade wankery so ridiculous).

Here are some suggestions I have seen:

BBD S&T to Charlotte for Tyrus Thomas ($7.3 million in 2011-2012)
BBD S&T and Jermaine O'Neal ($6.23 million) for Rip Hamilton ($12.5 million) and Ben Wallace ($2.25 million)
BBD S&T, Rondo ($10 million), and the Clippers pick for Steve Nash ($11.7 million), Marcin Gortat ($6.8 million), and a second round pick, with a third team somehow involved to help salaries match.

But even if Davis is somehow a widely coveted free agent, a sign-and-trade deal offers problems due to base year compensation rules.

As Larry Coon states in [urlhttp://members.cox.net/lmcoon/salarycap.htm#Q76]his NBA Salary Cap FAQ[/url]:

Base year compensation (BYC) prevents another salary cap loophole. Without BYC, a team over the salary cap that wants to trade a player, but can't because of the Traded Player exception (which says teams can't take back more than 125% of the salary they trade away), could just sign the player to a new contract that fits within the desired range, then do the trade. BYC says "if you re-sign a player and give him a big raise, then for a period of time his trade value will be lower than his actual salary."

Translation: Even though Boston has BBD's Bird rights, it can't just sign him to whatever amount makes a trade work.

In 2010-2011, Glen Davis made $3.3 million.  A 20% raise would be to $3.96 million.  In the summer of 2010, the MLE was $5.765 million.  Let's say that, if the CBA continued the same way, it would be about $6 million, a nice, easy round number to work with.  And a sign-and-trade usually involves a salary more than the MLE.  If it didn't, a team that wanted Big Baby would just sign him using the exception.  Most posters proposing trades seems to assume Davis would get at least that much.

So, we can assume that BBD would get a raise to at least $6 million in most S&T scenarios.  If it is more than $3.96 million, BYC matters, and I have shown that it likely will.  If his first-year salary is $6 million, then his base year compensation is $3.3 million (since it is more than half of $6 million).  The Celtics would be able to bring back no more than $100k + 125% of $3.3 million, or $4.225 million in salary.  If the other team sent out $4.225 million in salary, then it could bring back no more than $5.38 million in salary, which is less than the $6 million Davis would be pulling in.  The more you pay Davis, the wider the gulf.

The way around this usually involves adding more players to the deal so that the difference between BYC and actual salary is a smaller percentage of the salaries involved or having a third team renting out its cap space or a traded player exception in exchange for compensation.  Thus, a sign-and-trade involving Glen Davis is probably not a likely avenue for improvement in the off-season because of BYC.  I was originally going to write this up as one reason why a S&T with Krstic (who would be more likely to sign a contract for an amount without BYC complications) was a better idea than a S&T with Davis, but Krstic has apparently scampered off to Russia.

These problems also exist if you give Jeff Green a big raise over the $4.46 million he received this past season in a sign-and-trade.

The bottom line is that, even if it wasn't silly to talk about sign-and-trades without knowing what is possible under the next CBA, this is probably not a method of improving the team due to base year compensations rules. It's not impossible, but it probably requires moving one (or more) of the Big Four, and I just don't see that happening.  Either that or I am reading the rules wrong.

I am pretty sure you have completely misconstrued the BYC and what the C's can sign Big Baby for.

We own his Bird rights which means when he becomes a free agent we can sign him to whatever we want  to offer him without having to worry about the salary cap. The restrictions on how much we could sign him for only occur when extending a current contract, which, if he enters unrestricted free agency, we are not doing.

Base Year Compensation has more to do with trying to trade a player that is in a first year of a contract or about to enter into a contract extension with a major raise and using half his his year salary as an outgoing salary representation when determining salaries during trades for teams that are both over the cap.

I think.

I could be all wrong on this but I am sure Roy H. could decipher this better than I.

[LooseCannon]

We own his Bird rights which means when he becomes a free agent we can sign him to whatever we want  to offer him without having to worry about the salary cap. The restrictions on how much we could sign him for only occur when extending a current contract, which, if he enters unrestricted free agency, we are not doing.

Base Year Compensation has more to do with trying to trade a player that is in a first year of a contract or about to enter into a contract extension with a major raise and using half his his year salary as an outgoing salary representation when determining salaries during trades for teams that are both over the cap.

The Celtics have Baby's Bird rights and can theoretically give him a big raise, but a sign-and-trade would involve trading him in the first year of his contract, so the trade would have to satisfy rules about base year compensation.  Signing Davis is ok.  Signing and trading him is a lot harder.

Now that I think about it, the difference between what the Celtics were paying Perkins and what he was likely to get in the free agent market was likely to make a S&T nigh impossible if Perk was being offered a contract that Ainge was unwilling to match.