Deals: Byron Mullens & future 2nd to PHI for conditional 2nd....Jamison and cash to ATL for draft rights to Cenk Akoyl.— Dan Woike (@DanWoikeSports) February 20, 2014
Hawks' Thought Process
From the Hawks' perspective, this deal can add on at most $286,095 (=55/170*$884,293) in payroll. This is Antawn's guaranteed salary for the rest of the year. There is a difference between payroll and Team Salary. The former refers to actual cash exchange while the other is defined by the CBA and used to calculate Cap space and Luxury Tax. Atlanta did not have Cap Space before the deal, so Team Salary is of little importance to the Hawks.
A buyout of Antawn's contract could vary between $0 and $286,095 in payroll costs for the Hawks. Their Team Salary will be the same regardless of the agreed upon buyout. Nevertheless, this is a real cost to the operations of the Hawks and business do not like costs.
Given that the Hawks are taking on a cost, the cash considerations they received must have been for at least the expected cost of the buyout. If not, then the Hawks would have declined the trade. Why would you accept a losing proposition?
From the Clippers' perspective, removing Antawn saves them from Luxury Tax payments. The Luxury Tax on Antawn's contract would have been $1,326,439 (=150%*$884,293). That is a real cost the Clippers now avoid as they would have had to pay that at the end of the year if not for this trade. They also avoid paying the remaining $286,095 on Antawn's contract. So the Clippers would be willing to pay up to $1,612,534 in cash considerations for this trade, because that is how much Antawn's contract cost at the time. This is well within the acceptable range for the Clippers. For this season, a team is permitted to send away up to $3,200,000 in cash considerations as part of a trade.
To further explain the difference in payroll and Team Salary, the Clippers have paid Antawn Jamison for each day he was under contract with the team. Up to the trade deadline, this means that the Clippers had Antawn Jamison for 115 out of the 170 days of the regular season. So they had paid 115/170 of his minimum salary contract, which would be $598,199. But in terms of calculating Team Salary at the end of the year, Antawn Jamison's contract will not be reflected on the Clippers' Team Salary. The contract will be shown on Atlanta's Team Salary. Team Salary does not reflect actual payments and Team Salary is used to calculate the Luxury Tax. This distinction is what helps explain why this deal generates positive profits for both the Hawks and the Clippers.
Matching Both Team's Wants
To finish, the buyout cost for the Hawks could range between $0 and $286,095. The cash considerations from the Clippers could be up to $1,612,534. And at the end of the day, this deal could have netted the Hawks up to $1,612,534 in real money while also saving the Clippers. And that, my friends, is why the Hawks made this trade. Because you do not turn away free money.
1. For the sake of simplicity, I will assume that the draft rights to Cenk Akyol are worthless. But if you think those rights are important, then add that expected value onto the cash considerations the Clippers gave the Hawks at the end of this post.↩