The Financial Ramifications of Trading Marcus Camby

The last angle of the Marcus Camby trade we have yet to pursue is what kind of difference does the removal of his salary make for the Nuggets payroll?

Even without the $10 million that was slated to go to Camby this year the Nuggets are still one of the highest paid teams in the NBA.  As of now according to Hoops Hype salary information the Nuggets have over $68 million in salary committed for the 2008-2009 season which still puts them in the top ten for team salary.

That number will increase as they will likely sign J.R. Smith to an extension and they still have to add at least four more players to reach the minimum roster requirement of 13.

When you take those things into account they will be looking at a team salary of around $73-$75 million depending on what the starting salary on J.R.’s new contract will be.  Even after letting go of Eduardo Najera and the Camby trade the Nuggets are still set to be a tax paying team.

(If I could quickly explore a tangent the luxury tax is based on your team salary at the end of the season.  That means the Nuggets still have up until the trade deadline in February to shed more salary.  They will not be able to pull off a Camby like salary dump due to the fact that Memphis is the only team currently under the cap and they are clearly dedicated to being as cheap as possible for the near future so that option is not available.  They still can slash salary via trade though.  The NBA trade rules stipulate that the salaries exchanged in any trade between two capped out teams must be within 75% plus $100,000 of each other.  For example, the Nuggets could trade Allen Iverson’s expiring $20 million plus contract and bring back roughly only $15 million.  That is some significant savings.  To further tangentalize (I made up a word today, what did you do?) at this point my ideal trade for AI would be to package him with Steven Hunter to Cleveland in exchange for Wally Szczerbiak’s big expiring deal, Anderson Varejao and a small cap filler contract.  That would save the Nuggets over $4 million this year, likely get them below the luxury tax level and bring in another defensive oriented big man who loves to force game winning losing shots in NBA Finals elimination games.)

As we pointed out above no matter what the Nuggets do, they will still have a very high payroll for this season.  However, depending on what happens with Iverson, they will have the flexibility they spoke of following the Camby trade.

If Iverson is not traded this year and his contract expires the Nuggets will be able to shed another $20 some million off of their payroll for the offseason of 2009.  The Nuggets have three big contracts on the books for the 2009-2010 season.  Carmelo Anthony, Kenyon Martin and Nene will chew up over $40 million in guaranteed payroll.  You can add to that Steven Hunter’s nearly $4 million salary and whatever the second year of J.R. Smith’s contract is worth.  Probably in the $6 to $8 million range and they have suddenly approached or surpassed $50 million.  Kleiza will be an unrestricted free agent next year and he will be looking for an extension just like J.R. is this season.  However, his qualifying offer is set to be $2.7 million so he will be on the books for at least that much.  Hoops Hype shows that Chucky Atkins contract expires after next season, but I have read in too many places that it is a three year deal to know that for sure.  That is (perhaps) another $3 million on the books.  Even without Atkins at this point they have six players under contract for $53 to $55 million next season.  There are also cap holds that every team must carry until they sign a player to fill their minimum roster slots.  I do not know for sure what those minimum cap holds are, nor do I feel like looking them up right now, but it is safe to assume they are at least $500,000.  Add $3.5 million in cap holds to that $53 to $55 million and the Nuggets are right up against the cap.  Even if they manage to ship off Steven Hunter for an expiring contract in the next 11 months they will still only have $5 or $6 million in cap space.

Financially that is the best case scenario and it requires to allow AI to walk for nothing.  If they trade AI or do what at this point is unthinkable and extend him that is even more money on the books for next season.  If they trade him and being back $15 million in contract obligations that extend to 2009-2010 they will be sitting right around $70 million again.  If they extend him for say $10 million a season they will be in the mid $60’s.  Even in my “ideal AI trade scenario” from above the Nuggets will be bringing in Varejao who will be looking at a minimum salary of over $6 million for 2009-2010 and that will make sure the Nuggets are into the low $60’s. 

What is the point of all of this?

First of all, look for the Nuggets to make more trades in an attempt to cut more salary so they are not a tax paying team this season.

Secondly, and most importantly, I wanted to look at their salary structure for 2009-2010 in an attempt to determine what the chances are that they will use all or part of their $10 million trade exception.

It has been my argument that the Nuggets will indeed use that trade exception, even though many teams allow their exceptions to expire (as Golden State did last month).  I know that Stan Kronke wants to put a winner out on the court and I think they see the chance to really alter the Nuggets roster, while maintaining the talented young core, and come out with a potentially contending team for 2009-2010.  They cannot do that without using the trade exception and by looking at their salary structure unless they do something stupid, which is always a solid possibility, they should be in a position, depending on what they do with AI, to use it next offseason. 

Keep in mind, they do not have to use the entire exception to acquire a good player.  They could bring in a Tyrus Thomas, Anderson Varejao, Shane Battier, Udonis Haslem, Mo Williams or Leandro Barbosa by using only a portion of the trade exception. The Nuggets could also be players in sign and trade deals for any of the 2009 free agent class.

Unless the Nuggets trade AI and bring back a bunch of long term contracts (which would be completely against the direction they have set with the Camby deal) I believe the Nuggets will be far below the luxury tax line in the summer of 2009.  If there is a player they believe will help their team Kronke will certainly give the go ahead to use however much of that exception they need to use whether it be for a player making $4 million or $10 million.

Over the next two years the Nuggets have a great chance at getting healthy financially while remaining a talented competitive team.  There may be plenty of pitfalls ahead of them to avoid, and there is certainly no guarantee that the Nuggets management will successfully maneuver through them, but like Lloyd Christmas, at least we have a chance.

Of course if Mark Warkentien (how come I can spell Nikoloz Tskitishvili in my sleep, but I always have to look up Warkentien to make sure I spelled it right?  Dang you Skita!) follows the tradition laid out before him by general managers such as Issel and Vandeweghe they will sign J.R. Smith to a six year, $65 million deal and all of this discussion will have been for naught.

Like I said, plent of potential pitfalls ahead.