Or, How I Came Up With a Plan to Spend Forty Million Dollars Of Someone Else’s Money.
The NBA’s trade deadline has passed, and it’s now officially buyout season. Despite a quiet Thursday, the Clippers did well for themselves–they were big winners in a trade for Norman Powell and Robert Covington that our 213Hoops staff graded quite highly, and they made a minor but necessary move to offload Serge Ibaka, bringing back Rodney Hood and Semi Ojeleye. Early indications from The Athletic’s Law Murray are that the Clippers plan to keep the two newcomers…
… but with all love and respect to Law, who does fantastic work covering the team at The Athletic, I’m skeptical. To be fair, it seems like Law is too:
I can’t claim to have inside knowledge of what LAC plans to do at the end of their roster in the next couple of weeks, but just based on the team’s situation common sense would appear to dictate that the Clippers would let both guys go to make room for a free agent point guard signing and a promotion to the 15-man roster for Amir Coffey. Both Hood and Ojeleye have had very poor seasons for Milwaukee, and both play at positions where LAC already has very strong depth. That said, there’s not necessarily a reason why the Clippers have to act immediately. They can wait to strike a deal with a point guard before clearing a roster spot for him, and there is no deadline on converting Coffey’s two-way contract–it just has to be done by the last day of the regular season in order for him to be eligible to play in postseason contests. For a Clippers team missing four players with long-term injuries, Hood and Ojeleye could give the team short-term garbage-time options to spare key rotation guys’ legs in blowouts in the coming weeks.
Really, though, the Clippers should priotize Coffey’s conversion as soon as possible. He’s substantially better than both Hood and Ojeleye and has gone far, far beyond earning a promotion to the full-time team. If the team just needs another garbage time body, they can sign another guy to a two-way contract to replace Amir once he’s on a full deal. Waiting until after the deadline to convert Amir made sense, as the Clippers needed their open roster spot to execute a deal like the one they made. Waiting longer doesn’t make much sense. Sometimes, doing the right thing really is the right thing. Reward Amir. It will be good for team morale and good for his relationship with the organization when it comes time to negotiate a longer-term deal with him this summer.
Once that’s handled, the Clippers’ last roster spot should go to a veteran point guard. There are a number of options, including Goran Dragic, who the Clippers are interested in but who is likely to sign with Dallas; D.J. Augustin, who was waived by Houston today; and Dennis Schröder, who is a likely buyout candidate after being traded to Houston today (those last two links go to the same article). Others could shake free, in addition to current free agents like Jeremy Lin and Jeff Teague, but as long as Dragic to Dallas is basically a done deal (the Clippers will know better than I do if they have a realistic shot at him), Augustin would be at the top of my list.
As a player, there isn’t a ton to rave about with D.J.–he’s a 5’11” 34-year-old who just got cut by one of the worst teams in basketball, and he hasn’t really impressed for a few years now. But he’s steady and experienced, and for a small (even part-time) role he likely has a high floor without much drama or maintenance. I don’t really think the Clippers need to get ambitious here with someone who will expect touches or minutes, just someone stable and competent to help keep the trains running on time for some second unit shifts in the next couple of months. D.J. is that guy.
I mentioned above that Augustin was already waived by Houston today as part of the Rockets needing to create roster space to facilitate their deadline deals, so as long as he clears waivers, the Clippers could move quickly to add him to their roster in the coming days. But what if instead of signing him once he cleared waivers, the Clippers placed a waiver claim for Augustin? To claim a waived contract, a team needs to be able to absorb the existing deal using either cap room, a salary cap exception, or a traded player exception. Augustin would fit into the $8.25M traded player exception the Clippers have from when they traded Rajon Rondo last off-season.
If you’re a long-time reader, please be aware that we are now entering The Lucas Zone. Listen, okay, I know, why would you willingly take on Augustin’s contract, which pays him $7,000,000, instead of simply getting him on a pro-rated minimum for the rest of the season. Frankly, it’s a painful pill for the Clippers to swallow when it comes to the luxury tax, but the true benefit comes in how Augustin’s deal is structured for next season. He’s set to make $7,333,333, but only $333,333 is guaranteed. That means that he can be traded on draft day for $7M worth of salary matching, and the team that receives him can cut him before July 1st and only have $333,333 in dead cap for next year.
Let me give you an example. Say the Clippers are interested in Malcolm Brogdon, who the Pacers couldn’t move at the deadline due to his recent contract extension but are likely to shop this summer after launching a rebuild. Brogdon makes $21.7M this season, so salary matching becomes difficult for the Clippers. Luke Kennard and Marcus Morris together would work, but why would the Pacers want Morris’ contract? Combining Kennard and Augustin would make the trade math work while still saving Indiana substantial money and allowing the Clippers to hold on to an overpaid veteran in Morris who has value in LA but none in Indiana. We can haggle about if Brogdon is the right guy and what combination of sweetener/picks the Clippers should or shouldn’t be willing to give up when we get there in June, but you get the point–Augustin’s 7M ghost contract for next season is a really useful tool in facilitating draft-day trades (less so in free agency because at that point he’d be a fully guaranteed one-year expiring and not offer the same immediate savings). Sometimes the best move you can make at the trade deadline is to hold on to your cards for the off-season, and turning Luke Kennard, a future 1st, and the claimed contract of Augustin into Brogdon would be an excellent example of that.
But these things come at a cost. The Clippers are deep in the NBA’s luxury tax, currently 29.4M over. I don’t like to get bogged down in luxury tax details because I’m not really ever interested in defending owners for saving money, but just for a quick run-through, the way the tax works is that once your team salary crosses a certain threshold ($145M), you pay a penalty to the NBA for every dollar over you go. That penalty is determined by a) whether or not you are a “repeater” (a team that is consistently over the luxury tax) and b) how far over the tax you are on an incremental scale. The Clippers, thanks to their lull between Lob City and acquiring Kawhi, won’t have to worry about the repeater rate for a while, but that doesn’t stop things from getting pricey. Here’s the incremental tax scale that Steve Ballmer is looking at for this season:
|Maximum Incremental Penalty
Right now, the Clippers are $29.4M over the luxury tax, which means their bill has all of the first five incremental maximums and the bulk of the 25-30 penalty too. That’s a lot of money, but it’s a big improvement over earlier in the day, when Serge Ibaka was still on the roster and the Clippers hadn’t yet cut $6.4M in salary by flipping him for two much cheaper players in Hood and Ojeleye. Claiming Augustin’s $7M deal on waivers would lift the Clippers right back up–and actually above–the threshold they were at this morning. In a second, we’ll compare the Clippers’ tax bills in these different scenarios, but first we need to account for the rest-of-season contracts the Clippers will sign guys to. Rest-of-season minimum deals are pro-rated daily, so while we won’t know the exact salary until we know the exact day someone puts pen to paper, just take my word for it that $500,000 is a reasonable placeholder. If the Clippers cut Ojeleye and Hood to sign Coffey and a point guard, that adds a million to team salary (there’s no tax penalty for the new two-way contract player that would take Amir’s current spot). If they were to claim Augustin, then it would only be one additional $500k rest-of-season deal.
|Cut Hood/Ojeleye, convert Coffey and sign one more min player
|Cut Hood/Ojeleye, claim Augustin, convert Coffey
Would Steve Ballmer pay $40M in extra team salary plus tax penalty this season just to have a useful contract to help facilitate a trade this summer, when the Clippers could otherwise just wait for Augustin to clear waivers and have the same player without that flexible contract? He’s never said no to spending before, but basically no owner in NBA history has ever had an appetite for this big of a price tag for that minor of an asset. We’re talking massive costs for marginal gains here, but as far as the on-court product is concerned, there’s no opportunity cost for the Clippers in terms of assets or flexibility. Claiming D.J. instead of signing him to a rest-of-season deal only opens doors for moves that could significantly help the team next summer, with no downside outside of dipping a little further into Ballmer’s fifty-billion-dollar fortune. I won’t blame Ballmer if they don’t go for it–he’ll still be the best owner in the NBA with the strongest stomach for paying whatever it takes to win, but we may have just finally found the tipping point.
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