Ryan Bernardoni
Sign-and-Trade Considerations
A new report came out yesterday that teams had approached the Celtics about a sign-and-trade to acquire
. I have no idea if this is accurate, but it's worth considering how one could come together. If Boston were to go down that route, it would be a relatively complicated move. Setting aside the wisdom or likelihood of this happening, let's just look at the mechanics at play here.
Bidder's Leverage
Restricted free agent sign-and-trades are most often done when the bidding team has enough cap space to lodge an offer that the incumbent team doesn't want to match, but where it's a close decision and the bidders aren't sure of the outcome.
If a team like Atlanta or Sacramento with abundant space were to make an offer, a sign-and-trade would seem more likely. Both of those teams could go to a number that Boston would not want to match, so if they found that threshold number the Celtics would be faced with losing him for nothing and would prefer to talk S&T to get something back.
The two teams in the above tweet, the Grizzlies and Nets, do not have enough space to force that decision. The Grizzlies are over the cap. The Nets temporarily can make over $11M in space to submit an offer above what Boston wants to match, but probably below what they'd be willing to match.
In the case of Memphis, they can't get Smart without a S&T so Boston would have decent leverage to get a good asset.
The Nets could do things like add a 15% trade kicker to their offer that would be hard for the Celtics to swallow and so may think that their best offer would pry him away without giving anything up. In that case, the Celtics would have trade leverage somewhere in between the low leverage against a Hawks/Kings offer and high leverage of a Grizzlies deal.
If you see a team well into the luxury tax like the Thunder mentioned, just ignore them. Receiving a player via S&T triggers a hard cap at just above $6M more than the tax line.
Base Year Compensation
The Celtics are above the cap and Smart would certainly be signing a deal for over 20% more than he made last season, so he would be classified as a Base Year Compensation (BYC) player in the trade. That means that, for the purpose of matching salaries, he would count for half his new salary for Boston but his full salary for the receiving team.
This can make trade math more complicated than usual, so let's set up an example and look at how a trade could work for the Nets and Grizzlies. Note that I'm just doing the math here and not talking about fair value. Picks could be included to balance the value because they do not impact the cap math.
Example Contract: Smart signs a 4/$50M deal
Sign-and trade contracts must be at least three seasons long with at least the first season fully guaranteed. They cannot be over four seasons long. Raises are limited to 5% of the first year's salary, so the 8% max raise/declines that the Celtics can offer in a contract that keeps Smart in Boston are not allowed in a S&T.
Brooklyn Nets
The Nets can get to $11,365,809 in cap space by waiving Isaiah Whitehead, keeping Spencer Dinwiddie, signing Dzanan Musa, and waiting to complete the Joe Harris and Ed Davis signings until after other business is done.
Our proposed Smart contract can start with a first season salary as low as $11,627,907. Signing him for the full amount of his cap space would end in a $48.9M contract so in the real world that might get it done, but in our hypothetical it doesn't quite get there.
Still, using cap space is the way that a team like the Nets with a medium-sized chunk of space available would work this S&T.
Lets say that what the Celtics get for participating is Rondae Hollis-Jefferson and his $2,470,357 deal. That would let the Nets take in a contract of just over $13M as a cap space team.
Hollis-Jefferson makes less than the BYC half of Smart's new deal, so the Celtics have no issues in completing the trade. The Nets could choose to structure Smart as a flat $12.5M/year. The Celtics would get a TPE for $3,779,643 as the difference between half of Smart's outgoing contract ($6.25M) and Hollis-Jefferson's contract.
Smart would fill a roster hold clearing new cap space so Brooklyn could then sign Rodion Kurucs to a deal longer than three seasons, and then complete their business by making the Joe Harris and Ed Davis signings official.
The Celtics would end this move with a full roster but would also be over $5M below the tax line with the MLE in their pocket..
Memphis Grizzlies
Memphis is more complicated because they wouldn't be using cap space.
In this instance, we need to have the Grizzlies sending back the proper amount of salary that works for both Boston as a team accounting for half of Smart's new salary and Memphis as a team receiving the full amount.
If Smart's new contract has full 5% annual raises it would again start at $11,627,907. Boston would count sending out $5,813,954 under BYC rules, so the most that they could take back in trade is 175% of that amount, plus $100k. That's $10,274,420.
Memphis would be accounting for the full contract amount and so would need to send out at least that amount minus $5M. That's $6,627,907.
The logical player to include as the matching salary is JaMychal Green who makes $7,866,667. That's in the sweet spot of less than what Boston can receive but more than Memphis must send. Neither team would get a TPE in this instance.
Like with our hypothetical Nets trade, there's enough wiggle room here for Memphis to structure this as flat $12.5M seasons if using Green as the salary matching piece. They could not make it full 5% descending salaries because that would increase Smart's BYC accounting salary enough to make the Celtics have to match on the "+$5M tier" instead of the "+175% tier" and then Green doesn't make enough.
Boston's Willingness
I have no idea if the Celtics would be willing to engage in these negotiations, but there are some factors to consider. Most directly, if the team has approached
about an extension and think that he'd be willing to sign one that works for the team, it would make moving Smart more likely. Long-term it's probably an either-or decision between those two, unless
leaves in free agency, so locking up Rozier for the type of deal that Smart blanched at could be a trigger for the C's to think about alternatives with Smart.
The Nets being a team with cap flexibility certainly make them seem like a better trade partner than the Grizzlies. In theory, Hollis-Jefferson would fill a role on the team, maybe allowing you to make another roster move to get another future asset and then using the MLE to complete the team.
However, the Celtics would have less leverage over the Nets and so may be able to extract a better asset out of Memphis, especially if they have to take back the somewhat overpaid Green to make things work.
Danny Ainge said that retaining Smart is their top priority and the report only says that teams have asked, not that Boston has listened, so I don't particularly expect this to happen. It is a good example of how the BYC rules work and can make even a one player for one player trade more complicated than it usually is.
