Theory Challenged: Trading Theo

TheoOne theory that gets thrown around here pretty liberally (myself included) is the idea that we can simply trade Theo Ratliff’s contract to get an impact veteran or even an All Star.  But there is one potential flaw to that theory.  We might need that future cap space avoid the Luxury Tax.  (Wyc has stated in the past that he’s willing to pay tax money if the team is ready to compete for a Championship â€" don’t count on him coming to that conclusion in the next year or more.)

In the charts below, I’ve made tons of assumptions that could either be off by a certain dollar amount or just turn out to be faulty logic altogether.  But it is the best rough estimate that I can come up with using the info that I have. Assumptions highlighted in green.

For instance, I’m assuming that the team will sign Al Jefferson to a very large contract.  I’m assuming that the top pick will be paid somewhere in the range that Andrea Bargnani is being paid so I used his salary for a starting point.  I also assumed that we could re-sign Delonte West and Ryan Gomes to somewhere around $5M a year each (using round numbers for lack of better ones).  To be conservative, I mostly left the out years alone, including not accounting for future draft pick salaries.  I could go on, but I'm boring myself at this point.

Anyway, on to the numbers.  The quick analysis illustrates a few simple points that I’ll outline below.

Current Projected Salary Commitments:

currentcap.jpg

You can see that if the team doesn’t do anything but sign the first rounder and extend Jefferson, West, and Gomes, then the team seems to be safe from the luxury tax in 08/09 (We don’t know what that amount will be yet, but I’m making a guess it will be in the high 60’s).

Now, say you trade Theo’s contract straight up for another player making the same yearly salary but with a contract that lasts longer.  For the sake of argument, we’ll avoid naming specific examples.  This is a conservative estimate because most players’ salaries escalate over the years.  Here’s what a straight one-for-one deal would do to the cap situation.

Projected Salary Commitments Trading Theo for Equal Salary:

projectedcap.jpg

Clearly the jump in salary puts Wyc and company square in the land of Luxury Tax.  The threshold may go up to the $70M range, but not to the 80’s.

So, something has to give.  Either they would need to dump Wally without taking a contract back (not likely) or some of our young players would have to be packaged in the Theo deal or in other deals bringing back little or no salary.  Here’s what it looks like if you toss in West and Gomes with the Theo trade:

Projected Salary Commitments Trading Theo, West and Gomes:

capaftertrade.jpg

Looks more reasonable to me.  Of course, there are dozens of other ways to go: using Scalabrine’s contract instead of West or Gomes, trading the draft pick if it isn’t a top 2, etc.  But I think you get the point.

Conclusion:  If we use Theo’s contract to pick up a big contract player, we’ll have to drop additional salary by the 2008/2009 season.

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