Projected saving for Nuggets as result of Carmelo Anthony trade: $34,615,779.88

When researching NBA Collective Bargaining Agreement rules way back when the Pistons were involved in the Carmelo Anthony trade, thanks to Mark from ShamSports.com, I learned a bit about counting savings of a mid-season trade. I’m applying those lessons to the Carmelo Anthony trade finalized last night. The minor players could change, and that would change the numbers, but here’s the version I’m using. All salary data comes from ShamSports.com.

Let’s look at how much money the Nuggets will save as result of this trade.

Payroll

To start, let’s see how much money the Nuggets will save in player salary.

Melo has an early-termination option for his final season, but since that’s his option, I counted it as money the Nuggets were committed to pay.

Billups’ contract is guaranteed for just $3.7 million next season, so that’s all I’m counting.

Mozgov’s cap number includes a $1.9 million signing bonus that the Knicks have already paid, so I removed that. His final season is just 44.5 percent guaranteed, so that’s all I’m counting.

Fifty-one days remain in the 170-day NBA regular season. Because the players’ old teams have already paid for 119 days, I’ve scaled down the remaining money left to pay this year.

Nuggets trade:

Player 2010-11 2011-12 2012-13
Carmelo Anthony $5,144,772.90 $18,518,574 $0
Chauncey Billups $3,945,000 $3,700,000 $0
Renaldo Balkman $502,500 $1,675,000 $1,675,000
Anthony Carter $256,316.70 $0 $0
Shelden Williams $256,316.70 $0 $0
Total $10,104,906.30 $23,893,574 $1,675,000

Nuggets receive:

Player 2010-11 2011-12 2012-13
Raymond Felton $2,100,000 $7,560,000 $0
Timofey Mozgov $837,000 $2,566,800 $1,243,606.35
Danilo Gallinari $991,368 $4,190,182 $0
Wilson Chandler $639,144.60 $0 $0
Total $4,567,512.60 $14,316,982 $1,243,606.35

So, year-by-year payroll savings for the Nuggets:

  • 2010-11: $5,537,393.70
  • 2011-12: $9,576,592
  • 2012-13: $ 431,393.65

Add that all up, and in payroll, the Nuggets’ grand total:

Savings: $15,545,379.35

Luxury-tax bill

Before the trade, the Nuggets were slated to pay the luxury tax.

Their total payroll was $83,478,756 (already counting veteran minimum players at a minimum salary for a two-year pro). But Gary Forbes, as a player the Nuggets didn’t draft, counts as $854,389 toward the luxury tax, according to Larry Coon. That means the Nuggets number used for paying the luxury tax would have been $83,859,541.*

*All luxury-tax numbers in this post count likely incentives as achieved and unlikely incentives as unachieved. If players defy those benchmarks, the numbers will change.

The luxury tax is set at $70,307,000. So, the Nuggets would have been $13,552,541 over the dollar-for-dollar tax. Now, they’re below the luxury tax.

Savings: $13,552,541

Luxury-tax credit

Now that the Nuggets are below the luxury-tax threshold, they’ll receive a share of luxury tax.

Seven teams exceed the luxury-tax threshold right now, and here’s what they’re set to pay:

Team Payroll* Luxury tax Tax due
Lakers $90,381,756 $70,307,000 $20074756
Magic $89,898,145 $70,307,000 $19591145
Mavericks $84,768,836 $70,307,000 $14461836
Celtics $77,676,052 $70,307,000 $7369052
Jazz $77,040,605 $70,307,000 $6733605
Rockets $74,134,155 $70,307,000 $3827155
Trail Blazers $73,785,237 $70,307,000 $3478237
Total $567,684,786 $492,149,000 $75,535,786

That $75,535,786 is split into 30ths, and each team below the tax receives a share. So, the Nuggets would receive $2,517,859.53.

That number would change if a team above the luxury tax changes its payroll or another team surpasses the luxury-tax threshold, but for now, that’s what Denver is slated to receive.

Because the league would pay 1/30 of its luxury-tax collection to 23 teams, that would leave $17,625,016.73. The NBA can either use that money for “league purposes” or distribute it to all 30 teams, according to Larry Coon.  Guessing blindly, the NBA owning the Hornets could mean the league keeps all the remaining money this year.

Whatever amount the NBA decides to distribute back to its teams would cut into the Nuggets savings, because if they hadn’t made the trade, they’d pay the luxury tax. I’m counting their luxury tax payment as gone, but if the NBA returned some of the money, the Nuggets’ loss wouldn’t have been quite so high. If the Nuggets hadn’t made the trade, they could have received up to $791,896.24 from the league in left-over luxury-tax payments.

But like I said, my guess is the league will keep the left-over luxury-tax collection this year. So, I’m not reducing Denver’s savings.

Savings: $2,517,859.53

Cash

I saved the simplest factor for last. The Knicks sent the Nuggets $3 million as part of the trade.

Savings: $3 million

Total savings

  • Payroll savings: $15,545,379.35 ($5,537,393.70 this season)
  • Luxury-tax bill savings: $13,552,541
  • Luxury-tax credit savings: $2,517,859.53
  • Cash savings: $3 million

So, to break down the final numbers:

  • Savings this year: $24,607,794.23
  • Total savings: $34,615,779.88

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