Be careful what you ask for.
In my last post, I wrote about how this offseason was the optimal time to trade Jimmy Butler, especially if he made an All-NBA team and qualified for an unhealthy amount of money (under the Designated Veteran Players Exception in the new CBA), which came to fruition. One of my main goals of writing my blog is NOT to discuss already what you’ve heard ad nauseum, like who won and lost the trade. What I want to talk about is the second round trade on draft night between the Bulls and the Warriors, the trade exception acquired for Jimmy Butler, and the short term future of the Bulls.
Second Round Trade
The Bulls traded their second round pick, Jordan Bell, for $3.5 million in cash. The wise philosophers named O’Jays once said, “money, money, moneyyyy, MONEY”. That’s what the second round is all about. Before getting to the Bulls trade with Golden State, I think it’s important to explain difference between the first and second round.
In the first round, every draft pick is paid according to the first round rookie scale. First round picks are under a team’s control for essentially four years under a “2 + 2” , where the first two years are guaranteed + and the last two years are the team’s option to keep the player. Translation = NBA draft picks are GUARANTEED to receive money in the millions for two years, and a good chance at millions for at least four years.
In the second round, no rookie scale applies. Second round picks must be paid the minimum for up to two years, but it is far less expensive than the first round rookie scale, as seen here. Translation = second round picks are paid peanuts compared to first round picks, so NBA GM’s like to take chances in the second round to find a diamond in the dirt.
This is why the second round is essentially a stock market. The market is full of buyers and sellers; buyers are teams that want buy “stock” at a low price (a player the team likes in the second round), and the sellers are teams who don’t like any of the “stocks” available. Instead, the sellers will buy a “stock” (draft a player) for the buyers, in exchange for cash considerations, if they agree to trade. The maximum amount a team had to use for trades during the 2016-17 season was $3.5 million, which the Warriors traded in full to the Bulls for Jordan Bell.
Why Trade the Second Round Pick?
I would be lying if I told you I knew the exact reason why the Bulls traded the second round pick, but following the money is always a good place to start.
- Jimmy Butler’s Trade Bonus – Butler has an $1.8 million trade bonus in his contract, which means that the Bulls are obligated to pay Butler in the event he gets traded (the NBA, Where Smart Forecasting By Players’ Agents Happen). However, I think Rondo and Canaan’s dead cap money is the more likely use of the money.
- Rajon Rondo and Isiah Canaan’s Guaranteed Money: Both Rondo and Canaan combined are owed $3.2 million in guaranteed money as per their contracts if they are waived. Since both were waived on June 30th, the $3.5 million obviously covers that cost, and then some.
- Dwayne Wade Buyout: To put it simply, buyouts are divorces (in a perfect scenario, an amicable divorce) where the team and the player are negotiating an alimony payment. The divorce could be for many reasons, as Basketball Insiders explains here. For purposes of this post, all I want you to know is the buyout doesn’t free up any additional cap space for the team, but it allows the team to buyout the player at a lower salary. This is “amicable” for both sides because the player agrees to be bought out since he will be signing another contract with a new team, and thus, would be earning money from both his former team and the new team. The team benefits because it no longer wants the player on the team, and doesn’t have to fork over the full guaranteed salary. Let’s face it, the Bulls will not be competitive, and there will certainly be buyout discussions with Wade during the 2017-18 trade deadline. Having that $3.5 million additional cash (if not used for Rondo and Canaan) could be part of Wade’s alimony agreement with the Bulls.
Building off Albert Nahmad’s great work (follow him @AlbertNahmad), the Bulls acquired a trade exception of $15.3 million in the Jimmy Butler trade. If you remember buyouts as an amicable divorce, remember trade exceptions as an allowance the team has to use, but only for trades. You can use all or part of your allowance, but you have to use it within one calendar year. The trade exception counts against the salary cap to be used as an exception. The trade exception gives the Bulls flexibility to trade a player even if they are over the salary cap (as long as that player’s contract in under the $15.3 million) without having to trade any of their own players in return (and there is a roster spot available). There are many more technicalities of the trade exception, and if you would like to dive into them, look at Larry Coon’s page, aka the Cap Yoda.
The Bulls may have to follow Sam Hinkle and trust the process… for next season. I would tank, and tank hard. Here’s why, Luka Doncic and Michael Porter. Whatever you can do to increase your chances of getting these two, you do it. Even if the Bulls don’t completely bottom out and have a shot at Doncic or Porter, there are plenty of players in next year’s draft class that are worth falling into the lottery for. Check out Dave DuFour’s (@DaveDufourNBA) podcast , which did an excellent job in covering the top heavy prospects of the 2018 class. So what should the Bulls do to trust this mini-process?
- Buyout Wade, as mentioned above.
- Waive Rondo, which they did.
- Let Go of Niko – the Bulls have extended a qualifying offer to restricted free agent Niko Mirotic, which obviously means they intend to keep him… but I wouldn’t. Since Niko is a restricted free agent, the best course of action in my opinion is NOT to match an offer for him. As mentioned above, the Bulls are not going to be competitive even with Niko on the roster. If the Bulls don’t match Niko and let him go, it would free up playing time for rookie Lauri Markannen, as well as Bobby Portis, to exclusively play at the 4.
With this mini-trust process, the Bulls three best offensive players would be out of the fold, and this creates the path to lose games. All is not lost with this plan, as this gives all the minutes in the world to the younger players in a (hopefully) more Hoiberg style offense. That’s what I’m most excited about for next season. Make no mistake, the Bulls will not be good. But there has not been any stability or style of play under Hoiberg for the last couple of seasons. Having some stability (hopefully) in rotations with these young guys will be something to watch.
And if you’re not excited about the Bulls for the upcoming season, the next offseason for the Bulls should provide plenty of excitement. There are two things to keep an eye out on; the return of Zach LaVine from his injury and his level of play, and the next offseason. First, LaVine is a restricted free agent after this season, so in an odd way, it is better for the Bulls to have LaVine miss as many games as possible. This would lower the value of any potential offer sheets the Bulls would have to match to resign LaVine. Second, notwithstanding a potential contract for Nikola Mirotic and Justin Holiday (Niko hasn’t been signed as of this writing, and I’m not sure if Holiday’s second year is guaranteed), the Bulls will only have guaranteed contracts for Lopez, Markannen, and Felicio for the 2018-19 season. This provides them with one of the highest amounts of cap space going into the next offseason to sign potential free agents.
The big fish in next year’s free agent class are LeBron, Westbrook, and Paul George. Other notable players are available, such as: Avery Bradley, Boogie Cousins, LaMarcus Aldridge, and Carmelo Anthony (if both LMA and Melo don’t pick up their player options). GarPax have harped on being flexible in the future while letting their young guys develop, and it sure seems they have put themselves in position to follow that plan. Hang on tight for a good old fashioned rebuild, Bulls Nation.