Anthony Davis Has Asked To Be Traded: A Brief FAQ On What That Could Mean

I drafted this FAQ because I have received countless questions, and seen countless reporting issues, about the Anthony Davis situation. As many of you know, I have tried provide as much assistance as I possibly can, but I figured that one article, which everyone can see, that describes many of the main issues, would be helpful. I hope it does prove helpful. If so, I would respectfully ask that you please not copy my work – instead, please either ask me directly or provide proper credit. Please don’t copy my work product without providing proper credit. I tend to write about complex stuff. I help everyone who asks; I do so privately, never asking for credit or compensation. But these are challenging concepts, and I feel it’s proper to respect the people who provide the insight (unless you first request permission not to do so).

Anthony Davis sent a jolt through the basketball world on Monday, in the lead up to the NBA’s annual trade deadline on Feb. 7, when he informed the New Orleans Pelicans that he does not intend to sign a contract extension this summer and that he is formally requesting a trade.

The news has created a flurry of activity for teams, fans and writers alike, for whom there are various potential issues to consider. The following is a brief FAQ:

What are the Terms of Anthony Davis’ Current Contract?

Davis signed a 5-year, $127.2 million extension, known as a Designated Rookie Scale Player Extension, with the Pelicans on July 9, 2015.

The contract pays him $25.4 million this season and $27.1 million in 2019-20, with a player option worth $28.8 million for 2020-21. Davis can therefore become an unrestricted free agent no sooner than July 2020.

The contract is paying out the maximum is was able to – starting at 25% of the adjusted 2016-17 salary cap, with annual raises equal to 7.5% of his first-year salary (in each case, reflecting the rules of the 2011 CBA). It also contained a provision (colloquially referred to as the “Rose Rule”) that would have enabled him to receive a higher 30% of the adjusted salary cap if he met certain criteria (technically referred to as the “5th Year, 30% Max Criteria”). The provision would’ve paid him an extra $25.4 million over the course of his 5-year contract if he made any of the three All-NBA teams in 2015-16. But he didn’t receive enough votes for inclusion, after being limited to just 61 games due to shoulder and knee injuries.

Davis’ contract also contains a 15% trade bonus, which would pay out up to $65,976 if he’s traded this season or $4.1 million if he’s traded in July. 

What Could the Pelicans Offer Anthony Davis If He Were to Stay in New Orleans?

Because Davis has earned All-NBA honors in each of the past two seasons, the Pelicans will be eligible to offer him a Designated Veteran Player Extension next summer — which would start in 2020-21 (voiding his player option), and contain a starting salary equal to 35% of the then-salary cap (currently projected to be $118 million), or a projected $41.3 million.

The Designated Veteran Player Extension would need to have a term of five years. With maximum annual raises equal to 8% of his first-year salary, that comes to 5 years, $240 million.

This is the contract Davis is reportedly turning down.

If Davis were to be traded, as he’s requested, he will lose his ability to sign a Designated Veteran Player Extension with his new team. The highest first year salary for which he’d be eligible to sign as a free agent in the summer of 2020 would instead be 30% of the then-salary cap, or a projected $35.4 million.

The disparity creates a significant financial advantage for the Pelicans, but there are various ways Davis could mitigate that advantage (as described below). If he is traded to the team for which he wants to play long term, he could mitigate the advantage even further.

Where Does Anthony Davis Prefer to Be Traded?

According to Marc Stein of the New York Times, Davis has not provided the Pelicans a list of his preferred trade destinations. But the timing of his decision to inform the Pelicans that he does not wish to sign an extension and to request a trade – just prior to the Feb. 7 trade deadline – does seem curious. He did so knowing that the Boston Celtics, one of the two teams widely regarded as the foremost challengers for Davis, would be restricted from trading for him at the trade deadline (more on that later), and that the Los Angeles Lakers, the other, would (at least theoretically) have a significant advantage if a trade were to be completed at the trade deadline.

It seems rather clear from his tactics that he would prefer to be traded to the Lakers, as quickly as possible. Davis purchased a home in Westlake Village, just outside of Los Angeles, for $7.5 million this past summer.

Can Anthony Davis Control Where He Gets Traded?

It has been widely assumed that the Pelicans will be forced to trade Davis, now that he has communicated his unwillingness to sign the Designated Veteran Player Extension and formally requested to be traded, rather than potentially losing him for nothing in the summer of 2020. But the Pelicans are not obligated to trade Davis, nor are they obligated to trade him to his preferred destination. Their responsibility is to their own organization, not Davis, and they will do everything in their power to maximize their return if and when he is to be traded.

Though Davis can’t technically control where he is to be traded, he will certainly exert influence over the process by virtue of his ability to become an unrestricted free agent in July 2020. Davis could conceivably depress offers from non-preferred destinations simply by informing them that he’d only be a rental until 2020. Any team which would consider trading for him may be hesitant to surrender the considerable trade assets it would take to acquire him if they fear they won’t be able to re-sign him.

This concern can, however, be mitigated in a couple key ways:

First, for a Davis threat that he would only be a rental until 2020 to be credible, his preferred destination would need to have the cap space to re-sign him that summer. It would be no easy feat for such a team to carry a projected $35.4 million of cap space into that summer. The Lakers, for example, already have $44.2 million committed to LeBron James and the dead-money cap charge of Luol Deng. For them to carry $35.4 million of cap space for Davis, the entire rest of the roster could cost no more that $29 – $38 million (with the range dependent upon the number of such players). And, no, that rest of the roster couldn’t include a second max contract player signed this summer. If it did, the Lakers could only get to $30 million of room for Davis in 2020 (even if it cleared out the entire rest of the roster); that’s well below his $35 million max.

And if the Lakers couldn’t produce the requisite cap room to sign Davis as a free agent in 2020, the only other way to acquire him would be via a sign-and-trade. But that’s no guarantee; it would require the renting team to oblige, in exchange for which it would surely require a truckload of assets. So… the Lakers could, at least theoretically, sign a second max contract player in free agency this summer, and then pursue a sign-and-trade scenario for Davis in 2020, but: (i) it would require the Lakers sending back just about every other player other than LeBron and the second max player on their roster (trade rules would require that they send back at least $28 million in salary in exchange for Davis) and (ii) the package of players and assets would need to be appealing enough to the renting team to green-light it all. And, even then, taking in Davis via a sign-and-trade would also the Lakers wouldn’t be hard-capped at the $149 million projected apron (perhaps not a big deal, considering that the only other ammunition they’d have beyond their three max players would be the minimum-salary exception, Room-Mid-Level exception and, if they were able to retain them, draft picks).

Second, for a Davis threat that he would only be a rental until 2020 to be credible, his preferred destination might also need to be able to prove it can be competitive with him on board. The Lakers, for example, could be challenged in that regard. LeBron would be 35 years old at the start of Davis’ new contract. So if he fades, the guys making the other $29 – $38 million better be damn good!

These two factors could make a Davis threat to be a rental until 2020 if he isn’t traded to the Lakers to be seen as credible. And any potential acquiror, even if it’s not a preferred Davis destination, would have at least a full season (until the summer of 2020) to try to convince him to stay. If Davis were to ultimately have a change of heart — whether because, for example, the Lakers simply can’t acquire him or would be noncompetitive even if they did — Davis could end up liking his then-current situation (and the corresponding full Bird rights that come with it) more than he expected. And if things don’t work out, he could always be re-traded. All of which means that, even if Davis were to have a preferred trade destination (e.g., Lakers), the fact that he simply might not ever be able to get there opens the door to numerous other potentially interested parties.

The Pelicans are therefore likely to push back strongly on any attempts by Davis to exert influence over his destination in any potential trade scenario. They will carefully evaluate and negotiate each potential trade package (including from the Celtics — they are fully aware that they would lose a major suitor if they were to entertain the prospect of accepting a trade offer at the Feb. 7 trade deadline without first checking in with the Celtics, with whom the preliminary terms of a trade could be negotiated at the trade deadline and be officially executed next season; that, however, carries a certain degree of risk, given the uncertainty surrounding Boston’s upcoming playoff run) and act in their own best interest, regardless of Davis’ wishes.

The Pelicans, in fact, issued a strong statement on Monday that made it clear that they won’t be pressured into making a trade of Davis, and requested of the league to carefully monitor the situation for potential violations of tampering rules. “Relative to specific talks of a trade, we will do this on our terms and our timeline. One that makes the most sense for our team and it will not be dictated by those outside of our organization. We have also requested the League to strictly enforce the tampering rules associated with this transaction,” the statement read.

The league has since responded by fining Davis $50,000 for precisely that — publicly requesting a trade is considered a violation of the CBA’s tampering rules. Whether this creates any friction between a team and a player for whom he still plays (when healthy), insignificant as it may be in the grander scheme, is yet to be determined.

Which Teams Are Likely to be Interested in Anthony Davis?

All of them. But not everyone has a realistic shot at trading for him.

Front-runners could include (bear in mind that your opinion is as good as mine) the Celtics, Lakers, Denver Nuggets, New York Knicks, Philadelphia 76ers, and other teams with an excess of assets that are willing to take a gamble with them in trading for Davis in the hopes they can convince him to re-sign in the summer of 2020 — there could be many, particularly if they don’t deem a Davis threat that he would only be a short-term rental until 2020 to be credible (see above for reasons why they might think that). They’ll have a full season to convince him to stay, which worked for the Oklahoma City Thunder with Paul George despite his then-stated desire to play for the Lakers but may not work out as well for the Toronto Raptors with Kawhi Leonard (perhaps unless they can somehow land Davis to join him 🙂 ).

Certain teams with limited assets, such as the Miami Heat, could potentially go all out and put together a package that includes just about all of their assets in the hopes that it would appeal to the Pelicans. But, even if the Pelicans were to be intrigued, it would severely deplete their roster of talent to put around Davis if they were to acquire him. Which would be a huge risk. Davis has made clear that he wants to be traded to a team that allows him a chance to win consistently and compete for a championship. 

When Is Anthony Davis Likely to Be Traded?

Because Davis’ contract is not expiring, there is no urgency for the Pelicans in pursuing a potential trade. Therefore, it is far more likely that Davis will get traded in July than prior to the Feb. 7 trade deadline, unless they are presented with an overwhelming offer.

There are several complications that would limit the likelihood of a potential trade prior to the Feb. 7 trade deadline:

1. The Celtics won’t be able to trade for Davis until July.

An arcane rule in the Collective Bargaining Agreement prohibits the Celtics, a potentially significant suitor, from officially executing a trade until next July. The CBA permits a team to have the salary of up to two players who signed Designated Rookie Scale Player Extensions included within its team salary at any given time, but only one can be acquired by trade.

Since the Celtics already have Kyrie Irving, who is still playing on the Designated Rookie Scale Player Extension he signed with the Cleveland Cavaliers, trading for Davis would not be permissible unless the Celtics trade Irving as part of the deal (or beforehand). There is no way around this rule for Boston (not even if they were to extend his contract, which wouldn’t make sense anyway for an entirely different slate of reasons). Since Irving’s contract expires at the end of the season (assuming he declines his player option, which he almost certainly will), Boston will be able to officially acquire Davis starting in July.

While the Celtics would not be eligible to acquire Davis at the trade deadline while Irving remains on the roster, nothing restricts both sides from negotiating the framework of a potential Davis trade either now or this summer. An agreement could be in place before that date, and finalized on July 6 (after July Moratorium).

This trade restriction that is impacting the Celtics so severely is near universally misunderstood (I’ve made it a personal mission to help everyone to update the rationales they provide in explaining it, which I would humbly suggest has had a dramatic effect; if you search the explanations your favored salary cap experts were providing up until a few months ago, and search the explanations those same people provide today, you’ll see the difference for yourself), and is a rather curious aspect to the CBA. There is nothing inherently valuable about a Designated Rookie Scale Player Extension, which would cause such a trade restriction that extends through the life of the contract. If a player were to bypass such an extension, his prior team could offer the exact same contract in restricted free agency the following summer, and would only be subject to the customary trade restrictions – the latter of three months from signing, or December 15 (or January 15, if the team is over the salary cap).

2. It could be more difficult for the Pelicans to evaluate certain trade packages at the trade deadline than during the summer.

Draft consideration, for example, has yet to be determined. The first overall pick in the draft, and the potential to draft Zion Williamson with it, could have huge trade value. But even the worst teams in the NBA now would only have up to a 14% chance to land it, and those chances could decline further if Davis is actually playing for such team for the rest of this season.

3. Teams would have more flexibility in trade scenarios executed next season than at the trade deadline.

The Sacramento Kings are currently the only team in the NBA that has cap space, with $11.0 million. In any trade for Davis, they would be required to send back at least $14.4 million in salaries (whether to the Pelicans or a third team).

Any other team would need to operate within the confines of the traded player exception, which would require a team to send back at least $20.3 million in exchange for Davis’ $25.4 million salary.

In July, nearly half the teams in the league could have the cap space to acquire Davis outright, while potentially only sending back the salaries the Pelicans would actually want.

4. Teams would have more roster flexibility next season than at the trade deadline.

During the season, teams can only have up to 15 players (on standard NBA contracts). Since New Orleans has a full 15 players on their roster, any trade that sends them more players than they send back must include corresponding moves to ensure the Pelicans do not cross the 15-player maximum upon execution of the trade. That could involve trading additional players (whether in the Davis trade or beforehand), or waiving additional players prior to the trade. This is a relatively minor issue, though, which could rather easily be mitigated given the fact that New Orleans has numerous players on expiring deals they could easily cut, as well as numerous players on minimum-salary contracts that could easily be included in the Davis trade without impacting the overall parameters of the deal.

In the offseason, teams are able to increase their roster sizes to 20 players – making imbalanced player trades easier to accommodate.

***

Despite the obvious motivations of various parties to complete a trade at the Feb. 7 trade deadline, the Pelicans won’t be pressured into it. While teams the Lakers in particular would benefit from completing a trade at the trade deadline, while the Celtics will be unable to participate, they can, and perhaps would if the Pelicans were motivated to trade him to L.A., make the same offer at next summer. So New Orleans loses nothing in such circumstances by being more tempered in their approach.

There are, however, circumstances in which it could be more advantageous for the Pelicans to execute a trade at the trade deadline.

For example, certain players would be substantially easier to trade at the trade deadline — particularly impending restricted free agents. If, for example, the Knicks were to offer Kristaps Porzingis, it would be far easier to acquire him at the trade deadline (when is under contract, and subject to restricted free agency next summer) than next summer (when he would be a restricted free agent, and unable to be sent to the Pelicans without his approval); though, counterbalancing that in the case of New York, it would be impossible to know the true value of what will be a high first-round pick in the upcoming draft (and the chance at Zion Williamson) at the trade deadline.

So, in terms of timing, nothing is guaranteed.

Would Anthony Davis Sign An Extension With A Team to Which He’s Traded?

He could, but he won’t.

Davis would be eligible to negotiate and sign an extension at any time during the offseason — during the period from July 1 through the day prior to the first day of the regular season. But because he wouldn’t be eligible to sign a Designated Veteran Player Extension with his new team, the standard veteran extension rules would apply to him.

An extension executed within six months of the trade would actually pay out less for 2020-21 ($28.4 million) than simply accepting his player option ($28.8 million); that $28.8 million is about $6.6 million less than the maximum $35.4 million salary he would command as a free agent. An extension executed after six months could still only pay out up to $32.5 million, which is about $2.9 million less than than the maximum $35.4 million salary he would command as a free agent.

An extension would give the team to which he’s traded peace of mind, but it doesn’t benefit Davis.

What About A Renegotiation and Extension?

A team needs to have cap room to renegotiate a player’s salary (which can only go higher). Since no team other than the Kings has cap room this season, we’d likely be looking at a renegotiation that is technically executed no sooner than July.

If a trade is executed at the trade deadline, it’s certainly possible that he could agree to a renegotiation as soon as July (or, in the event he waives his trade bonus, August). Doing so could raise his 2019-20 salary from the current $27.1 million to as much as the projected $32.7 million maximum, a $5.6 million increase. He could also simultaneously agree to extend for up to four additional seasons off that elevated baseline, giving his new team added security, though doing so would pay him slightly less than he could earn as a free agent in the summer of 2020. A short-term renegotiation and extension (one that runs through 2020-21, with a player option for 2021-22, would be something to consider, if the team that trades for him wants to use a bit under $6 million of its cap room this way).

If a trade is executed in July, a renegotiation could be pursued but would be largely insignificant. Davis’ contract contains a 15% trade bonus. If he were to decline it, his contract wouldn’t be eligible to be renegotiated for six months; therefore, he’d need to accept it (unless you think the team would carry the extra cap space necessary to give him the renegotiated salary all the way into January, which almost certainly isn’t happening). The trade bonus would add $4.1 million to his existing $27.1 million salary for 2019-20, bringing it to $31.2 million. A renegotiation could increase it to as much as the projected $32.7 million maximum, but that’s just a $1.5 million increase.

If a trade is executed in July, a renegotiation and extension won’t happen. The renegotiation piece would increase Davis’ salary for 2019-20 to $32.7 million. As for the potential extension piece that could start in 2020-21, if the renegotiation and extension were signed within six months, his overall payout would actually be higher if he were to exercise his player option and have it be renegotiated ($30.4 million) than it would be if he declined his player option and extended his contract ($30.1 million). And, in both cases, it would be far less than he could get in free agency ($35.4 million); so that’s not happening. If the renegotiation and extension were signed after sixth months, those amounts could potentially increase, but the team would need to carry the extra cap space to give him the renegotiated salary all the way into January; but, again, that’s not happening either.

What Does All This Mean for Anthony Davis’ Next Contract, And Beyond?

After a trade, Davis would have quite a bit of flexibility in the contracts he chooses to sign in the future. Two potential options are presented below but, as you will see, one stands out as perhaps the most financially and strategically beneficial.

The Pelicans trading Davis would make him ineligible for a Designated Veteran Player Extension, which would kick in for 2020-21, start at 35% of the salary cap (a projected $41.3 million), and pay out a projected $240 million over five years.

Instead, the largest long-term contract he would be eligible to sign in the summer of 2020 would start at 30% of the salary cap (a projected $35.4 million). If he re-signs with the team to which he’s traded, that would pay out a projected $205 million over five years; if he signs with anyone else, it would instead be $152 million over four years. Either way, it would represent a severe discount to the Designated Veteran Player Extension he turned down from the Pelicans.

But there would be a more exciting, and potentially more likely, option to consider.

When Davis becomes a free agent in the summer of 2020, he could sign a short-term deal which would set himself up to become a 10-year veteran prior to the 2022-23 season (his age-29 season), at which point he’d be able to sign a full maximum contract starting at 35% of the salary cap.

In this scenario, he would likely sign a “2+1” contract in 2020 (a two-year contract, plus a player option for 2022-23 that he would intend to decline, but would provide him added security in the event of injury), that would pay out a projected $73.6 million if he signs it with the team to which he’s traded, and $72.6 million otherwise; a difference of $1.1 million over the two locked-in seasons before the option. In either case, it’d be the maximum he could earn for those two seasons.

The true benefit to this approach, however, would come on his 35% max deal in the summer of 2022. The total on that: 5 years, $264 million if he stays with the team to which he’s traded, or 4 years $204 million otherwise.

So, if in fact Davis’ preferred destination is the Lakers, it would benefit him strongly to exert maximum influence in an effort to make it happen — it could, in the end, make a $60+ million difference.

Here’s a comparison between of Davis signing a Pelicans’ Designated Veteran Player Extension vs. the perhaps likely option he would consider it he were to be traded (assuming he elects to re-sign with the team to which he is traded):

 

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