Can the Miami Heat trade Tyler Herro in a Hypothetical Blockbuster Trade Scenario?
A star Brooklyn Nets player has yet again shocked the NBA world with a trade request. In the offseason, it was Kevin Durant. This time, it’s Kyrie Irving. Irving has informed the Nets that he wants to be traded before the February 9 trade deadline. And the Nets are apparently trying to accomodate him.
Irving and Durant could both be ideal fits for the Miami Heat, paired alongside star talents Jimmy Butler and Bam Adebayo. But any potential trade for either player would surely require the Heat to relinquish a significant package of assets, and employ some creative maneuvering around complex trade-related cap rules.
Teams which are under the salary cap can make trades as they please, so long as they end up no more than $100K above the cap. But with the Heat and Nets both way over the salary cap, any potential trade of this magnitude would require the teams to use the aptly-named “traded player exception.”
The traded player exception is complex but, to simplify, if you’re trading away at least $19.6M in salary, you’re allowed to take back up to 125% of the salary you send away (plus $100K). Or, viewed from the other perspective, you can send out 80% of ($100K less than) the salary you receive.
So, basically, if the Heat is going to make a major trade for Durant or Irving (who make far more than $19.6M) before the Thursday deadline, both Miami and Brooklyn are going to have to match salaries to within 25%. But if one of the players involved in the trade is Herro, there’s another complication: the “poison pill provision.”
The poison pill provision arises when a team extends a player’s rookie scale contract, then trades him before the extension officially takes effect. It’s a rare situation, and it has its own set of rules. For salary-matching purposes, if a player is traded between the time his rookie contract is extended and the following July 1 (when that extension takes effect), the player’s outgoing salary for the trading team is his current-year salary. However, the player’s incoming value for the receiving team is the average of his current-year salary and the salaries in each year of his extension.
Herro’s current salary is $5.7M. But he signed a four-year, $120M rookie scale extension last summer that kicks in next July, making his average salary across this and all future seasons $25.1M.
So how do you complete a trade within a 25% margin, where the Heat treat Herro as a $5.7M player and the Nets treats him as a $25.1M player? These types of trades are almost never done, and some might say they’re effectively impossible. But they’d be wrong.
It’s actually quite simple.
For purposes of the trade only, Herro counts $19.4M more to the Nets ($25.1M) than he does to the Heat ($5.7M). So all that has to happen to reach the range in which a trade of Herro is mathematically possible is that the Nets need to send out enough salary to overcome that $19.4M disparity. That’s basic math: $19.4M divided by 45% (125% of the salary on the high end, minus 80% of the salary on the low end) = $42.8M.
So… Once the Nets start sending out at least $42.8M, a trade involving Herro starts to become theoretically possible, assuming the Heat has the players with the precise salary needed to complete the trade.
With that, let’s quickly analyze hypothetical trades of both Durant and Irving – focusing on the most simplistic permutations. (From there, you can make it as complex as you wish.)
Durant makes $44.1M. That’s more than $42.8M, so we already know a trade for Durant that involves Herro is theortically possible if the Heat have players with the needed salary.
What is that needed salary? That’s also really easy to calculate, using a permutation of the exact same equation.
The Heat would need to send out between $35.2M and $35.8M. Subtracting Herro ($5.7M), that’s any combination of players making $29.5M – $30.1M works.
The rest is just picking players.
Lowry makes $28.3M. Haywood Highsmith and Omer Yurtseven each make $1.8M. That’s a total of $30.1M.
So, a hypothetical starting point is Lowry ($28.4M) + Herro ($5.7M) + either Haywood Highsmith or Omer Yurtseven ($1.8M) in exchange for Kevin Durant ($44.1M).
From there, Nicola Jovic, Max Strus, Gabe Vincent, etc. could all easily be added or substituted. The Nets could throw in some players. The permutations are endless. As long as neither team crosses the 15-player max.
Irving makes $36.9M. That’s less than $42.8M, so we already know that a trade for Irving that Herro is mathematically impossible unless the Nets add at least $5.8M in salary to get to the needed $42.8M.
So find a Nets player(s) to add to the trade who makes at least $5.8M. That’s going to be Patty Mills ($6.5M), Seth Curry ($8.5M), Nicolas Claxon ($8.5M) or Royce O’Neal ($9.2M). I’ll pick Mills.
We now know a trade for Durant and Mills that involves Herro is theoretically possible if the Heat have players with the needed salary.
What is that needed salary? That’s just as easy to calculate, using the same equation as we used for Durant.
The Heat would need to send out between $34.7M and $34.9M. Subtracting Herrro ($5.7M), that’s any combination of players making $28.9M – $29.2M works.
The rest is just picking players.
The baseline can be Lowry or Duncan Robinson. I’ll chose Lowry.
Irving also has a 15% trade bonus, which would pay out $1.9M at the trade deadline. He can choose to waive it but, even if he doesn’t, even that can be accommodated. Just for fun, let’s accomodate that too.
I’ll make the trade Lowry ($28.4M) + Herro ($5.7M) + Jovic ($2.2M) in exchange for Irving ($38.8M with his full trade bonus) + Patty Mills ($6.5M) + Kessler Edwards ($1.6M, taken into the Heat’s trade exception). A clean, simple, 3-player-for-3-player swap.
From there, the permutations are just as endless. Want to replace Jovic with another Heat player? Want another player instead of Mills? All of it is possible. As long as neither team crosses the 15-player max.
As you can clearly see, trading Herro is not effectively impossible. It’s not even all that difficult. It’s just finding a combination of players whose salaries fit into tight windows. The bigger challenges are:
- The salary imbalance. In any trade involving Herro, the Heat would be taking on a bunch of salary. Why? Because the salary variance of a “poison pill” player like Herro applies to a trade only. So the trade partner would be sending back salaries to trade match to a Herro salary of $25.1M, even though his actual salary is only $5.7M. Which w would put blast the Heat way past the tax line — in the cases described above, somewhere around $10M over. Conversely, it would allow the trade partner to dump a bunch of salary onto the Heat, which, for a team like the Nets that is $35M over the tax line, could produce huge tax savings. In fact, a trade for Herro gives the Nets the ability to generate bigger tax savings than they can get just about anywhere else (with the exception of the San Antonio Spurs, which has a crazy amount of cap room). That another advantage the Heat could offer that very few other teams could.
- The trade package. In any trade, the Heat would need to offer a trade package that is both compelling to the Nets and acceptable to the Heat. It’s unclear if they can or will. Or if they’re even interested. You might say to yourself that the Heat can offer anything for Irving, because, with Irving an upcoming unrestricted free agent, the Nets have no leverage. But that’s not necessarily true. There are only a few teams that will have the cap room to offer Irving a salary at or near the max. For all the rest, Irving will need the Nets’ help in executing a sign-and-trade. That would give Brooklyn a bunch of leverage.
I’m missing something.
The way i understand the poison pill is that the 125% provision apply to both teams but with tylers salary at 5.7 and 25.1 respectively. So to make a two team deal work with both teams above the cap you’d need to increase the size of the deal to all that 25% absorb the 19.4 difference.
IF that’s right Miami would need to send out 77.6m (including tyler at 5.7) and take back 97m. Beyond being a big tax hit, it’s also nearly the entire team outside of Jimmy and Bam