The Most Clever Team in Basketball
How the Cavaliers turned Anderson Varejao into Channing Frye, Kyle Korver and a massive trade exception
Since reacquiring LeBron James, the Cleveland Cavaliers have been the most clever team in the NBA. Beyond the major acquisitions of Kevin Love and JR Smith, they have used the intricacies of the league’s salary cap and collective bargaining agreement to maximize the fringes of their roster despite a high payroll. Last week, the Cavs made one of their most impressive deals yet by trading for Kyle Korver. Their path to acquiring him was nothing short of brilliant.
In February 2016, David Griffin dumped the salary of Anderson Varejao along with a protected 2018 first round pick in a three-team trade to the Portland Trailblazers. With that trade, they created a $9.4 million Traded Player Exception (TPE). They used a previously held $10.5 million TPE to acquire Channing Frye from the Orlando Magic. Since Frye’s salary was lower than Varejao’s, they also made a $10 million savings on their luxury tax bill. Cleveland knew that Portland would take the first round pick and that Orlando wanted to move off Frye’s long-term salary. On the surface, this trade looks like a simple cost-saving maneuver along with a future first round pick for Channing Frye. However, its effects were longstanding.
After the Finals, the Cavaliers wanted to acquire Mike Dunleavy from Chicago. They were hard-capped, and their only realistic way of doing so was with the Varejao TPE. Unfortunately, Dunleavy’s deal was only $4.8 million, and the Varejao TPE was too valuable for that. When Matthew Dellavedova told the team that he was leaving for Milwaukee, Grifin convinced the Bucks to make the transaction a sign-and-trade. That sign-and-trade turned Dellavedova’s contract into a $4.8 million TPE, which the Cavaliers then used to acquire Dunleavy, allowing Cleveland to retain the $9+ million TPE from the Varejao deal.
Fast forward to last week. Dunleavy had not performed as the Cavaliers had hoped this season, and were determined to make another addition to compensate for the loss of JR Smith. Once again, they were hard-capped, with the Varejao TPE as their only usable asset. They were also constrained by the Stepien Rule, which would disallow them from trading first round picks in consecutive years.
In a strike of brilliant ingenuity, instead of using the Varejao TPE to acquire Korver, who had a $5.2 million expiring contract, Cleveland first went back to Portland and swapped their 2017 pick for the 2018 pick they originally traded in the Varejao deal. Now with their 2018 and 2019 picks both in hand, they were able to trade the 2019 pick along with Dunleavy to Atlanta for Korver. Furthermore, that pick is heavily protected (top-10) and likely won’t convey until 2020. For Atlanta, they get a future first-round pick and Dunleavy for a 35 (almost 36)-year old on an expiring contract, which is a decent haul. Cleveland also traded Mo Williams to Atlanta and gave them the cash to pay the remainder of his $2 million contract. Since Williams and Dunleavy’s outgoing contracts were larger than Korver’s incoming one, the Cavaliers saved another $2.3 million in luxury tax payments. Furthermore, moving Williams created the space to keep Jordan McRae, whose contract recently became fully guaranteed, should the Cavaliers choose to add another player to bolster their roster.
Moving forward, Cleveland still retains the Varejao TPE, an extremely valuable asset as the trade deadline approaches. They have added Kyle Korver and Channing Frye without giving up nearly any contribution on the floor, saved millions of dollars in luxury tax penalties, and have the ability to add another significant piece. The past year has been a master class for the Cavs in patience, understanding the wants and needs of other franchises, and maximizing the extent of their assets despite severely constrained flexibility in terms of their opportunities under the league’s rules. And they aren’t finished yet.
