Don’t be surprised if the Chicago Bulls trade a pick to save money

As you are presumably aware by now, the Philadelphia 76ers went on a one-team crusade to acquire the entire second round of this year’s draft at the trade deadline. Already in possession of a couple second round picks, they nabbed five more over this year and the next two by trading away Spencer Hawes and trading for Eric Maynor and Byron Mullens.

You might rightly ask what general manager Sam Hinkie’s plan is with all those picks. Tom Haberstroh of took on that question today, and he theorized that because of the harsher luxury tax penalties in the new CBA, and because first round picks are significantly more expensive than second rounders, Hinkie likely will shop his second round picks to teams worried about the luxury tax who also have surplus picks towards the end of the first round.

So where do second-rounders come in? Good question. First-round picks are not only more expensive than second-rounders, but they also count against the cap regardless of whether they are signed. The key is that second-rounders, by rule, do not. So cost-conscious teams looking to preserve precious cap space in summer free-agent sweepstakes or looking to shave down their luxury-tax bill can still add talent to fill out the roster by unloading a first-round pick for a couple of second-rounders.

A tax-flirting team like Chicago, which holds two late-first-round picks next season (Charlotte’s first-rounder goes to Chicago if it doesn’t fall in the top 10 via the Tyrus Thomas deal), could improve its flexibility by swapping a first-rounder with Hinkie for say, the No. 32 pick and the No. 39 pick. Same goes for Oklahoma City, a team that also holds two late-first-rounders in the 2014 draft. Though it doesn’t seem like much in February, second-rounders could hold serious currency for capped-out teams come June.

Furthermore, second-rounders are far cheaper for tax purposes than picking up free agents off the scrap heap. As astutely pointed out by SB Nation’s Mark Deeks, there’s a reason why center Erik Murphy remains on the Bulls’ roster even though he never plays: As a second-round pick, he is saving them about $1 million in luxury-tax penalties compared to a similar non-drafted rookie thanks to the fine print in the CBA. With a repeater tax on the horizon, CBA minutiae matters more now than ever.

via What Are Second Rounders Worth? — ESPN (Insider)

We will, for the moment, leave aside Haberstroh’s assertion that Erik Murphy is a center when we’ve actually seen him most recently as a nominal small forward. What is important here is that he specifically names the Chicago Bulls as a team that might send out a first rounder to Philly for probably two or three second rounders.

While trading out of the first round of one of the best drafts in recent memory seems abhorrent — I certainly abhor it, for whatever that’s worth — there’s plenty of reason to think it could happen. Mainly, that Jerry Reinsdorf is incredibly cheap and likes to save his money rather than spend it. Well, on the Bulls, anyway.

There are two scenarios where such a thing might actually make some modicum of sense. One if the Bulls follow through with their amnesty of Carlos Boozer, one if they don’t.

If they don’t amnesty Boozer,* and we’ve heard rumblings to that effect in recent months, then the Bulls will find themselves hanging right around the cap line before making any further moves, with around $63 million in salary committed to 8 players. Two first round picks bring that number up around $66 million, perhaps a little higher, for 10 players, plus ~$500K for their second round pick, which gets us to about $67 million for 11 players. In that case, we’d have to assume that the Bulls would use their full mid-level exception to bring over Nikola Mirotic, if at all possible. That takes them up to about $72 million, which would be pushing right up against the luxury tax line. And note that, in this scenario, DJ Augustin is not on the roster, or if he is, he’s making a little less than $2 million, which would probably push the Bulls into the tax. That’s a problem for Mr. Reinsdorf, particularly in light of the new repeater tax. As long as the Bulls stay under the tax line this season, that wouldn’t apply unless they pay the tax in 2014-15 and 2015-16, but let’s just assume JR would prefer not to pay the tax in either of those years if he can avoid it.

*Note: This scenario also applies to a hypothetical Boozer-Carmelo Anthony sign and trade, which is unlikely to happen, but you never know.

If we swap in two second rounders for one of the first rounders, the Bulls could save themselves about $1.5 million in salary if they let DJ walk — one million from the drop from a first to a second, another half million saved in not paying the veteran’s minimum to fill out the roster.

Meanwhile, if Boozer DOES get amnestied, that $1.5 million kicks in again, only this time it’s another $1.5 million in cap space. Alternatively, it’s just another $1.5 million JR doesn’t have to spend on filling out the roster. Supposing Mirotic signs for something in the $7-8 million range, and Augustin comes back for something in the $2 million range, that leaves us with around $60 million committed to 12 players with the two first rounders compared to $59.5 million to 13 with the two seconds. That obviously doesn’t sound like much of a difference, but the difference between $3 million and $3.5 million isn’t to be sneezed at. This year, that’s approximately the difference between Greg Stiemsma and Jordan Hill, which is not insignificant. Granted, Stiemsma only makes about $2.7 million this year, but I’m counting that as close enough.

(There is, by the way, no real benefit to drafting two players in the second round and then cutting them to gain cap space. The cap charge for unused roster spots is virtually identical to the salary they would be paid, and you’d still have to fill those spots eventually.)

Let me reiterate that I think such a move would be stupid. First rounders, even late first rounders, are much more likely to be productive players than second rounders. Look at Jimmy Butler, the very last pick in the first round of the 2011 draft, as compared to 32nd overall pick Justin Harper, who lasted all of a year with the Orlando Magic, barely played, and is now in Israel. And keep in mind that this year’s draft is considered to be incredibly deep, so the odds of getting a productive player are even higher than they normally would be. But the possibility of saving money has never stopped The Chairman from making the on-court product slightly worse. And there is some slight merit to the idea in terms of maximizing cap space, as outlined above, though probably not enough to make it worth it.

I suppose we’ll find out in June.

All salary numbers that I did not invent for the sake of my hypothetical come via ShamSports.

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One Response to Don’t be surprised if the Chicago Bulls trade a pick to save money

    Scrooge Mcbucks February 26, 2014 at 5:08 am #

    Suprised ? No, ive come to expect it by now.

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