Orlando's TPEs

July 26th, 2012

Before the sign-and-trade of Ryan Anderson to New Orleans, Orlando had one TPE, totalling $4.25 million, created in the Glen Davis/Brandon Bass trade of last offseason. That $4.25 million TPE is set to expire on December 12th.

Orlando used some of that TPE in the Anderson deal to absorb the returning salary of the criminally overlooked Gustavo Ayon, who is to earn $1.5 million this season. The Bass TPE, then, is now $2.75 million big, and thus can be used between now and December 12th to absorb incoming player salaries of $2.85 million (as $100,000 leeway is allowed with TPE’s).

By absorbing Ayon with the Bass TPE, Orlando were essentially trading out Anderson with no incoming salary. This then meant another TPE was created equal to the amount of Anderson’s outgoing salary. The issue is what that amount is.

Anderson signed a deal that will pay him exactly $8.7 million next season – however, whilst the concept of Base Year Compensation (which now isn’t called that, or indeed call anything, but which term will suffice here) was largely eradicated in the latest CBA, it does still apply to sign-and-trade deals. The basic principle of BYC is that, if a team signs and trades a player using Bird or early Bird rights, and the player receives a raise in the first year of the new contract greater than 20% in the first year of the new deal over the last year of his previous one, then his outgoing salary is deemed to be only half of his actual salary.

Anderson earned only $2,244,601 last year, so he easily earned more than a 20% raise, and thus is BYC-eligible. His actual salary of $8.7 million was therefore assessed to be $4.35 million for the purposes of the trade calculations, and thus that, as his de facto outgoing salary, is also the size of the TPE created.

Orlando has one year to the day from the date of the original deal in which to use this TPE. Between that and the remainder of the Bass one, they have some trade leverage. And we surely know they’ll be making a trade soon.