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How Exactly Was Dwight Howard Traded?
Posted By Eric Pincus On August 15, 2012 @ 2:00 pm In All,Main Page,NBA | No Comments
The Orlando Magic finally put an end to the Dwight Howard era with a massive four-team trade this past Friday.
After protracted negotiations with the Brooklyn Nets and then the Houston Rockets, the Magic found a key partner in the Philadelphia 76ers. Once the Nets exited the picture in early July, momentum suggested the Rockets would either get Howard or Andrew Bynum (via the Los Angeles Lakers).
The Lakers were willing to give up Bynum for Howard but need a third team to broker a deal. If not Houston, the Cleveland Cavaliers were a possibility, and yet Lakers general manager Mitch Kupchak did not believe anything was likely to come of talks.
Ultimately Orlando approached the Lakers with an initial three-way idea with the Sixers, which evolved into the four-way that was executed on August 10.
In addition to draft considerations, the Magic acquired Moe Harkless, Arron Afflalo, Al Harrington, Nikola Vucevic, Christian Eyenga and Josh McRoberts. The Lakers received Earl Clark, Chris Duhon and Howard. The Sixers landed Jason Richardson and Bynum. The Nuggets ended up with Andre Iguodala.
The question for many is “Why? Why did the Magic take this deal above other possibilities?”
While that’s certainly a hot topic to debate, the question addressed here is “How?”
Under the rules of the Collective Bargaining Agreement, teams can break down a large trade into whatever legal combination most suits them. It doesn’t have to be a single transaction but can be a number of smaller ones in tandem.
For the Lakers, it was moderately complicated. Bynum was traded for Howard and Clark. McRoberts was used to acquire Duhon. Eyenga did not bring a player back, generating a $1,174,080 trade exception (TPE) the Lakers can use for up to a year.
It was straight-forward for the Nuggets who simply traded Afflalo and Harrington for Iguodala. For the Sixers, a single deal was done with Iguodala, Vucevic and Harkless for Bynum and Richardson.
It’s the Magic deal that took considerable ingenuity to construct. In addition to the players received, Orlando ended up with a $17,816,880 TPE for Howard. While a basic trade was possible, how exactly was the deal structured to also generate the league’s largest TPE?
For some background, Orlando made a deal earlier in the summer that sent Ryan Anderson to the New Orleans Hornets for Gustavo Ayon. The Hornets had enough cap room to absorb Anderson via sign and trade at $8.7 million.
Additionally, the Magic were holding onto a $4.25 million TPE from the Brandon Bass/Glen Davis trade. Ayon, at $1.5 million, was acquired via part of the Bass TPE . . . leaving a remainder of $2.75 million. Because Anderson got a raise greater than 20%, the Magic received a $4.35 million TPE.
In exiting Howard, the Orlando executed the following:
So in simplistic terms, Howard was traded for Nikola Vucevic and whatever that massive TPE yields over the next year.
The Magic are rebuilding and initially may not look to spend. The team just climbed down from tax territory to about $6.2 million under the $70.3 million tax threshold.
Even if the team holds through the trade deadline in February, the Magic go into the June 2013 NBA Draft and July free agency with a powerful tool. Orlando may also look to help broker a deal should two teams need a third to execute a complicated transaction. The Magic would love to continue collect draft picks and young talent.
It remains to be seen how well Magic general manager Rob Hennigan did with the Howard trade but given the intricacy, he clearly didn’t rush into a frivolous decision.
For more detail on the Orlando Magic, check out the HOOPSWORLD Team Salary Page.
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