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June 30, 2023

Why new CBA could motivate quicker James Harden trade offers for Sixers

How long will it take for the Sixers to determine James Harden's fate?

If you pay even a little attention to coverage of the NBA, you have heard a lot of doom and gloom regarding the new collective bargaining agreement and how it's impacting the league before it kicks in. The Wizards basically salary dumping Bradley Beal was a good example of the money side impacting the basketball side, even if that's an extreme example due to other factors.

Why is that relevant here? The Sixers could end up in a situation where teams interested in Harden show some urgency to get a deal done today. Yes, today, June 30th, and not a day later. 

Trading players/contracts in the NBA is not as simple as just trading a player you don't want anymore for a player on another team you do want. There are specific salary-matching rules to consider in each transaction, and those rules are among many that are shifting in the new CBA, not necessarily in favor of the teams hoping to acquire a star.

Let's break this down:

  1. Under the terms of the "old"/current CBA, teams above the luxury tax threshold can take back up to 125 percent of their outgoing salary in a trade plus $100,000
  2. Under the terms of the new CBA, teams above the first apron can only match salaries up to 110 percent of their outgoing salary in a trade 
  3. Under the terms of the new CBA, on the first day following the 2023-24 season, teams over the first apron will only be able to trade for 100 percent of their outgoing salary — which is to say, they cannot trade for a player making a single cent more than whoever they trade away
Another critical component — Harden is scheduled to make $35.6 million next season, with a 15% trade bonus of $5.3 million. That trade bonus is important to make note of. While the team trading away the player with a trade kicker is responsible for paying the bonus, their outgoing salary for matching purposes excludes the bonus figure. For the receiving team, it's Harden's new cap figure (which includes the bonus) that must be used for salary matching in the trade.

So how does this apply to the Sixers and James Harden's situation? Let's look at a scenario involving the Los Angeles Clippers specifically, as we reported on Thursday that they've already been in contact with Philadelphia regarding a potential Harden trade.

Scenario A: The Sixers trade James Harden to the Clippers today, on June 30th, prior to the new league year starting. His trade bonus for salary-matching purposes (based on guaranteed salary remaining in the deal) is then split evenly across this "season" (or the remaining hours today) and next year. That would add $2,673,000 to Harden's cap hit in each year of the deal. In other words, the Clippers would be receiving Harden today, June 30th, with a salary-matching number of $35,673,000. 

In English, please: The Clippers would have to send out a bit more than $28.5 million in salary for a June 30th trade to be "old" CBA legal. In Clipper contract terms, that's roughly Norm Powell and Robert Covington.

Scenario B: The Sixers trade James Harden to the Clippers after July 1st. In the final year of his deal, the entirety of Harden's bonus would apply to his 2023-24 cap hit. Adding the full 15% bonus to Harden's scheduled $35.6 million contract puts his cap hit at roughly $40.9 million for salary-matching purposes in a trade.

In English, please: Under the terms of the new CBA, the Clippers would have to send roughly $37.3 million in salary in order to be compliant on salary matching. In L.A. contracts, that's Norm Powell, Robert Covington, and a little under $8 million worth of additional salary. For reference, Clippers guard Terrance Mann will make $10.5 million next season, and Nicolas Batum will make $11.7 million. 

You could argue this isn't super meaningful for the Clippers in the sense that they have lots of players around the $10 million mark to trade, and picking up Harden for a group of role players won't make them sweat much. But zooming out from the Clippers and applying this to all potential suitors, it is potentially the difference between a team trading the Sixers another rotation player by necessity or having the ability to try to beat the Sixers down on the asking price. 

The Miami Heat are reportedly interested in Harden, for example, but Miami is short on mid-sized contracts to move on top of whoever their outgoing value chip would be. Tyler Herro's $27 million cap hit lacks a natural partner to move with him in that sort of deal, unless the Sixers were inclined to take on "bad money" like Duncan Robinson's deal to facilitate the move (and that's a no, I would estimate). As a result, a trade executed at any point from July 1 onward could potentially force Miami to add another young prospect on a smaller deal just to cross the matching requirement line.

Looking at it from Philly's end, they'll prioritize whatever scenario lands them the most talent and best assets, either to keep for their team or trade elsewhere for another core piece. However, given that Harden will likely try to dictate his way to one of a small number of teams operating with over-the-apron restraints, the higher threshold is potentially meaningful if it forces the Sixers to take back (or re-route) an extra player and his contract to comply with salary-matching terms, rather than because they want said player. It's unlikely to change their stance on moving patiently and striking when the market works best for them, but it's a factor to consider in this process.

(Sixers fans will note that Paul George's name is not mentioned in the L.A. scenario. Even if the Clippers were inclined to entertain that swap, and my understanding is they have not to date, a straight-up deal with George and Harden is actually illegal for the Sixers prior to July 1stPhiladelphia is hard-capped and can't take on the difference in salary between Harden and George without crossing the tax apron for 2022-23. In addition, with Harden's trade bonus not counting toward Philly's outgoing salary number, they would only be able to take back 125% of Harden's $33,000,000 plus $100,000 in any deal prior to July 1. That sets the ceiling for money sent to Philly at around $41.25 million, or short of George's $42.5 million cap hit for 2022-23. There would need to be more salary adjustments/additions in order to make a deal around those two work on June 30th. Are you getting a headache yet?)

Drop all of the math, and the short version of this story is as follows — the profile of most suitors that would appeal to Harden will operate under different, tougher constraints once the calendar flips to July. It would be a Gumby-esque reach to suggest teams must get their best offers in today or consider themselves out of the running for Harden. But it sure wouldn't hurt to show a little urgency.

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