The Carmelo Anthony Deal- Why It’s One of the Most Complicated in NBA History

If you’ve gone to ESPN.com over the last few weeks, you’ve seen a Carmelo Anthony heading at least once a week. “Carmelo deal to Nets forming.” “Deal sending Carmelo to New Jersey close.” “Melo slows deal.” “Melo won’t go.” I’m sure many are wondering what the problem is. If a player is under contract with a team and that team wants to trade that player, what’s the hold up? Well thanks to a combination of issues, the Carmelo situation has become the perfect storm of a messy trade.

 

For those of you unfamiliar with the circumstances, Carmelo Anthony plays for the Denver Nuggets and wants to be traded to the New York Knicks. The Denver Nuggets want to trade him to save money and get a good package of players and draft picks in return, especially since they lose his rights after the season. Melo is functionally in the last year of his contract- at the end of this season, he has an option year for $18 million, meaning he can choose to play in Denver for $18 million or opt out of his contract and become a free agent. This is good for Carmelo since he can leave and sign with the New York Knicks.

In order for any trade to go through in the NBA, teams have to make sure they follow all trade rules. In this case there’s a few rules that really stand out. Players can sign longer contracts and make more money by extending current deals or resigning with their current teams than they can by signing with a new team. This gives teams a competitive advantage in free agency to sign players they already hold the rights to and is really important for the Melo deal. Also important, there is a luxury tax threshold- when team salaries are above this threshold, teams have to pay $1 tax for each $1 they are over. In the Nuggets case, any reduction in salary corresponds to double that amount in savings.

Here’s where it gets tricky. The Collective Bargaining Agreement (CBA) between the NBA and NBA Players Association’s (NBAPA) expires at the end of this year. The new CBA is expected to limit players’ salaries, length of contracts, and contract guarantees. Under current rules, Carmelo can sign a 3-year extension for $65 million which gets added on to the player option he has. That’s a 4 year total of $83 million. If he opts out and signs as a free agent with the Knicks, this could decrease to 4 years for $50-60 million. The ideal situation for Carmelo is to be traded to the Knicks where he could sign a 3 year extension.

Lost in all this is the effect this has had on Denver’s season. Denver has acquiesced to Carmelo’s desires and looked for a trade partner in larger markets, at the expense of its current season. A proposed deal to New Jersey would send former All-Star Devin Harris, rookie Derrick Favors, a few other players, $3 million, and a first round pick to Denver. This deal includes another team, Detroit, which would get salary relief. The Nuggets would be required to give up point guard Chauncey Billups in the deal. This gets the Nuggets back a lot of young talent, while shedding almost $12 million in salary for the year ($24 million when considering luxury tax). It’s a great deal for the Nuggets and sends Anthony to a big market, with players that would make that team competitive.

The problem with the deal is that it’s contingent on Anthony agreeing to that 3 year extension with the Nets. Which he so far has said he won’t do. Melo has some negotiating power here by refusing to sign an extension. No team, including the Nets, would give up young talent and draft picks to use Anthony for a few months and then watch him leave in free agency. The Nuggets also have some negotiating power because if Melo doesn’t agree to the trade, he could lose up to $30 million by signing as a free agent instead of signing an extension. Whatever ends up happening, I think all parties are losers in the deal. Carmelo could have stayed in Denver and become that city’s hero, much like Paul Pierce did in Boston or Kevin Durant is now doing in Oklahoma City. The Nuggets also lose the face of their franchise, and could lose Anthony for no compensation at all. The Nets give up a lot of talent for a core of Carmelo Anthony (a top five players), Chauncey Billups and Rip Hamilton (aging players), and Brook Lopez (young center who may be an All-Star and may not). Even though the Nets do get Melo, that core is not good enough to compete in the East. It may not even be good enough to compete in New York.

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2 Responses to The Carmelo Anthony Deal- Why It’s One of the Most Complicated in NBA History

  1. From that standpoint you wonder why the Nets would want to make that trade — it’s not as if they’re only one player away. I don’t want thte Knicks to get Melo either. The Knicks need another scorer like the Atlantic Ocean needs a glass of water.

  2. Money says:

    Really enjoyed the article! Very informative and a good read. Given the complex calculus of expiring collective bargaining agreements, salary cap restriction, expiring K’s, player interest, etc. what would it take to get Melo in New York before the trade deadline? Like what players would have to be offered to please both sides in both basketball and business terms?

    Curry, Gallinari, first & second pick for Melo? — is Curry’s deal expiring?

    Any word of potential underground deals via Stein or Bucher on this one?

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