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Analyzing the financial implications of the Channing Frye trade

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How will the Cavs' acquisition of Channing Frye affect their salary cap situation?

Kim Klement-USA TODAY Sports

How does the Cleveland Cavaliers' trade for Channing Frye affect our tax bill this year? Let's take a look at the numbers:

Pre-trade

Team Salary: $109.27 million

Luxury Tax: $61.99 million

Anderson Varejao: $9.64 million in 2015-16, $10.36 million in 2016-17 ($9.3 million guaranteed), $10 million (non-guaranteed) in 2017-18

Jared Cunningham: $950,000 in 2015-16

Post-trade

Team Salary: $106.88 million

Luxury Tax: $53.02 million

Channing Frye: $8.19 million in 2015-16, $7.81 million in 2016-17, $7.42 million in 2017-18

This results in the Cavs saving $8.97 million this year in luxury tax if Cunningham's roster spot remains empty. Further, the difference in pro-rated salary between Frye and our two former players amounts to $880,000 this year. However, the Cavs do have to pay Varejao a five percent trade kicker on the guaranteed portion of his contract.

Net savings: $8.68 million this year

While Frye's contract is fully guaranteed the next two years, it is also significantly less than Varejao's. As a result, Cleveland saves $2.55 million in salary for 2016-17 and $2.58 million in salary for 2017-18 relative to Varejao's deal. It is yet to be determined how much this saves us in luxury tax, but it will likely be a significant amount.

All-in-all, this trade makes a lot of sense from a financial standpoint, and obviously from a basketball standpoint.