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