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Waiting on a J.R. Smith trade is the best move for the Cavaliers

A small loophole could pay big dividends for Cleveland

NBA: Finals-Golden State Warriors at Cleveland Cavaliers Kyle Terada-USA TODAY Sports

In the wake of LeBron James’ decision to leave the Cleveland Cavaliers in free agency for the second time, thoughts immediately turned to where the team goes from here. Naturally, trade rumors have swirled around most of the highly-paid players on the team, most of whom are supporting players brought in to support James’ particular set of skills. Without the engine that made their team go, the Cavaliers are left with the rest of the car but aren’t leaving the garage in the race for a championship any time soon.

While the conversation around the team has turned toward salvaging what remains of the roster, Kevin Love, George Hill, J.R. Smith, and Kyle Korver have swiftly moved to the trade block. While not an absolute necessity to tear it all down, the Cavaliers do owe a top-10 protected first-round pick to Atlanta each of the next two years and if they’re not going to compete at the top of the Eastern Conference, finding a way to put themselves in the top half of the lottery for a couple of years would be in the best long-term interests of the team. Whether Koby Altman can convince Dan Gilbert to choose this path remains to be seen, but theoretically, the “blow it up” strategy has more pros than cons.

Of particular interest in trade scenarios is Smith. For reasons that have nothing to do with his on-court production or clock-related gaffes in one of the biggest games of his life, the Cavaliers absolutely should keep him on the roster through this season and plan to move him next June, when his trade value will be at its peak. “But wait,” you may be asking, “how will his trade value be higher then, when he’s another year older and might be coming off a worse season?” The answer to that question has very little to do with Smith as a player and a lot more to do with Smith’s contract and lies in a loophole in the 2011 Collective Bargaining Agreement, which was closed in the 2017 CBA but still applies to Smith’s contract.

Under the previous agreement, players with non-guaranteed contracts counted for their full salary in trades but could be immediately waived for no cost to the acquiring team, making these players particularly interesting trade chips in negotiations. Perhaps the most famous recent example (and the impetus for the rule change) involved the Cavaliers and Portland Trail Blazers three years ago, when Cleveland traded center Brendan Haywood to Portland for the minimum allowed return. Haywood was immediately waived by the Trail Blazers and both teams benefitted enormously from a bit of salary cap creativity; Haywood counted for $10.5 million in the trade math but was owed nothing upon being waived by Portland, which generated a $10.5 million trade exception for the Cavaliers and bought the Trail Blazers a pair of second-round picks. The majority of that trade exception was used at the ensuing February trade deadline to acquire Channing Frye, who played a pivotal role in the run up to the 2016 NBA Finals victory for Cleveland.

If that same trade were to take place under the 2017 CBA, Haywood’s contract would have counted for nothing and Cleveland would not have gotten a trade exception as a result of the deal. Any contract signed under the new agreement follows these new rules, so trading Hill or Korver, both of whom signed the contracts in 2017, doesn’t garner this extra benefit (though they do function essentially as expiring contracts this season, which has its own value), but Smith’s deal was signed in 2016 and is one of the last few around the league that adheres to the old rules with regards to non- or partially-guaranteed years. Before his contract guarantees on June 30, 2019, the Cavaliers can trade him at his full salary and either generate a large exception for later use or take back another contract that fits his salary from a team looking to cut money.

With just $3.87 million guaranteed for 2019-20, Cleveland can wait until after this season and trade him for a player making far more than that and pick up future assets for their trouble, which will be particularly enticing if they do lose that top-10 protected pick to the Hawks. Players on big money for 2019-20 whom teams will want to trade will all fit Smith’s contract in a trade — old friend Timofey Mozgov, another ex-Cavs in Luol Deng, Tyler Johnson, Joakim Noah, Bismack Biyombo,and Evan Turner would all be smart targets for the Cavaliers next June in an attempt to pick up another first-round pick to restock their war chest of assets.

It’s a small bit of salary cap minutiae, but waiting to trade Smith until after the 2018-19 season ends maximizes his trade value and takes advantage of a small guarantee on a large contract, which will undoubtedly help a capped-out team to get a bit more flexibility or a team staring down the barrel of the luxury tax cut a big salary to duck under the threshold for the punitive penalties. There may be a deal between now and then that’s better than taking on bad money with a first-round pick attached, but assuming no team overvalues Smith’s contributions as a shooter and hot-and-cold wing defender, taking the patient approach will be prudent for the Cavaliers.