TL;DR: Under the new CBA, the trade would not have happened because of changes in how payroll is calculated. So we should be thankful that we were able to acquire such a great player, albeit at a steep price.
I was reading about the new CBA and came across a rule change that was added to prevent this exact kind of trade.
The new CBA just got ratified but it won't come into affect until the offseason so the league is currently operating under the old CBA. Under the old CBA, a team's payroll must above the salary floor (which is 90% of the cap). If they do not meet the floor, they have to pay the difference into a pool that’s then paid out to the players on their roster. However, “payroll” is NOT the actual dollars a team has paid out during the year. Payroll is instead defined as a team’s cap sheet on the last day of the season.
What this means is that a team which is $10M below the floor could trade for a player with a $10M salary at the trade deadline and they would pay the player only $3-4M (the full season salary of $10M pro-rated over the two months or so that the player is with his new team). However the player's full $10M would count towards the payroll and the team would not be below the salary floor. Had the team not made the trade, they would have had to pay their players an extra $10M. So, by making the trade, the team saves $6-7M.
However, under the new CBA, payroll will be calculated as the amount of money that the team has actually spent. So the hypothetical team in the above situation would still be $3-4M below the cap and would have to pay the difference to its players.
The Nuggets were around $10M below the cap before they traded for and waived Mo Williams. After the trade, Williams' entire $2.1M salary will count towards their payroll even though they'll pay him only $700k or so (a saving of about $1.4M). They'll probably make more such trades before the deadline so that they can cross the salary floor and avoid paying the penalty. Under the new CBA, there would be no savings for the Nuggets since the amount they pay him ($700k) will be the same as the cap hit so there's no reason for them to make the trade.
Submitted January 20, 2017 at 04:13AM by widesheep