By: Richard Braun, Ruling Sports Intern (Twitter: @RicBraun)
When the Nets traded for Joe Johnson last night, Dwight Howard’s desire to move to Brooklyn took a major hit. As a result, if he wants to maximize his future earnings, Howard is going to need to be open-minded about his future home.
Howard’s next contract will almost certainly be for the maximum salary allowed under the NBA collective bargaining agreement, which for him starts at $15.5 million in the first year of the contract. However, under the new CBA, players who re-sign with the team who owns their Bird Rights can get a maximum of a five year deal with 7.5% annual raises. A free agent, on the other hand, can only get a four year deal with 4.5% annual raises. Any team Howard is traded to gets his Bird Rights, which is why he has such a vested interest in where Orlando trades him – wherever he gets traded to can offer him significantly more money than anyone else. By forcing Orlando to trade him where he wants to go, he is trying to have his cake and eat it too.
His dream of going to Brooklyn, however, now appears unlikely of ever becoming a reality. Even though the Nets and Magic have engaged in trade talks that would send Brook Lopez and filler to Orlando for Howard, the Magic can get better deals elsewhere. Houston, Atlanta, and both Los Angeles teams can all offer much better deals for the Magic than Brooklyn can. And given the falling out Howard has had with the Orlando front office this past year, they are unlikely to do him any favors. And because of last night’s Joe Johnson trade, New Jersey no longer has any cap flexibility going forward, and would not be able to sign Howard as a free agent for anything more than the Mid-Level Exception.
This leaves Howard with two options – play out the season in Orlando and sign elsewhere in the offseason, hoping that Orlando agrees to a sign-and-trade so he can get the 5 year deal, or agree to sign an extension with whatever team he is traded to. If he isn’t traded, he stands to lose around $40 million for the life of the contract because of the lower annual raises and the shorter term deal.
Atlanta in particular now seems to offer Howard more than he originally thought was possible. After shedding the contracts of both Joe Johnson and Marvin Williams (sent to Utah for the expiring contract of PG Devin Harris), Atlanta is now loaded with enough cap space to make a run at two big time free agents next offseason. Not only is Howard potentially a free agent next offseason, but so is Chris Paul. Atlanta doesn’t need to wait that long, however. They could offer all-star big man Al Horford in a deal, which would trump just about any deal any team can offer. Horford has five years left on a deal that pays him $12 million annually, so Orlando could build around him for the long term. Atlanta could throw in promising PG Jeff Teague in a deal as well, and likely would need too in order to make salaries match up (as a non-luxury tax paying team, if Atlanta sends out less than $19.6 million in outgoing salary, they can bring back in that amount plus $5 million). The fact that Atlanta is Howard’s hometown is just icing on the cake. A Dwight Howard-Josh Smith tandem on the court would certainly be a menace defensively, and Atlanta would then be a major player in free agency in 2013.
Houston can also make a better offer than the Nets, and they appear willing to do so despite Howard’s refusal to agree to an extension there. Houston has six first round picks from the past three years, plus PG Kyle Lowry and the expiring contract of SG Kevin Martin. It makes for a decent offer, and certainly would be a better package than what the Cavs and Raptors got in return for their exiting superstars. If Howard was unwilling to resign in Houston, however, it would result in him passing up on a 5th year in his contract and the higher annual raises. He would be dependent on Houston agreeing to a sign-and-trade that would allow him play wherever he wants to play but still get his big contract.
Dallas is another team that has reportedly been on the fabled Howard “wish list”, but like Brooklyn they can offer very little. Dallas could sit on their cap space for one more year and hope Howard signs there as a free agent next offseason, but they risk coming away with nothing in that scenario. And again, Howard would be accepting less money, short of a sign-and-trade.
A sign-and-trade next offseason for Howard, whether he stays in Orlando or is traded to a place he doesn’t want to be long term, is a tricky proposition for him. A sign-and-trade occurs when a player signs with the team that owns his Bird Rights, but he is then traded immediately to another team. The benefit to the player is that he gets a bigger contract than he may have if he had just signed with a team as a free agent. The team, meanwhile, gets something in return in the trade, which usually isn’t much more than a trade exception but is better than nothing. A team gets a trade exception (TPE) when they trade a player into another teams cap space and does not get equal salary in return. You get one year from the date of the trade to use the TPE. Cleveland and Toronto both got trade exceptions when LeBron James and Chris Bosh were sent to Miami, but neither team used them. In fact, usually teams don’t use the TPEs when they get them – the Lakers had one after trading Lamar Odom last off-season, but have yet to use it and likely won’t. What this means for Howard is that he will be at the mercy of whatever team owns his Bird Rights – they could easily decide it is not worth it for them to get the TPE, and just let Howard walk.
All of this leaves Howard in a sticky situation unless he opens his mind about his future home. By overplaying his hand and being stubborn with his demand to go to Brooklyn, he risks missing out on the max contract he can earn. By agreeing to go to Houston or Atlanta, he will be making it much easier for Orlando to trade him and will guarantee him a massive contract extension.