OK, listen up, class, today’s lesson is based around an NBA salary cap issue called “Base Year Compensation.”
You may be hearing that term a lot over the next few weeks, because it applies to the Cavaliers’ Anderson Varejao and Sasha Pavlovic.
I know this now, but I did not know it Wednesday afternoon when I wrote the following paragraph in a story about Varejao that appeared in the paper on Thursday: “…if the deal starts in the
$7 million to $8 million range, the Cavaliers may try to work a sign-and-trade for Varejao. That’s where (David) Wesley would come into play, as his contract would allow the Cavaliers to take back two players whose salaries total more than $11 million.”
Wrong, wrong, wrong, as an alert reader was quick to point out in an e-mail Thursday morning.
Varejao and Pavlovic are Base Year Compensation (BYC) players. The issue can get really complicated, but what it boils down to is this: If a BYC player signs a contract and receives more than a 20 percent pay increase from his rookie pay scale, which Varejao and Pavlovic are sure to do, he can only be traded for someone whose contract is worth half the value of the first year of the BYC player’s new deal. That stipulation applies for a full calendar year after the BYC player’s new contract is signed.
Confused? Thought so.
Say Varejao, who earned slightly less than $1 million last season, signs an offer sheet with Memphis that would pay him $7 million in 2007-08. The Cavaliers, who are over the salary cap, could match that offer and then try to work a trade with the Grizzlies, but they could only take back a maximum $3.5 million in salary.
This is so because Varejao is, all together now, a Base Year Compensation case.
What does all this mean to the Cavaliers?
It means if Varejao does indeed sign a five-year, $41 million offer sheet with Memphis, working a sign-and-trade with the Grizzlies may not be a real viable option because most of the players the Cavaliers would want in return make too much money.
The Cavaliers would still have two other immediate options: Match the offer and keep Varejao, even though he would be making more than starting power forward Drew Gooden ($6.4 million in 2007-08), or don’t match the offer, lose the talented young Brazilian and get nothing in return.
Of course, if the Cavaliers matched the offer, they also could trade Varejao next offseason and take on a player making a similar salary.
Now, there is one bit of good news as far as the Cavaliers’ chances of keeping Varejao are concerned: There are people in the know who believe the Grizzlies, who are also courting Chicago restricted free agent Andres Nocioni, are not really offering a big-time deal to Varejao.
Agent Dan Fegan, they will tell you, was stretching the truth a bit, perhaps in an attempt to get one of the other teams in the league with significant cap space — Charlotte or Milwaukee — to enter the bidding.
If that’s true, it would be great news for the Cavaliers, who want to keep Varejao, but don’t want to pay him more than the mid-level exception — it is expected to be between $5.5 million and $6 million — in the first year of his contract.
OK, my time is up for today. Class dismissed.
Contact Rick Noland at (330) 721-4061 or firstname.lastname@example.org.