BY: MATTHEW EMERY
You may have noticed many players were waived yesterday. That’s because all player contracts become fully guaranteed on January 10. Since a player stays on waivers for 48 hours, where he can be claimed by other teams, and must be waived by January 10 before his contract becomes fully guaranteed, January 7 (by 5:00 pm) was the deadline to waive players for the purpose of clearing team salary. For many teams, this deadline has cap and tax saving implications. With that said, below is a list of the players that were waived on January 7 in anticipation of the deadline.
The waiver of Michael Carter-Williams was expected but interesting in that it shows how teams use this date to lessen their cap hits. The waiver of Patrick McCaw is very intriguing in that it may create more issues than many initially thought.
The Bulls traded a future conditional second-round pick to the Rockets to acquire Michael Carter-Williams (“MCW”) and $1.1 million in cash yesterday, but waived him only a few hours later. MCW’s $1.7 million contract was only guaranteed for $1.2 million. The Bulls will have to pay MCW approximately $366K of his $1.2 million guarantee, with that amount also counting toward the team’s cap. From the Rockets perspective, this move was clearly to mitigate the teams’ cap and tax hits. From the Bull’s perspective, they used an open roster spot to gain a profit of about $700k in the trade. This worked out well for both teams.
The Patrick McCaw situation is even more interesting and could be a topic of discussion over the next few months. Golden State made McCaw a restricted free agent this past summer, and he remained a restricted free agent until the Warriors declined to match a 2-year $6 million (non-guaranteed) offer by Cleveland on December 30, 2018. It’s rare to see a player stay a restricted free agent for as long as McCaw was this season, but it can happen where the qualifying offer is extended by the team and the player has neither accepted or rejected it. In a turn of events, McCaw was suddenly waived by the Cavs yesterday. Thus, the Cavs are only on the hook for a very small portion of the $6 million contract. This created an odd situation whereby a restricted free agent suddenly became an unrestricted free agent in the span of a few days. The big issue was whether the NBPA and or the NBA would have some issue with this matter, as Marc Stein mentioned yesterday.
As it now turns out, the NBA will investigate this matter.
Some may be saying, what’s the issue and why should I care? Well, McCaw and the Cavs may have developed a plan to circumvent restricted free agency, a key component of the CBA. That should make you concerned, at least to some extent.
While the Warriors and other teams may not be upset about this specific scenario, the NBA is likely investigating this matter because it may have been meant as a means to circumvent restricted free agency. In other words, the Cavs and McCaw may have had an agreement whereby they would offer a rather high non-guaranteed contract, full well knowing that the Warriors would not match, and an additional side agreement that he would be waived by January 7, 2019 so that he can enter unrestricted free agency.
Why would the Cavs do this? Perhaps the team did it as a favor to his agent or to some other team that wanted to sign him? Maybe they just wanted to pull him away from the Warriors and they saw an opportunity to do it at a minimal cost? There could be a plethora of reasons.
In any event, the CBA is a contract which permits conduct, and any conduct contrary to the purpose of the CBA, but technically legal, may run afoul the CBA through circumvention. The CBA addresses circumvention in Article XIII. Specifically, Article XIII, Section 2(b) of the CBA prohibits promises or side agreements to a Uniform Player Contract. The league only needs circumstantial evidence to find that such a side promise or agreement existed, although direct evidence is probably necessary here. A finding of circumvention may depend on how this section is interpreted, but it’s no surprise that the league is at least taking a look at this situation, especially where there doesn’t appear to be any precedent for this McCaw transaction. The League’s argument for circumvention would certainly be stronger if McCaw were to resign with Cleveland for a minimum contract as a run around the RFA rules.
In short, it would be problematic for the NBA if players could force their way out of restricted free agency by signing a fully non-guaranteed exorbitant contract, with a side agreement to be waived and become an unrestricted free agent just a few days later. Thus, if the NBA finds that this was a measure meant to circumvent the CBA, then it may impose harsh fines and penalties on the Cavaliers to deter this kind of behavior. The NBA could take a draft pick away from the team and/or impose a $6 million fine. McCaw may also be punished as well if he is found to be complicit with this agreement.
The league has some political reasons for looking into this issue, as restricted free agency is an issue which is heavily favored by the league, as evidenced by the Arenas Provision (which helps incumbent teams keep their restricted free agents) and by the fact that it helps the league maintain parity.
The results of this investigation will be very interesting and we’ll keep this story updated as the league conducts its investigation.