Colin Maher, Salary Cap Strategist and Contributor to No Trade Clause

Trade Mechanics:  The Mikal Bridges Trade to the Knicks

One of the bigger splashes so far this offseason was the New York Knicks trading for Brooklyn Nets star Mikal Bridges.  Not only did the trade increase the hope of all Knicks fans for next season, but it shined a light into the new CBA and how trades may be structured moving forward.

Let’s dive in.

Trade Summary

For details regarding pick details and protections, visit NoTradeClause.com/draft-capital.

Timing of the Trade

The news broke about the major pieces of the trade (Bridges, Bogdanovic and the draft picks) back on June 25th, on the eve of the NBA draft. However, the full terms of the trade weren’t made official until after the Moratorium of the new salary cap year-July 6th.  

This occurred for two reasons that are not mutually exclusive.  

First, if the trade stood as-is when announced on June 25th, the Knicks would have acquired more salary than they sent out. This is only permitted for teams below the First Apron. As a result, they would be “hard capped” (i.e. restricted) from having a team salary over the First Apron the rest of the 2024-2025 Salary Cap year while having little wiggle room to make any additional roster moves.

Second, to allow them to execute the transactions needed to avoid the hard-capping issues above, the teams needed the salary cap year to turn over to the 2024-2025 season, which took place on July 1st. 

Transactions and Trade Salary

As explained in articles past, when looking at a trade you have to view the trade individually through the lens of each team.  When doing so, you have to consider the “Outgoing Trade Salary” and the “Incoming Trade Salary.”   Sometimes, a player’s individual salary that currently applies to “Team Salary” may be adjusted for Outgoing Trade Salary, Incoming Trade Salary, or both.  It depends on several factors including timing of the trade within the league’s calendar, contract terms, etc.

In addition, teams may specifically execute certain transactions with players to allow a trade to work.  Here, two transactions took place to execute this trade and keep the Knicks under the First Apron.

Transaction #1 – The Diakite Guarantee

As explained in the Caruso/Giddey trade article, a team’s Outgoing Trade Salary may be reduced by the amount of non-guaranteed salary included in the contract, depending on the date of the trade. Because this trade took place during the new salary cap year but before the regular season, you reduce the outgoing salary by the entire amount of non-guaranteed salary. In other words, for Outgoing Trade Salary purposes, you only count the amount of guaranteed salary earned to date.

As you can see for the Knicks, Diakite’s salary was fully non-guaranteed until the universal guarantee date of January 10, 2025.   Therefore, his Outgoing Trade Salary would be $0.  To increase his Outgoing Trade Salary, the Knicks guaranteed $1,392,150 of his salary.  This specific amount was necessary, as you’ll see below.  Of course, the Nets now have to take on the guaranteed portion of Diakite’s contract.  A small price to pay for all those picks.

Small Note – Only $2 million of Bogdanovic’s salary was guaranteed through June 28th.  If the trade did in fact occur on June 25th, his salary would have to be guaranteed similar to Diakite’s to allow for the trade.

Transaction #2 – Shake Milton Sign & Trade

To increase Outgoing Trade Salary for the trade, the Knicks signed Shake Milton to a Sign-and-Trade for three years worth $9,162,406. A couple of things to note with regard to the S&T.  First, it has to be for three years (excluding options), as that’s the minimum term length per the CBA. However, years two and three can be non-guaranteed. Which is how Milton’s contract is structured.

Second, the Knicks are sending out more player contracts than receiving (Valet does not have a player contract).  Because it is an “unbalanced trade” in the offseason, they cannot send out more than one minimum salaried player (even if the contract is for three years and therefore falls outside Minimum Player Salary Exception). The Knicks are able to use their Non-Bird rights (120% of prior salary) to sign Milton to a non-minimum contract.

Incoming/Outgoing Salary

After executing the pre-trade transactions we can move into the trade math from each team’s viewpoint. 

The Knicks execute one trade, aggregating three player salaries together to equal the same amount of incoming salary from the Bridges contract.  The breakdown is below.

The Nets executed five separate trades using existing TPE’s that were set to expire just days after the trade. This allowed them to create new TPE’s that can be used for one year from the date of the trade, subject to limitations if they were to exceed the First Apron (which they cannot exceed this season anyway).

Conclusion

This trade is likely a microcosm of future trades under the new CBA, where teams will search for creative ways to match salary to avoid being hard-capped or otherwise staying under applicable aprons.  This trade shows how valuable partial guarantees and sign-and-trades may be in the future.