The WOOD Chip - Dallas-Mavs.com Forums

Underdog · 08-22-2010, 03:21 PM

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The True Value Of Haywood's Mavs Contract? Yes, It's 'The WOOD Chip'

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The summer of 2010 marked the long-awaited denouement of Erick Dampier's contract -- The DUST Chip - as a Dallas Mavericks trade asset. Shipped to Charlotte, it landed Tyson Chandler, a center good enough to be the starter on Team USA and usable as both a complement to Brendan Haywood and as an attractive expiring contract for potential trades during the season, while getting rid of $17.5 million in wasted salary from the payroll. It was a positive move, though hardly what we at DallasBasketball.com had hoped for and dreamed for and written about in anticipation of for over a year.

But before you despair about the fact that DUST is about as infamous as it is famous, check it out: Just as DUST was out the door, the guys who invented it did something else undetected:

They created another chip just like it, to take another swing in the future.

Yep, Mark Cuban, Donnie Nelson, Keith Grant and the gang are at it again. This time, in re-signing Haywood, they tacked on one of those eight-figure, fully-unguaranteed years to the end of Haywood's new contract, a year whose primary purpose will be to create an advantageous trade opportunity for the Mavs. Like The DUST Chip, this will now be a virtually-one-of-a-kind asset to use in a future July free agency.

We'll call it (as you might have guessed-and/or-guffawed by now) … The WOOD Chip.

Why do we talk about it now? In general, NBA policy prevents teams from discussing contractual details. As a result, when new deals are signed, the facts tend to trickle out a bit at a time: first we get some indication of total dollars (which can be fuzzied by incentives) and years, and then the details begin to emerge. Haywood's contract is no different. And even now, there's still a bit of fuzziness because there are incentives built into the deal that can still alter the contractual commitment.

But we do know this: in the Summer of 2015, the Mavs will have another exciting trade toy to use. Since we've outlined before how such a trade chip can be used to the Mavs' advantage we won't go into all the details again for now, but the main point is that it allows the Mavs to receive a contract without send back any contractual obligation, a feature which is useful when dealing with a team who doesn't want to add to (or wants to reduce) their payroll. Being able to use such a contract in a Sign-and-Trade for a free agent, or with a team repositioning their roster in the summer, is a huge advantage.

While some dismiss The DUST Chip (and the Mavs’ creativity in inventing it) because it didn’t result in LeBron James becoming a Mav, the potential had been created out of nothing. The position was there. And an opportunity did present itself:

The DUST Chip didn’t lure a superstar. But it did put the Mavs in position to grab Al Jefferson, if the Mavs had so desired. And it did alternately land them a very useful center, who can be used as an expiring contract immediately if so desired, plus $17.5 million in savings.

Not LeBron. But not too shabby.

Not a grand-slam home run. But a decent at-bat.

Ultimately The WOOD Chip will be almost exactly like The DUST Chip, in that it extends through the meat of the free agency signing period. As we detailed previously the players with a more-than-minimum-ish final unguaranteed year usually have a "fully guaranteed if not waived by" date in June, and/or a substantial payoff if they are waived. Haywood's, like Dampier's, has neither a June deadline nor money to be paid.

There are a few subtle differences between the DUST and WOOD Chips. Haywood's final year, at $10.5 million, is 20-percent smaller, which lessens the size of trade it can handle - and adds to the potential that Haywood could be retained rather than waived. In addition, while Dampier's contract had no deadline at all (other than the league-wide January 10 date when all contracts become fully guaranteed for the balance of the year), Haywood's has a "fully guaranteed if not waived by" date of August 1 in that summer: it's a difference that will still allow the Mavs to use it during the primary free agency season, while still giving Haywood a reasonable window to get a new deal if waived. Finally, The WOOD Chip will be subject to the customs that arise under a new CBA, which may make it less advantageous - or may make it of even greater use.

Here are the numbers:

2010-11 $6,900,000
2011-12 $7,624,500
2012-13 $8,349,000
2013-14 $9,073,500
2014-15 $9,798,000
2015-16 (unguaranteed) [trade chip of $10,522,500]
TOTAL (guaranteed) - 5 years, $41.745M

Those offer another fact about Haywood's contract that now needs to be noted, beyond the existence of The WOOD Chip. Because of the way the final year was written and the existence of incentives, the deal itself actually was a much more reasonable contract than was publicized. Didn't we have media and fans alike scared the Mavs were going to have to choose between losing Haywood and overpaying him with deals starting in the $10-12 mil range, in light of the money available in free agency? But when all was said and done, it was only a $41-mil deal over five years, with the first season less than $7 million. Very reasonable, and well within the Mavs' existing salary structure they've been building.

One final point needs to be made. Some of these totals are subject to change a bit. The incentives written into the Haywood deal are currently unknown, but from the way the contract was first described to us in July, we think they are probably worth several million dollars in total over the life of the deal. If they are met (they are currently classified by the NBA as "unlikely") they may impact any future season including the final season and its guarantees. As more details emerge, we'll keep you posted.

Will The WOOD Chip eventually land the star or superstar that DUST did not? The odds seem stacked against such a thing, but there's no way to tell.

But this story isn’t about skepticism or anybody’s “viewpoint.’’ It’s about facts, assets and opportunities.

The WOOD Chip is, once again, the result of an unusually beneficial way to construct a contract. Brendan Haywood’s deal – less than you thought it was now, better than you think it is then -- is all about creating opportunity. And in that department, the Mavs never stop.

Maybe we'll land LeBron in 2015? There's still hope, Mavs fans!!!

DLord · 08-22-2010, 04:03 PM

The WOOD chip aspect draws the attention. But to me the more important story is the overall deal. Whether or not the ending trade chip turns into something valuable, all in all that's a really nice deal done by the Mavs in a summer where the money and competition for players was at its highest. Reasonable - maybe even somewhat of a bargain - sized contract for a solid center, topped by a potentially valuable trade chip.

DL

sefant77 · 08-22-2010, 04:19 PM

I really hope someone gonna bump this thread in 5 years

sefant77 · 08-22-2010, 04:20 PM

Quote:

Originally Posted by DLord

The WOOD chip aspect draws the attention. But to me the more important story is the overall deal. Whether or not the ending trade chip turns into something valuable, all in all that's a really nice deal done by the Mavs in a summer where the money and competition for players was at its highest. Reasonable - maybe even somewhat of a bargain - sized contract for a solid center, topped by a potentially valuable trade chip.

DL

this. Its a value contract for a "real" center with strong defense.

Amir Johnson, Gooden, Harrington...