Base Year Compensation [Very Boring]

[Jeremy <jwarren@eecs.tufts.edu>]

On Tue, 19 Jan 1999, Championship 17 wrote:

> Hi Jeremy,
> 
> 
> Maybe if you have some time, you can explain to all of us what this base 
> year thingy is all about.  Thanks!

Here's my understanding of the new base year compensation rules.  When you
trade a player in the first or second year of a non-rookie 3+ year
contract, you don't match his entire salary (within 15%) with the salary
of the player(s) you obtain.  If he's in the first year of his new
contract, you take the greater of 1/3 of his present salary or 120% of his
old contract salary.  If he's in his second year of his new contract, you
take the greater of 2/3 of his present salary or 120% of his old contract
salary.  These new restrictions apply when you are over the cap.  They are
designed to discourage sign and trade deals which would circumvent the
salary cap.

For example, let's pretend we're trading Popeye Jones.  He just signed for
$8M over 3 years.  I'm guessing his first year salary is about $2.4M.  So
his base year cap value would be the greater of 1/3 of his new salary
(which equals $800K) or 120% of his old salary ($1.8M???) which would be
$2.16M.  So his salary cap value in a trade would be $2.16M instead of
$2.4M, which isn't much different.  So maybe Warwick's trade would work
after all.

The moral of the story?  Never question Warwick's trade ideas.

Jeremy