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Toronto has reportedly signed-and-traded Lowry for Goran Dragic — now what?

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While the official word isn’t out yet, it’s understood the Raptors are working out a deal with the Miami Heat built around Lowry and Dragic. So then what happens with Dragic and Toronto?

Miami Heat v Toronto Raptors Photo by Tom Szczerbowski/Getty Images

One day into NBA free agency and the Raptors have already agreed to send Kyle Lowry to the Miami Heat in a sign-and-trade, and have agreed with Gary Trent Jr. on what his deal will be.

There are still a lot of questions to answer for the Raptors this week, but step one is determining what to do with the salary ballast from the Miami Heat. It’s not official yet, but the Raptors are most definitely taking on the salary of Goran Dragic to make the sign-and-trade with the Heat work. And it’s clear that both team and player have little interest in staying together for 2021-22. So, where does Dragic go — and what comes back to Toronto?

Cap Room?

There is limited reporting on the exact return for Lowry from the Miami Heat. But we can be sure they sent at least Goran Dragic ($19.4M) and Precious Achiuwa ($2.7M). There may be a future pick involved, but for our purposes, we don’t need to speculate further on that.

Those players alone would only allow Lowry to sign an $87.5 million deal over three years, and most reports have him at approximately $90 million. Depending on how loosely one defines “approximately” that could mean the above is all the players coming, or another player like KZ Okpala ($1.8M) could be coming as well, bringing Lowry’s allowable total salary up to $90 million (or even higher, could go up to $94.5 million).

For cap room purposes, the pessimistic approach is to assume that extra player is coming to the Raptors, so let’s go with that for now.

If the Raptors keep Dragic, they would be projected to have no cap room — and would continue this off-season as an above-the-cap team able to use their mid-level exception (MLE).

This is clearly not Plan A for the Raptors, though. They’d like to move Dragic to a third team in this trade and clear themselves significant cap room to chase a free agent, either one of the remaining restricted free agents on the market (John Collins, Lauri Markannen) or so they can sign a couple of the smaller unrestricted free agents instead (perhaps Malik Monk and their own Khem Birch).

Alternatively, they could use the opportunity of moving Dragic elsewhere to bring in another player via trade. But I think simply shedding his deal is their first priority.

If the Raptors do move Dragic, and take nothing back, that would clear his $19.4 million and allow them to have $100.8 million on the books, including all their unguaranteed salary (besides Rodney Hood and Aron Baynes who will obviously be cut). That means $11.6 million in cap space for Toronto. That would be enough by itself to make a 4-year offer worth $50 million.

As we covered in our recent pieces, the Raptors can cut their minimum salary guys and then re-sign them if they are open to that, which would open up $4.1 million in additional cap room. Assuming they do that, their cap room climbs to $15.7 million. That would be enough for a higher offer to a free agent, up to four years and $67 million. Note that in this case, since there are now empty roster spot holds on the team salary sheet after cutting all those guys, that splitting the $15.7 million between two players would increase the available cap room (by $0.9 million for each extra player it is used for). So for example, signing two players would let them use $16.6 million in cap room between them.

The Raptors could also cut Boucher ($7M) as well, or trade him without taking back salary, and open up their cap room to $21.8 million, good for a 4-year offer of $94 million.

And of course, there’s the trick we mentioned on Sunday, in which the Raptors pull Gary Trent Jr.’s qualifying offer and save themselves $3 million in cap room. One of the major benefits of locking Trent Jr. into an agreement early in free agency (to a pretty player-friendly deal) is it frees them up to pull that QO without worrying Trent Jr. will walk away. So I expect they would do this.

Doing so would increase their cap room to $24.8 million, good enough for a 4-year offer of $106 million. Big enough to go hunting for an expensive RFA, or possibly to sign two decent unrestricted free agents (say, Birch and Monk).

But all of this depends on shedding that Dragic deal.

Where To For Goran?

There are any number of landing spots for Dragic, especially if the Raptors angle to make this into a trade with a high salary player coming back. We’re going to leave that scenario out here — as there are too many options to cover — and focus on the salary clearing trade options, as those are the ones that best align with their quick trigger with Trent Jr.’s contract.

The obvious names would be the teams that missed out on Kyle Lowry — namely, the Dallas Mavericks and the New Orleans Pelicans.

Dallas Mavericks

The Mavericks have already made some signings, but it’s unclear if they did so with the cap room they generated for Lowry or if they plan to operate as an over-the-cap team.

They signed Sterling Brown (2 years, $6.2 million) and Reggie Bullock (3 years, $30.5 million) as free agents. And re-signed Tim Hardaway Jr (4 years, $74 million) and Boban Marjanovic (one year, salary unreported).

The confusing part is whether they did so with cap room or by operating above the cap. Signing Hardaway first would remove his large cap hold and replace it with his first-year salary of $16.5 million. That leaves them with $15.7 million in cap room. If they kept Boban’s rights, it would cost them $4.6 million, but let’s say they sign him first as well, perhaps to a deal identical to last season ($3.5 million). Then their cap room is $13.1 million.

That $13.1 million is enough to fit the $3 million starting salary for Brown and $9.7 million starting salary for Bullock. And then they are done, no more cap room.

Alternatively, they’re maybe now operating over the cap, so to sign Hardaway Jr and Boban they just need to keep their rights and their salaries are irrelevant, and they can sign Brown with the Bi-Annual exception (the two-year term suggests this was their intent). But Bullock’s deal is very narrowly too much to fit in the Mid-Level Exception. It is so close that I expect there was a reporting error, as the Mid-Level for three years is worth $30.05 million, not the reported $30.5 million.

But in either case, they are not absorbing Dragic into cap space. They would now need to make a salary matching trade, which is obviously not ideal for the Raptors.

It might look something like:

To Dallas: Goran Dragic ($19.4M)
To Toronto: Dwight Powell ($11.1M) plus one of Maxi Kleber ($8.8M) or Dorian Finney-Smith ($4M)

If Kleber, that’s enough salary matching for both Dragic and Boucher. Those deals would clear a little cap for Toronto but not much — if we start from the optimistic $24.8 million in cap room, that drops to $4.9 million in the Powell/Kleber deal or to $10.6 million in the Powell/Finney-Smith deal. In either case, it’s not worth the trouble, the team would stay over the cap and use the Mid-Level Exception and Bi-Annual Exception to add more depth.

It’s not really a cap clearing move, but it could work as a trade just to add pieces. The question is whether Toronto would want those pieces. I still figure they want to avoid that, but opportunities to shed Dragic’s entire salary are disappearing fast.

New Orleans Pelicans

The Pelicans have also made some moves in free agency that have eaten into their available cap room. They signed-and-traded Lonzo Ball to Chicago, with Tomas Satoransky ($10M, expiring) and Garrett Temple (sign-and-trade, three years, unknown salary) coming back. They are also receiving Devonte’ Graham (sign-and-trade, four years, $47M).

That means, starting from their committed salary of $84 million (including Josh Hart’s cap hold), they added at least Satoransky’s $10 million, Graham’s $10.9 million, and enough salary in Temple’s deal to allow the Bulls to salary match on Ball (that would be $4.8 million), making a total of $25.7 million in salary. That brings their total to $110 million. With a cap of $112.4 million, they are out of cap space.

Oh no, here we go again. Another landing spot for Dragic has been reduced to salary matching.

Well, no. Because New Orleans doesn’t have to operate below the cap for any of that. They can operate as an above-the-cap team, and do all of that, and have flexibility leftover, via trades.

The key here is the Jonas Valanciunas trade they made to clear all that cap room to start with. They traded down in the draft to be able to send out Steven Adams and Eric Bledsoe for Valanciunas’ contract.

The trick is, that deal could not be completed until the summer when Memphis would have the cap room to absorb those contracts. Meaning that trade hasn’t happened yet. And if it happens at the same time as a bunch of this other stuff, it could open up all sorts of avenues for New Orleans to add salary.

First, let’s try to keep it simple, can they do the Lonzo Ball and Graham swap without using cap space or expanding into the bigger trade?

New Orleans Trades: Ball ($19.8M)
New Orleans Receives: Satoransky ($10M), Temple ($4.8M), Graham ($10.9M)

Ball’s $19.8 million would allow them to absorb up to $24.8 million. That deal works out to $25.7 million coming in. So not quite. But what if Lonzo’s deal was structured differently? If Lonzo has a decreasing contract with salary drops instead of raises every year, his starting salary would be $22.97 million. That would mean Temple’s salary would need to be $7.97 million, and New Orleans would be absorbing $28.9 million. While Ball’s deal would allow them to absorb $28.8 million. Not quite enough. So the Graham deal needs to be rolled into the bigger trade (the Chicago deal can stand on its own).

So, the bigger trade would then look like this.

New Orleans Trades: Adams ($17.1M), Bledsoe ($18.1M)
New Orleans Receives: Valanciunas ($14M), Graham ($10.9M)

The outgoing salary ($35.2 million) allows them to receive in return up to $44.1 million. The trade above has $24.9 million of that spoken for, leaving $19.2 million available.

You’d think perhaps this is another heartbreak — that just missed being able to absorb Dragic! But no, they would be sending out another piece to the Raptors in a Dragic trade. Let’s be optimistic and assume the Raptors could pry away Nickeil Alexander-Walker. That would add $3.3 million to their outgoing salary, plenty to be able to fit Dragic in. That’s very optimistic though, more likely it’s a guy like Naji Marshall, who makes $1.5 million — again, plenty enough to cover the missing $0.2 million to absorb Dragic’s deal into that trade.

But back to that optimism. The Pelicans do want to be adding as much talent as possible that would fit around Zion Williamson — they are trying to sell him on the team, after all. So what else could the Raptors send to help them pry away Alexander-Walker?

Boucher is a guy the Raptors might look to waive (e.g. decline his second year) if they have a big-name free agent target like John Collins to go after. If that’s the case, the Raptors might as well trade him instead. Boucher fits wonderfully on the Pelicans, giving them a floor-spacing big man and a change of pace from Valanciunas. He’s also on a short-term affordable deal, allowing them the flexibility to re-sign him or make other moves after this season. That may still not be enough to get Alexander-Walker to the Raptors, but it’s worth a shot.

If that were to occur, the deal would need to expand. Boucher’s $7 million would not fit in the trade above. This is where the Lonzo trade comes in. If the Pelicans roll all these trades into one, which is possible (just need the various teams to “touch” each other at least once, with small exchanges of cash or low-value second round picks), it could look like this:

New Orleans Trades: Ball ($19.8M), Adams ($17.1M), Bledsoe ($18.1M), Alexander-Walker ($3.3M)
New Orleans Receives: Valanciunas ($14M), Graham ($10.9M), Satoransky ($10M), Temple ($4.8M), Dragic ($19.4M), Boucher ($7M)

The outgoing salary is $58 million, which allows them to bring in $73 million. The incoming salary is $66 million.

Tada! It works!

And New Orleans holds onto the Mid-Level Exception to add another player, can still re-sign Josh Hart, and are in no real danger of hitting the tax line, all while adding a significant stockpile of rotation quality players in Valanciunas, Graham, Dragic, and Boucher while only really sending out Alexander-Walker (as they seemed to have no interest in keeping Ball).

There are of course other alternatives, such as the Raptors simply paying a team like OKC to take Dragic and sending them some picks to convince them (probably a couple of 2nd rounders), or finding a landing spot for Dragic where instead of clearing cap room they would be receiving back a similar or at least sizeable salary (such as the Dallas example above). But this Pelicans example is more fun, I thought, and I do think is more along the lines of what the Raptors are looking for, gaining an asset rather than losing some, and buying themselves back into the free agent market with that cap space.

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That’s all for now. We’ll be back whenever we get clearer information on what is happening with Dragic or the Lowry sign-and-trade.

Let me know if you have any questions or proposed destinations for Dragic, and I can try to clarify or explore those with you.