Last week the Nets, in an attempt to get the Wizards to not match Otto Porter’s offer sheet, put a variety of unappealing intricacies into his offer sheet. Brooklyn gave Porter a player option, and threw in a stipulation that he gets half of his salary advanced to him on October 1. But for this post, let’s focus on arguably the most contentious detail in his new deal: His 15 percent trade kicker.
The Nets added the trade kicker in for two reasons: To entice Otto to sign the offer sheet and reduce the likelihood the Wizards would match. Though the Nets failed in deterring Washington from matching, the Wizards still have to deal with the kicker in the chance they try to trade him down the road.
Here’s how a trade kicker works, as explained in CBA FAQ:
Teams are permitted to write a bonus called a "trade bonus" (sometimes referred to as a "trade kicker") into contracts. This bonus is paid to the player when he is traded, but only upon his first trade and not upon any subsequent trades. The trade bonus is paid by the team trading away the player.
At its most basic level, the trade kicker means if the Wizards decide to trade him at any point during his current deal, his salary goes up 15 percent. The team Otto is traded to will pay the standard part of his deal, and the Wizards have to pay Otto his trade bonus over the remaining part of Porter’s contract.
For example: If the Wizards were to trade Otto before the 2018-2019 season, they would owe him a trade bonus for the two guaranteed seasons Otto has remaining. In those two seasons, Otto is owed $53,262,488. The Wizards would have to pay him nearly $8 million as a result of trading him, which would be spread out over the remainder of the deal.
However, trade bonuses do not allow contracts to exceed the maximum a player can earn in a season. Because Otto is already at the max this season, if he were traded, the Wizards wouldn’t have to pay any bonus this season. The amount he can receive from a trade bonus in subsequent years will depend on how much the cap rises, and how much the max salary rises in proportion with it.
It is very difficult to predict what exactly the future amounts could be without the final cap numbers, but based on 2018-2019’s salary cap projection of $102 million, the most Otto could make on a max contract in 2018-2019 would be $26,775,000. His actual salary that year would be $26,011,913, so the most he could make from the trade bonus (and the most the Wizards would have to pay) in that season is $763,088. The rest of his trade bonus would be paid out in 2019-20, which would be approximately $5.1 million, due to max contract constraints. Porter wouldn’t be eligible to receive a trade bonus for the fourth year of his deal unless he opts in before he’s traded.
Trade bonuses also make trading players harder. This is because the dollar amount of the trade bonus counts as outgoing salary for the team trading away the player. This means the Wizards would have to take back extra salary to trade Otto away, even as they’re paying a trade bonus to him while he plays on another team. Despite all that, it’s worth noting Otto can waive the trade bonus to make a trade legal, so this may not matter if Otto ever wanted to leave.
There is a lot of minutiae involved with trade bonuses. Dealing with all of them can be a hassle for teams trying to plan their future. Ideally, the Wizards aren’t in a position where they need to consider trading Porter unless it’s for a clear upgrade. If it comes to that, let’s hope the Wizards can manage it appropriately.