It wasn’t splashy. In the end, the Toronto Raptors opted to turn Goran Dragic’s expiring contract into a slightly cheaper veteran who will actually — we think — be in the same city as the team moving forward. Thaddeus Young, long perceived to be an ideal stylistic and culture fit, is in, bolstering the team’s depth without really addressing any of their core weaknesses, now or in the longer-term.
It’s the longer-term that won out. While it’s safe to say there were other players available for the particular assets the Raptors had at their disposal, a desire to maintain financial flexibility and an appreciation for Young landed them here. A Derrick White, for example, carried a much longer financial commitment that would threaten the team’s agility into a 2023 summer where Fred VanVleet and Gary Trent Jr. can both opt out of their current contracts.
Feelings about flexibility can reasonably vary. The Raptors prioritized it in the lead-up to the summer of 2021, only to punt that flexibility to facilitate the Kyle Lowry sign-and-trade and acquire Precious Achiuwa, and now Young and Drew Eubanks by extension (the latter of whom the Raptors will waive). It’s only as valuable as how well you can use it, and even without taking on long-term salary, the Raptors don’t project to be a cap space team this offseason. Turning Dragic’s expiring deal into a 2022-23 salary, even one with only modest asset value, could have been viewed as a positive for both roster construction and trade flexibility; instead, it’s Young’s full Bird Rights (at age 33 this summer) that offer some path to stability in the second unit.
How all of that shakes out is a summer 2022 question. And really, the big answer from Toronto’s trade deadline is that they’re willing to wait until summer 2022 to answer all of the big questions facing the franchise. They believe in the core five and at least a couple of the periphery pieces. How they get from that stage back to an actual contention window is something they’ll have to explore in July, likely via trade.
For now, here’s how the specifics of the Dragic-Young swap shake out, with some explanations of the more technical aspects at play.
The terms
Raptors receive: Young, Eubanks, a 2022 second-round pick (from Detroit)
Spurs receive: Dragic, a 2022 first-round pick (lottery-protected in 2022; if the Raptors land in the lottery, the pick will move to 2023, when it will be top-13 protected; if the pick doesn’t convey in 2023, it becomes two future second-round picks)
The picks
Toronto and San Antonio effectively swapped picks in the upcoming draft. If the season were to end today, the Raptors would lose out on the No. 20 pick and receive the No. 31 pick in return. That’s a real change, but there are reasons the Raptors were comfortable with the swap.
For one, Toronto has often picked off the consensus board, to where they may feel they can still get a player they like at No. 31 who would have been in the mix for them at No. 20. They have had success selecting at Nos. 20, 23, 27, and throughout the second round and undrafted market. The other factor is that second-round picks offer more contract flexibility and almost always count for less for luxury tax purposes than first-round picks, who are locked into a set contract based on draft slot, do. This slide might cost the Raptors a target or two over the 10-to-15 picks they move down, but it will make their rookie cheaper for years in which they could be tight to the luxury tax.
The trade exception
This trade will be structured as two different trades from Toronto’s perspective. One will be a swap of Dragic and Young, which satisfies the cap requirements for Toronto because they’re bringing back less money. The other will absorb Eubanks into a small traded player exception they held from last year’s deadline that was set to expire.
The reason to construct the trade that way instead of as one big deal is to maximize a new traded-player exception (TPE) that will be created. TPEs are accounting tricks that give a team the right to “finish” a trade at a later date. The Raptors receive a TPE for the difference between the Dragic and Young salaries, so about $5.25 million. They’ll have one calendar year to use that to acquire a player, even if they’re over the cap.
(TPEs cannot be combined or aggregated with player salaries, so they could only take back a salary up to $5.35 million via this TPE.)
The salaries
The duo of Young and Eubanks make $3.49 million less than Dragic. Prorated for the remainder of the year, the Raptors will save about $942,000 in salary the rest of the way. In their third consecutive year of depressed revenues due to the pandemic, that’s relevant.
The tax implications
Calculations for the luxury tax are based on a team’s final cap sheet, not a prorated one, so the Raptors get the full $3.49 million in additional cushion below the tax here. That means Trent’s incentives are no longer of concern with the additional breathing room. Young also has incentives, but they are very unlikely to be reached.
Staying beneath the tax this year is notable because of how heavy the tax bills around the league will be. Non-taxpaying teams project to receive about $11 million each in the luxury tax disbursements at the end of the year, so there’s about a $12-million swing in real dollars here.
The Raptors could dip into that and utilize their space below the tax line to add another piece between now and the end of the season. They will waive Eubanks, and while they could just run with a short roster, they also have the breathing room to target a buyout candidate, call up a G League player, trial some players on 10-day deals, or convert Justin Champagnie’s two-way contract.
They could also choose to waive an additional player and try a few of those paths out. Technically, the Raptors could spend around $3 million and still avoid the tax. They probably won’t go that far, though it’s worth noting they do still have a small chunk of their mid-level exception available if they wanted to go beyond the minimum salary for a buyout candidate or sign a young player to a three-year deal.
The current roster
The roster remains at 16 players for now:
Starters: VanVleet, Trent, Barnes, Siakam, Anunoby
Second Unit: Banton, Young, Boucher, Achiuwa, Birch
Bench: Watanabe, Mykhailiuk, Flynn
905: Champagnie, Bonga, Johnson
The 2022 offseason outlook
The big takeaway from the move is that there’s no big takeaway. The Raptors’ future cap sheet looks the exact same, swapping expiring for expiring.
The difference could be that Young factors into plans beyond this season. If he proves a fit and the price is right, Toronto will hold Young’s Bird Rights, allowing them to exceed the cap to re-sign him this summer.
And the Raptors will almost certainly be above the cap this summer. They already have $110.6 million committed in salary to eight players. The cap is projected to be $121 million. After factoring in incomplete roster charges and cap holds, the Raptors wouldn’t be able to create meaningful cap space without a foundation-changing trade. Most teams in that position, including the Raptors during almost the entirety of this front office’s tenure, will choose to operate as an above-cap team. That allows them to hold on to player rights and have access to things like the mid-level and bi-annual exception.
The more notable number to keep an eye on is the $147-million projected luxury tax line for 2022-23. If we assume that’s a rough cap for the Raptors’ budget, they’d have about $33 million to add to Siakam, VanVleet, Anunoby, Trent, Barnes, Birch, Achiuwa, Flynn, Mykhailiuk (player option) and Banton (non-guaranteed) via the draft, trade, salary cap and trade exceptions, and re-signing their own free agents (Young and Boucher with Bird Rights, Watanabe with Early Bird Rights).
What’s next
The Raptors will work Young into the rotation as a complement to the existing group. They’ll keep an eye on how the buyout market develops and judge whether that is a better approach to the final roster spot than Champagnie or a G Leaguer, eventually making that move. Bigger picture, they’ll continue to evaluate the existing core, Young’s fit longer-term, and what needs may need addressing in the summer.
It was not the most ground-breaking of deadline days, but it makes the Raptors better now at a slight incremental draft cost without sacrificing any of their future plans. So, pretty standard of this management group, all things considered.
