Deconstructing a salary dump: How the Orlando Magic will act in trades

The first trade of the NBA offseason was reportedly completed Monday.

The New Orleans Pelicans traded Steven Adams and Eric Bledsoe along with the No. 10 pick and another future first for Jonas Valanciunas and the No. 17 pick.

The initial reaction among the NBA landscape was a bit of confusion. The Pelicans traded away two established players and starters with the higher pick for a solid center and a lower pick.

Not only that, the Pelicans traded these key players and the higher pick to a team they are theoretically competing with for a playoff spot. And the Grizzlies are already reportedly looking to move Bledsoe in a further attempt to move up in the draft.

While on the surface it looks like an odd move or possibly even a lateral move, there are clear reasons for both teams why this made sense.

More importantly, while these two teams are both playoff competitive at the moment, they show the exact kind of deals the Orlando Magic are likely to pursue and how they might be used in the larger trade universe.

The New Orleans Pelicans made an odd move ahead of the draft, dumping salary to clear cap room for free agency. The Orlando Magic are likely to act the same way and help a team like the Pelicans.

In essence, this deal looked like a salary dump for New Orleans. The team got rid of several high-priced players who were not working out completely for them in hopes of clearing cap room. And that is why they attached a high-value asset in No. 10. It was a sweetener to get the Grizzlies to take on that salary.

Orlando will be seeking similar deals. The team with copious cap space in 2022 and little chance to use it effectively with such a young and developing roster is likely to pursue and be a part of similar salary dumps where teams get rid of unwanted contracts and attach some future valuable asset as payment for doing so.

The Magic are not likely to be competitive this year and probably even next season. Plus with a $17-million trade exception, the Magic have the ability to take on a lot of salary at virtually no cost to the dumping team.

The question will be, of course, what kind of future assets in the form of young players or draft capital, would get the Magic to make this kind of move? No one is taking on dead-weight salary or bad contracts for free.

That is why it is important to understand how these deals are constructed. This is likely the path the Magic are going to walk.

So what were the motivations of this deal on both sides? And more specifically for the Pelicans. First, let’s visualize the various pieces of the deal:

On its face, the Pelicans do not appear to be getting a lot for what they gave up. They moved down in the draft and picked up a solid player in the process. But it still feels like they took a step backward.

Of course, no trade is done in a vacuum. It is often done with some consideration for the team’s cap and future free-agent plans in place.

New Orleans shed $17.1 million with one more year in Adams as well as Bledsoe’s contract worth $18.1 million, with an additional year non-guaranteed for $3.9 million ballooning to $19.4 million on June 29, 2022.

Essentially what New Orleans did then was clear out almost $35 million in cap space while only bringing in $14 million in Valanciunas’ final year of his deal.

This move was all about clearing out the salary-cap room so the Pelicans could try to retain Lonzo Ball in free agency or chase after another free agent this offseason.

New Orleans is feeling the pressure to build a playoff team and so the team feels the need to make a big splash in free agency. What this trade did was open up some cap room to do so.

The Pelicans now have just $70 million committed to next season before getting to draft picks and cap holds. The expected salary cap will come down at roughly $112 million. That gives New Orleans significant buying power in free agency — around $35 million after taking the team’s draft pick into consideration.

Orlando Magic

This gives the Pelicans the ability to retain Lonzo Ball in restricted free agency or even make a play for Kyle Lowry and his expected $30 million salary.

That is exactly what the Pelicans wanted. They are not going to wait on young players anymore, David Griffin appears ready to be aggressive to chase after players to improve the roster.

Thus, New Orleans’ main motivation in this deal was to shed the Bledsoe and Adams’ contracts. They attached the draft picks they did to accomplish this goal.

In a similar trade moving forward, Orlando would play Memphis’ role.

For the Grizzlies, their desire to add another solid young player with a top-10 pick dominated their conversation. They added a good veteran center in Steven Adams who can hold the spot down for two years as the young team continues to grow.

It sounds like Memphis is planning on continuing to be aggressive to trade further up with Bledsoe likely a candidate to move again.

Bledsoe’s salary is too big to move into the Magic’s trade exception, but the Magic have the cap room or the salaries in Terrence Ross or Gary Harris to be a team the Grizzlies target to dump this salary once again.

Not to say the Magic would do that. This is merely the direction the Magic are heading.

But Memphis would have to sweeten the pot somehow. The Grizzlies would need to add some draft capital — their picks might be of suspect value with Ja Morant emerging as a star player and the team getting another young player. It might not be worth it in the end.

In all likelihood, Orlando is less interested in housing Bledsoe for another year and more interested in finding a team similar to New Orleans. The Magic should be looking to help teams that are trying to clear cap room and position themselves for free agency. They just need the right sweetener to pull the trigger.

It is not likely the Magic will be able to find that deal at this juncture. This year’s free-agent class is not fantastic and so teams positioning for room are going to be few. One of them already made their play.

This is the kind of deal the Magic might make closer to the trade deadline ahead of a huge free agency summer in 2022. Orlando might be in a position to collect more picks at that point — although already the team is recognizing it is far too young.

The New Orleans-Memphis deal from Monday seemed like an odd one at the time. But it acted as a salary dump for the Pelicans. And this is the exact kind of deal the Magic should be hunting as they look to stock their asset coffers and put themselves in a position to make a major move — either at this draft or in the future.