The Orlando Magic will actually cut payroll by $11.4 million through next season with today's massive trades bringing Gilbert Arenas, Jason Richardson and Hedo Turkoglu to town in exchange for Vince Carter, Rashard Lewis and Marcin Gortat. But by 2013, the bill for Arenas and Turkoglu will come due.
The Magic will save $4.5 million in salary this season from the trades with the Washington Wizards and Phoenix Suns. Those savings will be matched with a decrease in Orlando's inevitable luxury tax bill, meaning Magic owner Rick DeVos will save $9 million in payroll this season.
The savings are greater in 2011-12, when Richardson falls off the book. The Magic will be left paying $30.3 million for Arenas and Turkoglu, but will have trimmed $37.2 million in salary, assuming Phoenix waives Carter (which would cost them $4 million but save them his scheduled $18 million salary). That results in $6.9 million in salary savings for the Magic; one would assume they'll be over the luxury tax, should the luxury tax still be in place in the new collective bargaining agreement.
But things change in 2012-13. The Magic have added $32.6 million to that season's payroll, while excising $24.4 million. In 2013-14, once Lewis' deal has ended, the Magic will have added $34.3 million while excising just Gortat's $7.7 million.
Certainly, the Magic wanted to shake things up and swing for the fences. Luckily, their bill won't come due for a while, and the team can keep trying to find the right mix around superstar center Dwight Howard until then.
Meanwhile, the Suns are surprisingly not immediate saving money in the deal. They agreed to take back Mickael Pietrus along with Carter and Gortat, and that means the Suns' payroll will actually increase $2.6 million due to this deal. However, the Magic have reportedly sent Phoenix enough cash to cover the difference. Teams can include up to $3 million in trades.
But the extra salary for Phoenix continues next season, as the Suns' 2011-12 payroll increases by $5.1 million, assuming Carter is waived (as expected). Savings due to Turkoglu's large deal being excised would begin to kick in 2012-13, with the Suns saving $4.6 million. In 2013-14, the Suns will save $4.3 million by losing Turkoglu's deal and only being on the hook for Gortat's $7.7 million salary.
Washington's salary ramifications are simple, as Lewis is paid more than Arenas but for a shorter term. The Wizards take on an extra $1.9 million this season and an extra $1.8 million next season. The salary shake-out in 2012-13 depends on whether Lewis is waived, and if not, what incentives he meets. But the swing is not dramatic: the Wizards could save $3 million or spend an extra $2 million over what they would have paid Arenas. The real savings come in 2013-14, once Lewis' deal has ended while Arenas is still on the books for $22.3 million.
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