The Charlotte Hornets have agreed to a trade that will send Dwight Howard to the Brooklyn Nets next month. The Nets and Howard are reportedly in talks to buy out a portion of Howard’s remaining $23.5 million salary and make him a free agent.
Why couldn’t the Hornets have just bought out Howard, rather than take back the remaining two seasons and nearly $33 million on Nets center Timofey Mozgov’s contract?
Hornets management can’t discuss the trade until it becomes official July 6 when the NBA starts a new salary-cap year. But the answer to this involves the tradeoff between the Hornets addressing their immediate payroll problems and adding to their payroll obligations for the 2019-20 season.
The Hornets are dangerously close to the NBA’s projected luxury-tax threshold (about $123 million) for next season. This trade would reduce the Hornets payroll for next season by about $7.5 million (the difference between Howard’s and Mozgov’s salaries). Importantly, that would put the Hornets far enough under the tax line to have the option of using the full $8.6 million midlevel exception in free agency.
You could ask, “Then why not ask Howard to cut $7.5 million off his salary in return for being released?”
Howard has no real incentive to give up more than a small percentage of his salary to become a free agent. If the Hornets had become aggressive in asking for a huge buyout number, Howard could have just reported to training camp and become a huge distraction for rookie coach James Borrego. And the Hornets might have spent the summer with no flexibility under the luxury-tax threshold.
That doesn’t mean this is an easy bargain to accept. Mozgov’s guaranteed salary for the 2019-20 season is $16.7 million, and ↓Howard’s contract expires after this season.