Analysis: Quirk in CBA might mean that Anthony Tolliver’s buyout costs Portland $50k in cash

In a rare move for a player already on a minimum contract, Anthony Tolliver agreed to a buyout with the Sacramento Kings and was waived on February 29. Buyouts are relatively normal this time of year, as guys want to move on from their current teams before the March 1 deadline in order to remain playoff-eligible. There were a handful of buyouts this year, but none more interesting than Tolliver’s, at least for us cap nerds.

Sources confirm to Early Bird Rights than Tolliver gave back exactly $144,901 in his buyout, the amount he would earn on a 10-day contract with another team as a veteran with 12 years of service. For most buyouts, this would be the end of the discussion: Sacramento would take $144,901 off their books and the two would part ways as soon as he cleared waivers. However, because Tolliver is on a one-year minimum contract, things are very different. Sacramento ends up with no savings on their books for the salary cap and save just $49,981 in cash. Additionally, the Portland Trail Blazers, for whom Tolliver played before he was traded to Sacramento on January 21, lose out on $49,981, despite having no control over the buyout proceedings.

It should be noted that there may be a one-time ruling from the NBA to change this, so that Portland does not lose nearly $50k in this buyout, but as the CBA is written, it is my interpretation that the Trail Blazers stand to lose that amount, the Kings save some cash but nothing off the cap, and Tolliver’s entire buyout goes back to the league-wide fund, rather than to the Kings specifically, as would happen in most buyouts.

The difference for Sacramento and Portland has to do with how one-year minimum contracts are reimbursed by the NBA. The section of the CBA that governs reimbursement is Article IV, section 6.g.2:

“The Compensation paid to any player with three (3) or more Years of Service who signs a one-year, 10-Day or Rest-of-Season Contract for the Minimum Player Salary in excess of the Minimum Player Salary for a player with two (2) Years of Service shall be paid by the player’s Team pursuant to the terms of such player’s Uniform Player Contract, and then reimbursed to the Team out of a League-wide fund created and maintained by the NBA. Such reimbursement shall be made at the conclusion of the Season covered by the Contract.”

What this means is that a player on a one-year minimum contract with three or more years of service will be paid his full contract by his team, then that team will be reimbursed by the league at the end of the season. It specifically does not say that a team is reimbursed on a pro-rated basis for each day the player is on the team, but that the team has to pay out $1,620,564 before the league will reimburse them for any amount. Through March 2, the day he cleared waivers, Tolliver had earned $1,912,697 of his full contract.

This clause doesn’t necessarily govern what happens when a player is traded, but the history of reimbursements in the league tells us that if a player is traded during the season, as Tolliver was, then the reimbursement is split between the teams for which he is under contract, pro-rated based on the cash each team spent while the player was under contract with their team. They do not split the reimbursement based on days spent with the team, due to players being waived before completing the season, as Tolliver was here.

Tolliver’s one-year minimum contract was set to pay him $2,564,753. Portland had him on their books for 91 days of the regular season (October 22, 2019 through January 20, 2020, inclusive), so they were on the hook for 91/177ths of that amount, or $1,318,602. The traded him to Sacramento on January 21, at which point the Kings picked up the bill for the remaining $1,246,151. At the end of the year, the league would have reimbursed both teams such that their total net spend was $1,620,564, the minimum for a two-year veteran, and split that reimbursement based on the amount each team spent. Had he stayed with the Kings through the end of the year (or been cut without a buyout), then Portland would have received a reimbursement of $485,431 and Sacramento would have cashed a check worth $458,758. In that scenario, Portland would have spent a net amount of $833,171 for Tolliver’s services, and Sacramento would have spent a net amount of $787,393.

However, Tolliver taking a buyout complicates this immensely. Rather than making his full $2,564,753, he decided to take a buyout that will pay him a total of $2,419,852. Portland has already paid him his $1,318,602, so Sacramento is on the hook for the rest, or $1,101,250. The Kings will pay that out as usual, but the reimbursement that comes back to each team is different than it would have been otherwise. The total reimbursement drops from $944,189 to $799,288 – since Tolliver had already earned more than $1,620,564 from Portland and Sacramento, his entire buyout amount goes back to the league-wide fund, which certainly makes one question why Tolliver gave any money back at all – and that new reimbursement amount is split between Portland and Sacramento according to the proportion of his salary each team paid.

Therefore, Portland’s reimbursement amount is (1,318,602 / 2,419,852) * 799,288, or $435,540, a full $49,891 less than they were expecting and would have gotten if Sacramento had kept Tolliver or cut him without a buyout. They’ve already paid their $1,318,602; the buyout doesn’t change that number, only his total earnings and the reimbursement the league-wide fund will pay out. Their new net spend on Tolliver is $883,062.

Sacramento, by the same calculation, benefits by $49,891. They’re now only spending $1,101,250 for the remainder of his contract and get 45.50% of the reimbursement (1,101,250 / 2,419,852), or $737,502. That reimbursement amount is smaller than what they were going to get in the first place, but they’re also spending $144,901 less on his pre-reimbursement salary before that reimbursement kicks in. Their new net spend on Tolliver is $737,502.

As the rules are currently written, Portland will lose out on this $49,891 and Sacramento will save that same amount, even though Sacramento was the team that bought Tolliver out and Portland had nothing to do with that decision. None of this affects either team’s salary cap or luxury tax in any way, but my opinion is that this is patently unfair to the Trail Blazers, since they had no control over the proceedings and stand to lose out because Sacramento and Tolliver worked a buyout.

It should also be noted that the league-wide reimbursement is paid by splitting that amount between the 30 teams, so Portland will save 1/30th of $144,901, or $4,830, by Tolliver taking the buyout, but they’ll still be behind where they expected to be by more than $45,000.

As I noted earlier, the league may alter the reimbursement so that Portland still receives the full amount they were expecting and Sacramento’s reimbursement drops accordingly, but that would be a one-time exception that would technically go against the rules of the CBA. That wouldn’t be a new thing for the NBA, as they did that earlier this year with the Nene contract signed with Houston, and this wouldn’t necessarily be an issue they’d have to resolve with the NBPA, like they did in the Nene situation. There’s no salary cap impact, no change to total BRI, and no change to Tolliver’s total earnings, so the NBPA isn’t involved in this decision. The NBA, with Portland likely leading the charge, given that they’re the ones who will be hurt by it, could rule in favor of the Trail Blazers and split the reimbursement accordingly, but that decision has yet to be made.