Tyler Johnson is due to be paid $44,372,000 over the next three years by the Miami Heat, assuming he stays with them. If traded to another team however, he receives $51,027,800, because of the “trade bonus,” aka “trade kicker,” clause in his contract.
Essentially a TJ trade has the Heat paying him $6,655,800, if he plays for somebody else, and occasionally against Miami itself. Should TJ become an All-Star shooting guard in Miami, that clause becomes meaningless because the Heat will have an undrafted bargain on their team.
Since the outgoing team, i.e. the Heat, pays the bonus, there is little incentive for Miami to move him over the next three years. The receiving team however takes a hit to its salary cap of over $20 million for taking T. Johnson over the 2018-19 and 2019-20 seasons. Whether TJ develops into a $20 million player for another team by then remains TBD (To Be Determined).
This clause could affect how the Heat approach the Dion Waiters’ negotiations. Both are nominally shooting guards, and Miami already has Wayne Ellington, Rodney McGruder and Josh Richardson as possible SGs. The contingent of Hassan Whiteside, James Johnson, and Tyler, who met Gordon Hayward in Miami, may be the projected starters, joining Goran Dragic, for team this coming season.
Hoopsrumors explains “trade kickers” and has a list, from 2016, of NBA players with that clause in their deals.
Trade kickers are contractual clauses that pay players a bonus when they’re traded, and they represent one of the tools teams have to differentiate their free agent offers from the deals competing clubs put on the table. According to the Collective Bargaining Agreement (CBA), the bonus must be paid by the team that trades the player, rather than the acquiring team.
SB Nation had an interesting article, “Why the Rockets traded for every fringe NBA player known to man,” on how the Rockets and Los Angeles Clippers manipulated players and cash to make their deal meet the salary cap guidelines of the CBA. The actual trade seems incredibly complex.
In the official deal announced by the Rockets, they included backup center Montrezl Harrell, former Piston Darrun Hilliard, former Maverick DeAndre Liggins, and existing minimum-salary player Kyle Wiltjer. That was 80 percent of Paul’s incoming salary, which is the necessary threshold for over-the-cap teams to complete trades. Anyone left over — Shawn Long, Tim Quarterman, Ryan Kelly, Chinanu Onuaku, and Isaiah Taylor — can be used in future deals for other stars, if the Rockets can somehow pull those off, too.
Pat Riley, the Utah Jazz negotiating squad, Hayward and Waiters all happen to be in Southern California today, where face-to-face negotiations are a possibility. Reading about the Rockets-Clippers deal, a person can image all the possible trade scenarios available to NBA teams to wrap up contracts.
Tyler Johnson’s contract is a big part of Heat salary structure going forward. In any trades or signed deals that involve him, an accounting of the Heat paying his pro-rated $6,655,800 trade kicker would probably be part of the negotiations. The Heat’s brain trust is busy at work coast-to-coast to deliver Miami a fourth championship, in face of all the contractual nuances.