Examining Draft Day and Pre-Draft Trades

From a pure entertainment perspective, fans love the NBA Draft. It's a suspenseful evening of making bets on the futures of individuals, where no person in the world can accurately predict or know how these multi-million dollar investments will work out. Some picks resemble hope, others frustration and lack of clarity... but all are done with a plan in mind.

Draft night is that unique evening where all thirty teams are, in some form, directly in competition with each other. From an organizational perspective, the draft is the culmination of one of the largest areas for research, data collection and group decision-making areas in the league. Each team's front office spends countless hours analyzing, gathering and debating these prospects all in the name of moving the franchise in the right direction. Seeing the efforts compiled by scouts and the like places even more value on those players once they are selected.

It's not quite that simplistic though, where each team waits their turn and picks their best selection available, then waits for their next turn in line. The NBA allows teams to trade their draft picks and selections when both teams deem it's advantageous to swap positions. It helps sweeten the pot for mid-season deals between contenders and struggling teams, among other reasons, and has become an integral part of the trade landscape. Pick trading and swapping is so prevalent that several teams have based their entire building strategy upon hoarding them, evaluating the best players they can get with them, and figuring out the rest later.

As of the end of May, 14 of the 30 first-round picks and 35 picks overall have already switched hands -- a whopping 58 percent of all draft picks. Those are all the results of trades made at earlier dates, long before the draft order and the season itself is decided. To further add to the chaos, teams can begin making trades and deals again prior to the draft or on draft night itself.

The last few seasons the draft has become an environment of pandemonium due to unforeseen draft day trades. Here are the number of draft picks that changed hands on draft night over the past five seasons:

• 2016: 18 selections, 3 future draft picks and 5 NBA Players under contract
• 2015: 14 selections, 8 future draft picks and 5 NBA Players under contract
• 2014: 23 selections, 6 future draft picks and 5 NBA Players under contract
• 2013: 30 selections, 8 future draft picks and 4 NBA Players under contract
• 2012: 9 selections, 1 future draft pick and 1 NBA Player under contract

2012 appears as more of an aberration than indication of an upward trend starting in 2013, but the point is that the amount of draft picks that change hands fluctuates highly every year. Trying to anticipate how many trades will happen might be futile due to the insane number of variables at play. At the very least we can try to identify the types of situations that cause teams to engage in draft-day trades most frequently.

The Cap-Clearing Contender Scenario

In a cap-clearing scenario, one team will trade a player under contract with the goal of getting their contract off the books being paramount. The typical profile of a team looking to clear cap space is that of a contender who assembled an expensive roster to win-now and must deal with the long-term consequences. Their best option is to pair draft picks with a decently large salary in hopes that a team with cap space will take on the contract. The team trading the pick and the salary away likely takes on some minor player, a conditional draft pick and gets the ever-important trade exception created by the disparity of salaries.

What they need to do with that cap space is not always the same. Some simply need immediate relief from their heavy payroll. Others want to make minor moves that don't disrupt the core but position them to make a free agency splash that puts them over the hump. As with any trade, it takes two to tango. Finding the right trade partner for these teams requires a massive understanding of the positions all other 29 franchises are in. Trade partners best in this deal are ones that have the financial flexibility to take on some salary if it nets them an extra draft pick.

Cleveland did this in their Brendan Haywood acquisition, giving up Alonzo Gee for Haywood and a draft pick (Dwight Powell). Haywood ended up being the more valuable of the two pieces, with a unique $10 million unguaranteed contract that kicked in a year after the trade. Haywood's contract helped the Cavaliers ultimate construct a roster around LeBron, with his trade exception resulting in Timofey Mozgov's mid-season acquisition. That was only possible because the front office had the foresight in 2014 to use their cap space now to provide flexibility later.

Based on the length of the contract being discussed in the trade, the effectiveness of that player and the other salaries or contracts to make the trade work, different types of compensation will head one way or another. That said, the most common type of player that's easiest to move is one with a unique contract: unguaranteed contracts. Teams looking to clear cap space will look to acquire one of these, often times giving up a draft pick to do so. 

Examples: Cavs grab Haywood's unique contract, Bulls send Hinrich to Wizards.

2017 Teams fitting the bill: Portland, Oklahoma City, Toronto


The Veteran on the Rebuilding Team

The second scenario on this list also features a team looking to clear cap space, though for different reasons. Immediate cap relief, compounded with the addition of a draft pick, is seen as the catalyst for an important turnaround. Teams that are either mired in mediocrity or looking to rebuild completely will entertain this option around the draft. Often those are the teams searching for the ability to hoard draft picks in hopes of a slower retooling of the roster.

Most importantly for teams in this scenario is that long-term relief: cap space. Teams that exercise this deal usually have a plan with what they'd do with the cap space, whether it is retaining a marquee restricted free agent due a massive raise or building long-term cap space as they look to contend down the line. Often teams will make a trade one year with the plan of using cap space a year later.

Trade partners are vital for this type of scenario to work. The better the player, the more valuable the draft pick must be in return. Any trade partner must not only like the veteran involved in a deal, but be willing to give up a draft pick in order to get them.

Examples: Aaron Afflalo-Evan Fournier trade, Thad Young to the Pacers.

2017 Teams fitting the bill: Sacramento, Indiana, Brooklyn, Phoenix


The "Trade Up"

The premise for the next two types of trade scenarios is simple, albeit hard to predict. Teams fall in love with players during draft season, saying they need to move up in the draft to make sure they get the player and not risk seeing a competitor snatch them up. An aggressive move for a prospect, ramifications of a trade like this can be vast. The better the player/ higher the draft position needed to select them, the more it will cost to move up. Compensation could bleed into future years with other draft picks.

Only one common ingredient appears for identifying teams that might be in the trade up category -- multiple first-round picks. Teams that have two or more picks in the first-round have an increased tendency to bundle them together and move up for one player. 

Regarding trade partners: it doesn't have to be teams that are simply in the beneath "trade down" category or that are looking for an impact player immediately. Sometimes there's a swap to be made of a first-rounder and a guy worth a second-rounder in exchange for a second-round pick and a guy worth a first-rounder. That technically qualifies as trading up or down, but is done with the intent of synching the talent-level with the organizational timeline for success.

Part of what makes the draft such a pressure-packed situation is that one unforeseen domino that falls can create the need for quick judgment -- if one player starts to fall, a trade-up can net a quick move on draft night.

Examples: 2014 Heat grab Napier, 2015 Nets use Plumlee to get in the first round, 2013 Celtics for Kelly Olynyk.

2017 Teams fitting the bill: Teams with multiple picks (Portland, Brooklyn, Atlanta, Philadelphia, Orlando, Utah)


The "Trade Down"

There's an obvious relationship between trading up and trading down in many regards, as the currency obviously used to negotiate trading down means your trade partner has a draft pick to offer in return. But trading down is a difficult decision to make, one usually done to maximize value or add multiple pieces. The logic behind "we don't like anybody at this pick, so let's trade down" is sound but rarely how situations play out.

Times where a run of talented players all at the same position might occur in a draft, a trade down scenario would be more plausible if a team doesn't have a need there. Or, like in the case of the 2014 Nuggets, the way the draft had turned out thus far presented them with an opportunity to get two players they were considering with the same pick. Planning a trade-down in advance requires feelers with other first-round teams before the draft, knowing who to call if the situation arises that they'd want to trade down.

At the end of the day value maximization is the name of the game. Teams only have a few minutes when they're officially "on the clock", so feeling out of the trade-down market takes place beforehand. Pulling the trigger on draft night, regardless of circumstances, requires the right scenario coming to fruition and a quick evaluation of a landscape with constantly moving targets -- after all, there's no knowing exactly what players will be available later in the draft.

Examples: 2014 Nuggets with Nurkic and Harris, 2015 Cavaliers with Tyus Jones, 2013 Timberwolves with Trey Burke and Utah.

2017 Teams fitting the bill: Detroit, Charlotte, Oklahoma City, Indiana


The "Now For Later"

There certainly is such a thing as too many draft picks in one year. Each team finds themselves in different scenarios with how many roster spots they plan to have available next season, and they are forced to budget those openings between the draft and free agency. If a franchise has more draft picks than potential roster spots, they have two main options: draft an international draft-and-stash prospect or trade it for a pick in a later year (or for cash, if the pick is low enough).

For pick hoarders who grab future second-round picks, those picks will come due eventually. In the years where they all do, they can pick a slew of international guys, or they can trade one or two and move them down the line to a future year. Further complicating matters are the previously-drafted international prospects that might finally be ready to come to the NBA. Front offices must factor them into the planning for roster spots, so if they would rather have that than a second-rounder, it would make sense to trade a pick now for a pick later.

Most common with second-round picks, I'd surmise that this is the most common cause of draft night trades. I am also curious to see how the reformatted two-way D-League contracts effect this system. As an estimate, it would make sense to see fewer of these "now for later" trades if a team can hang onto the pick and retain exclusive rights of a domestic player without having them effect the roster spots or cap scenario too greatly.

Examples: Cavs send Allen Crabbe to Portland, Deyonta Davis to the Grizzlies for a future first, Knicks pick up Willy Hernangomez.

2017 Teams fitting the bill: Boston, Philadelphia, Denver, Phoenix, Portland