With RJ Barrett's recent 4 year, $120 million rookie extension, most would assume that the Knicks can't include him in a Donovan Mitchell due to the poison pill restriction that kicks in when extending a player on their rookie scale contract. While in most cases that would be correct, in this specific scenario the Knicks could still be planning on including Barrett in a deal for Mitchell. Let's walk through how they can do that below.
First, let's take a look at the extension itself. The 4 year, $120 million extension comes out to an average annual value of $30 million, and roughly 21% of the salary cap based on current cap projections. This deal could play out favorably for the Knicks, or whoever Barrett ends up playing for, if the salary cap sees a bigger increase than current expectations due to a new CBA coming soon, as it is not tagged to a % of the cap as a max deal would be.
As previously mentioned, this new extension triggers a poison pill restriction when attempting to trade Barrett. This effectively means that in any trade, Barrett's outgoing salary counts as his 2022-2023 amount, but his incoming salary counts as the average value over current year plus over the life of the extension. In a scenario deal with the Jazz for Donovan Mitchell, Barrett counts as $10.9 million as outgoing money for the Knicks, and as $26.2 million as incoming money for the Jazz. This $15.3 million difference is the "poison pill gap" as I like to call it, which makes it very difficult in most cases to make the money work in trade scenarios. It's not impossible though, and in this case, it's not difficult to come up with deals including RJ Barrett being traded to acquire Donovan Mitchell, whether those deals being just between the Jazz and Knicks or including a third team. Let's take a look at some of those scenarios below.
A Deal Between Just the Knicks and the Jazz
Contrary to popular belief, the Knicks and Jazz can still get a deal done between themselves while still including RJ Barrett. All they have to do is add enough money to the deal where that "poison pill gap" impact is lessened to fit under the CBA's trade rules. For example, the deal below is a legal trade money-wise.
The deal below is another example of a legal trade between just the Utah Jazz and New York Knicks, from a salary standpoint.
As you can see, there are still avenues for these two teams to get a deal done without the need to involve a third team.
Including a Third Team That Has Cap Space
The Jazz and Knicks can make their lives a little easier by including a third team in the deal that has cap space that can take on some unwanted money and help facilitate the deal, though this may come at the cost of giving up even more assets to get the deal done. The two teams with enough cap space still left on their books are the Indiana Pacers and the San Antonio Spurs. Below is an example of a deal of bringing in a third team to facilitate a trade that includes RJ Barrett.
Here, the Spurs are taking on Evan Fournier's contract to help facilitate the deal, but would probably need to be compensated with draft capital to do so. However, it does help make the deal more appealing to the Jazz, as they don't need to take on as much money in the short-term or long-term with Fournier going to a third team.
Including a Third Team That Doesn't Have Cap Space
Say that the Jazz did not have any interest in RJ Barrett but instead wanted to flip him to a third team for even more draft capital. The scenario below incorporates the Lakers as a third team taking on RJ Barrett, along with Evan Fournier and Rudy Gay. This would probably cost the Lakers both of their tradeable future firsts, however, but would allow them to get off of Russell Westbrook while acquiring a very good young player in Barrett. The Jazz would presumably get both Lakers future firsts along with a haul of firsts from the Knicks, and New York would land Mitchell.
All this to say that despite the New York Knicks signing an extension with RJ Barrett, that does not necessarily mean that he won't be included in any deal for Donovan Mitchell, assuming one occurs. There are multiple avenues to including him in a deal, as we walked through above.
Nick Thoreson is a young professional working in finance who is passionate about the NBA and especially all things salary cap related.