Can Gilbert Arenas, Wizards Make a Deal?
But there could be a solution that works out for both parties.
ESPN's Chris Sheridan has a brilliant idea buried in his piece on potential Knicks interest in Arenas. Sheridan suggests (through the voice of an anonymous league executive) that the Wizards might be able to more easily find a market for their embattled guard by modifying his contract's length.
Normally, this isn't allowed. By rule of the collective bargaining agreement, players cannot negotiate their salary or contract length downward, except in a buy-out agreement (in which a player is waived). A buy-out wouldn't necessarily help the Wizards much, unless Arenas agrees to take only a tiny piece of his guaranteed salary. At point of waiver, the Wizards would relinquish their opportunity to trade Arenas, so whatever is left of his contract would remain on the team's books until 2014.
However, Arenas currently holds an early termination option for the final two seasons of his mammoth contract. Arenas is due $20.8 million in 2012-13 and $22.3 million in 2013-14, provided he does not execute his termination option before the 2013 season. The standard window to execute an option is from the end of the regular season preceding the option year until June 30. (Teams have begun to move the end of the window up to provide a bit more clarity before free agency begins July 1. I have no specific knowledge of Arenas's window.) The collective bargaining agreement allows teams and players to renegotiate the option window.
Sheridan suggests turning the two termination option seasons into team option seasons. It's unclear if that's allowable under the CBA. But here's something which definitely would be: the team and Arenas agree to expand the window to any time before June 30, 2012. Arenas invokes the early termination option. Now, instead of being signed for $80 million over the next four seasons, Arenas is due $37 million over the next two seasons. Obviously, that makes Arenas much, much more tradable.
Why would the Wizards do it? The team can (and potentially will) attempt to void Arenas's contract, based on his felony plea Friday. But what if the attempt fails? The franchise is stuck with a nearly untradable $80 million clunker it can't reasonably expect to reintegrate. If the void attempt succeeds, Washington slices $80 million in bad player debt. If it fails, Washington keeps that $80 million on the books. It's an all-or-nothing proposition, with all sorts of negative ramifications either way.
What about Arenas? He knows the void attempt is coming. There are two possibilities if that attempt becomes reality: it fails, and Arenas is still owed $80 million, or it succeeds, and Arenas is owed $0. A coin flip for $80 million.
Killing the final two years as outlined above mitigates the risk for each side. Arenas is guaranteed a portion of his pay -- $37 million -- with the opportunity to get a fresh start somewhere else fairly soon, and with the opportunity to sign another contract in 2012 to make up some of the relinquished salary. The Wizards shave off a sure $43 million of obligations, and open the possibility of an Arenas trade.