Making Sense of the Nagbe Trade

Darlington Nagbe no longer plays for the Portland Timbers. For a player who has been on the roster since the team ascended to MLS, that’s as jarring as it is clean-cut.

Less clean-cut, however, is what the Timbers got in return for sending Nagbe to Atlanta United. Here’s the short version:

Atlanta Gets: Darlington Nagbe and Gbenga Arokoyo.

Portland Gets: $650,000 in 2018 General Allocation Money (GAM); $100,000 in 2019 GAM; $300,000 in 2018 Targeted Allocation Money (TAM); a 2018 international roster spot; and up to $600,000 in conditional, incentive-based future TAM.

It’s that easy.

Okay, actually, it’s not. Let’s break down the implications of each of the non-Nagbe assets in this trade.

Some are relatively familiar. A 2018 international roster slot gives the Timbers the ability to carry an additional international player in 2018. The value of an international roster slot is generally estimated to be around $50,000 to $75,000 in allocation money, although some think that value is going up with teams shopping overseas a bit more vigorously in light of the recent league-wide TAM infusion.

But let’s take the others one-by-one.

$1,050,000 in guaranteed Allocation Money

The cornerstone of the Timbers’ return for Nagbe is the $1,050,000 in guaranteed allocation money that the club is receiving from Atlanta. Of this haul, $750,000 is GAM and $300,000 is TAM. Although $100,000 of the GAM is earmarked for 2019, that is a largely academic earmark given that a substantial portion of the league-wide TAM can be clawed forward from 2019.

For those who aren’t familiar, the difference between GAM and TAM is modest. GAM can be used to buy down the salary of any player, rendering their salary-cap hit less than it would be. So a player whose salary is $200,000 would only have a cap hit of $100,000 if the club used $100,000 in GAM to buy down his salary.

TAM can similarly be used to buy down the cap hit, but only for players whose salary-cap hit is otherwise greater than the maximum cap hit, which in 2018 will be just over $500,000. Because such players’ salaries can be bought down as low as $150,000, though, the use of TAM on a player whose salary would otherwise be over $500,000 can create additional cap space for others on the roster with lower salaries.

Put another, simpler way: The Timbers just received another $1,050,000 in salary-cap space. Given that the 2018 salary cap is a little over $4 million, and the effective league-wide cap (including TAM and GAM allocated on a league-wide basis) appears to be a bit over $8 million, that’s a significant chunk of change. And it’s almost double the maximum of $650,000 in GAM that the Timbers could have received had they transferred Nagbe to Celtic last winter.

Up to $600,000 in conditional, incentive-based TAM

As part of the trade, the Timbers may also receive up to $600,000 in conditional TAM. Conditions in such trades can vary widely from the relatively easy to trigger (like a certain number of minutes played) to the nearly impossible (like winning the MVP award).

On Tuesday afternoon, ESPN’s Taylor Twellman and/or Jeff Carlisle reported the conditions in the Timbers trade with Atlanta were as follows: (1) $150,000 if Nagbe wins the league's MVP award, (2) $125,000 if Nagbe records at least 12 assists in a season, (3) $125,000 if Nagbe scores at least 12 goals in a season, and (4) $250,000 if Nagbe ranks in the top three in the league in terms of goals plus assists while also winning MLS Cup.

Each of those conditions are very difficult to trigger, to say the least. The best way to think of them, therefore, is as a risk mitigation mechanism. Simply put, the Timbers currently value Nagbe at the guaranteed allocation money level ($1.05 million) plus the secondary financial benefits outlined below. The conditional TAM, therefore, is designed to ensure the Timbers get potentially significant extra value if Nagbe turns his immense talent into immense playmaking and goalscoring production in Atlanta.

The structure of the Nagbe trade, then, inherently reflects the conventional wisdom about the enigmatic midfielder. He’s a good — even very good — player in his own right, but who has yet to live up to his considerable talents.

Trade of Gbenga Arokoyo to Atlanta

On its face, this seems relatively straightforward: The Timbers traded a player to Atlanta.

Not so fast.

Why? It starts with MLS’s offseason buyout — or amnesty — rule that allows a team to buy out one guaranteed contract per offseason and remove that contract from the salary cap.

Arokoyo’s time in Portland has been snakebit, to put it mildly. When he arrived midway through 2016, he hurt his groin in his first T2 tuneup and wouldn’t again see action until the second half of the last game of the season in Vancouver. Heading into 2017, Arokoyo was the expected starter at right centerback until he ruptured his Achilles tendon in preseason. As a result, the Timbers’ one-time upside signing now represents significant risk. Because Arokoyo’s contract carries with it somewhere in the ballpark of $500,000, it makes sense that the Timbers would want to move on from Arokoyo.

So Arokoyo entered the offseason as the Timbers’ most likely amnesty candidate. But not the only one. After signing as a free agent in 2017, Chance Myers barely made it on the field for the Timbers as a result of a pair of serious injuries. Given that his salary sat at a bit over $200,000, the Timbers also would seemingly want to amnesty Myers for 2018 rather than pay somewhere near that amount for a player about which there is considerable doubt whether he would be able to play at all. But remember: The Timbers can only amnesty one player.

Hence, the Timbers traded Arokoyo to Atlanta. By doing so the Timbers can shed Arokoyo’s contract without using the amnesty provision. They can then turn around and otherwise use the amnesty provision, which seems most likely to be used to shed Myers’s salary. This saves the Timbers the approximately $500,000 in cash (i.e., non-salary cap money) that it would have cost them to buy out Arokoyo and the approximately $200,000 in salary-cap savings from Myers’s salary (Arokoyo’s cap savings, on the other hand, aren’t truly additional as a result of the trade because the Timbers likely would have amnesty’d him, in any event).

That is, simply put, just as good as an extra approximately $200,000 in guaranteed GAM. The Nagbe trade, then, netted the Timbers about $1.25 million in guaranteed cap space. Add in the savings from Nagbe’s salary and, even assuming none of the conditions are triggered, the Timbers have about $1.8 million in salary-cap space today that they didn’t have before sending Nagbe to Atlanta.