Toronto traded fan favourite and trusted veteran point guard Jose Calderon and forward Ed Davis to the Memphis Grizzlies for Gay and centre Hamed Haddadi.
The deal was confirmed Wednesday while Toronto was taking on the Hawks in Atlanta.
"Players like this don't come along that often in terms of their availability," Colangelo said of Gay. "This was a very unique circumstance. We feel like we took advantage of it."
Toronto is also sending a second-round draft choice in 2013 and cash considerations to the Grizzlies, who are flipping Calderon to the Detroit Pistons in exchange for forwards Austin Daye and Tayshaun Prince.
Calderon has played his entire NBA career in Toronto. The six-foot-three Spaniard joined the team in the 2005-06 season and has played in 525 games, averaging 10.0 points and 7.2 assists per game.
Calderon, who was set to become a free agent at the end of the season, was surprised by the move.
"It's been my home for eight years," Calderon said in Atlanta, where the Raptors were taking on the Hawks, shortly before leaving the arena. "I've done everything possible for this team. It's tough. The fans have been with me since Day 1. It's tough."
Davis was Toronto's 13th overall pick in the 2010 NBA Draft. In his two seasons, Davis has averaged 7.0 points and 6.9 rebounds mostly in a reserve role, although he has started several games this year with Andrea Bargnani and Jonas Valanciunas out with injuries.
Gay, the Grizzlies' leading scorer, has been the subject of trade speculation throughout the season as Memphis looks to unload his hefty max contract. The six-foot-eight small forward is due US$16.5 million this season with $37 million more over the next two years.
Davis, who has two more seasons left on his deal, is set to make $3.1 million next season.
The 26-year-old Gay has been with the Grizzlies since joining the NBA in 2006. He has averaged 17.9 points and 5.8 rebounds over seven seasons.
Haddadi is the first Iranian-born player in the NBA. The seven-foot-two centre has averaged 2.0 points, 2.1 rebounds and 6.1 minutes in 134 career outings, all with Memphis.
For Memphis, trading away Gay eases a luxury tax hit due next season, while concentrating the team around centre Marc Gasol and all-star forward Zach Randolph. The Grizzlies had their best playoff run in 2011 when they knocked off then-No. 1 seed San Antonio before losing to Oklahoma City in seven games in the Western semifinals — all with Gay on the bench after needing season-ending shoulder surgery.
New Grizzlies owner Robert Pera took over the franchise last November and has quickly started addressing the team's salary situation.
"We are excited to add three players who bring with them a tremendous amount of value to our team and have achieved incredible success on the pro, college and Olympic levels," Memphis GM Chris Wallace said in a statement. "In these players, we welcome NBA Champion and Olympic gold medallist Tayshaun Prince, as well as up-and-coming athletic forwards Ed Davis, who won an NCAA title at North Carolina, and Austin Daye."
Just over a week ago, the Grizzlies sent valuable reserve Marreese Speights and two other players to Cleveland in a move that cleared $6.4 million in salary and avoided a $4 million luxury tax hit this season.
All told, the Grizzlies will save nearly $40 million over the next three years after the two trades.
Prince and Daye meanwhile have both spent their entire careers with Detroit, and Prince was the last link to the proud championship team of 2003-04.
"Trading a player like Tayshaun Prince, who has meant so much to our organization and contributed to our championship success, is never easy," Pistons president Joe Dumars said in a statement. "We want to thank Tayshaun for his professionalism and contributions over the last 10 years. We also appreciate everything that Austin Daye has done for our team both on and off the court over the past three-plus years."
Prince, a 32-year-old forward who was drafted by the Pistons in the first round in 2002, is averaging 11.7 points and 4.6 rebounds per game this season.
"Shocked obviously," Prince said after the Pistons played the Pacers. "I didn't find out, obviously, until I got here. I'm shocked, but it's a business and you never know what's going to happen."
Calderon is averaging 11.1 points and 7.4 assists this season for the Raptors (16-29), who are desperately trying to scratch their way into the playoff picture. Toronto is in 11th place after losing to Atlanta 93-92, 8 1/2 games behind Boston for the eight seed.
"Hard to write this tweet now. Thanks for all these years of support,thanks for everything raptors fans. Thanks TO for made me feel like home," Calderon tweeted after the trade was finalized.
Davis also thanked the Raptors and Toronto on Twitter.
"I will always consider Toronto my home and the Raptor nation as my extended family. I feel very blessed to have had this experience here," he said.
Calderon and Davis had both been starting for the Raptors, but they do have Kyle Lowry waiting in the wings at point guard and likely see Gay's scoring punch as the key to vaulting back into the discussion in a mediocre conference.
Coach Dwane Casey will have to deal with a bit of a log jam with Gay, DeMar DeRozan, Terrence Ross, Landry Fields and Alan Anderson as wing players with similar skill sets. But getting a player with Gay's natural scoring talent, even at the expense of parting with a valued player like Calderon, proved too enticing to pass up.
"Hopefully this team is back to the playoffs as soon as possible," Calderon said.
— with files from the Associated Press.Suggest a correction