Ted Stepien Rule

June 5 2012 at 3:21pm CST By Luke Adams

While a rule like the Gilbert Arenas provision can flatter its namesake, the late Ted Stepien, former owner of the Cavaliers, may have preferred not to go down in history as the namesake for the Ted Stepien rule. Stepien owned the Cavs in the early 1980s, and made a number of trades that left the franchise without first-round picks for several years. As a result, the league eventually instituted a rule that prohibited teams from trading out of the first round for consecutive future seasons.

Because the Stepien rule applies only to future draft picks, teams are still permitted to trade their first-rounders every year if they so choose, but they can't trade out of the first round for back-to-back future seasons. For instance, since the Knicks have traded their 2012 first-round pick to Houston, they aren't allowed to trade their 2013 first-rounder unless they receive a first-round pick (for either '12 or '13) in return. However, following the 2012 draft, the Knicks regain the right to trade that 2013 first-rounder, since their '12 first-rounder is no longer considered a future pick.

Teams will have to consider the Stepien rule over the next few weeks as they mull trading draft picks for veterans. The Warriors and Rockets, for instance, each have a pair of first-rounders and are viewed as candidates to move those picks for a veteran player or two. However, because both teams have traded their 2013 first-rounders – Golden State to the Jazz and Houston to the Nets – they can't package this year's first-rounders for players unless they receive a '12 or '13 first-rounder in return.

Here are a few more rules related to trading draft picks:

  • For salary-matching purposes, a draft pick counts as $0 until the player signs a contract.
  • The "Seven Year Rule" prohibits teams from trading draft picks more than seven years in advance. For instance, during the 2011/12 season, a 2018 draft pick could be traded, but a 2019 pick could not be dealt.
  • Teams are permitted to include protection on draft picks. For example, the Mavericks' 2012 first-rounder was traded to the Rockets, but was top-20-protected. Since the pick eventually landed at No. 17, Dallas was able to keep it for another season.
  • For non-protected traded picks, the receiving team may be granted the option of deferring the pick for one year.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA's Collective Bargaining Agreement. Larry Coon's Salary Cap FAQ was used in the creation of this post.

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