The February 18th trade deadline is two months from today, but it’s already close enough to have an effect on player movement. Teams can’t trade any of the players they sign within three months of the deadline, and the two-month mark also represents a key date. Today is the final day a team can trade for a player using an exception and still be allowed to flip that player in another trade that aggregates his salary before the trade deadline. In more simple language, that makes it harder, but not impossible, for teams to construct trades that send out anyone they recently traded for in a package with another player.
To understand the implications of today’s deadline, it’s important to understand the NBA’s traded player exception rules. NBA teams with cap space are free to make trades as they wish without regard to matching salaries, as long as no trade takes them more than $100K above the cap. However, most teams operate above the cap during the season. So, to make trades, they have to use the traded player exception, which involves limits on how much salary they can take back compared to the salary they take in. When teams don’t receive any salary, they receive a one-year credit for the salary they relinquished. That credit is commonly known as a trade exception.
Most of the trades that take place during the season make use of the traded player exception one way or another, whether or not one of those credits is involved. So, if the Rockets, who are over the cap, were to trade Ty Lawson, they’d do so pursuant to the rules of the traded player exception. Let’s say, hypothetically, they trade him to the Cavs on Saturday for Mo Williams and Anderson Varejao. That’s purely a hypothetical — no one is suggesting that such a trade is even remotely being considered. We’re just using it as an example.
Since the Cavs, in our hypothetical scenario, acquired Lawson one day past the “aggregation deadline,” and since they’re also over the cap and used the traded player exception (but not necessarily their trade exceptions) to swing the deal, they can’t aggregate Lawson’s salary in another trade. If they wanted to trade Lawson and Sasha Kaun to the Bucks for Greg Monroe next month, they couldn’t do it, even though the salaries would be a match, because they couldn’t aggregate Lawson’s salary with Kaun’s.
Now, let’s say the Cavs decided to put Lawson and Kaun in a trade together for Khris Middleton. This would be legal. That’s because the Cavs wouldn’t have to aggregate Lawson’s salary with Kaun’s to come within 125% plus $100K of Middleton’s salary under the matching parameters of the traded player exception. They could simply trade Lawson for Middleton, and trade Kaun for no salary in return in what would the NBA would treat as a separate transaction, even if it all happened at the same time.
Needless to say, the concept is complex, and it’s why many rumored trades don’t end up happening. It’s difficult to construct legal trades within the rules. But, the point is that while it’s more complicated for teams to flip the players they trade for after today, it is possible for them to do so, even in multiplayer deals.
Larry Coon’s Salary Cap FAQ was used in the creation of this post.