Hoops Rumors Glossary: Traded Player Exception

While relying on ESPN.com’s Trade Machine may be the simplest way to verify whether or not a trade will work under NBA rules, it’s worth examining the primary tool in the league’s Collective Bargaining Agreement that determines a trade’s viability — the traded player exception.

Teams with the cap room necessary to make a trade work don’t need to abide by the traded player exception rules. However, if a team makes a deal that will leave its total salary more than $100K above the salary cap, the club can use a traded player exception to ensure the trade is legal under CBA guidelines.

There are two different types of traded player exceptions used in NBA deals. One applies to simultaneous trades, while the other applies to non-simultaneous deals. In a simultaneous trade, a team can send out one or more players and can acquire more salary than it gives up. In a non-simultaneous trade, only a single player can be dealt, and the team has a year to take back the equivalent of that player’s salary, plus $100K.

Let’s look into each scenario in greater detail….

Simultaneous:

In a simultaneous trade, different rules applies to taxpaying and non-taxpaying clubs. A non-taxpaying team can trade one or more players and take back….

  • 175% of the outgoing salary (plus $100K), for any amount up to $6,533,333.
  • The outgoing salary plus $5MM, for any amount between $6,533,333 and $19,600,000.
  • 125% of the outgoing salary (plus $100K), for any amount above $19,600,000.

Here’s a recent example of these rules in effect:

Last July, the Pistons sent Marcus Morris to the Celtics in exchange for Avery Bradley. Morris has a flat $5,000,000 salary for 2017/18, which falls into the first category in the list above. As such, Detroit was eligible to take back up to $8.85MM — 175% of Morris’ $5MM salary, plus $100K. Bradley is earning $8,808,989 this season, so he narrowly fit within that limit.

If Morris’ salary had been $10MM, the Pistons could have received up to $15MM in return (Morris’ salary, plus $5MM). If his salary had been $20MM, Detroit could have received up to $25.1MM in return (125% of Morris’ salary, plus $100K).

For taxpaying teams, the traded player exception rules for a simultaneous trade are simpler, albeit more restrictive. A taxpaying club can send out one or more players and take back 125% of the outgoing salary, plus $100K. If the Cavaliers were to trade Channing Frye‘s $7,420,912 expiring contract, for instance, they could take back up to $9,376,140.

In simultaneous transactions, the traded player exception is used to instantly complete the deal, leaving no lingering loose ends. This form of the traded player exception generally isn’t what we’re talking about if we say a team has a trade exception available to use. Those outstanding trade exceptions come as a result of non-simultaneous deals.

Non-simultaneous:

In non-simultaneous deals, a team can trade away a single player without immediately taking salary back in return. The team then has up to one year in which it can acquire one or more players whose combined salaries amount to no more than the traded player’s salary (plus $100K).

For instance, when the Raptors traded Cory Joseph and his $7,630,000 salary to the Pacers last July, it created a traded player exception worth $7.63MM for Toronto. The Raptors have until next July to acquire one or more players whose salaries total up to $7.73MM (Joseph’s salary, plus $100K). If they don’t use the full trade exception within a year, it will expire.

The same week they traded Joseph to Indiana, the Raptors also sent DeMarre Carroll to the Nets and received Justin Hamilton in the deal. Although each team acquired a player in that swap, the Raptors viewed it as a non-simultaneous trade, with Carroll and his $14,800,000 salary as the outgoing piece. Hamilton’s $3,000,000 salary was immediately absorbed using that trade exception, leaving Toronto with an exception worth $11,800,000.

Putting the two together:

When evaluating an NBA trade, it’s worth noting that the two teams can view the deal entirely differently. For example, one team could consider a trade simultaneous, while the other team breaks the transaction down into two separate trades, one simultaneous and one non-simultaneous. Let’s take a look at a recent real-life example, examining the trade that saw the Clippers deal Blake Griffin, Willie Reed, and Brice Johnson to the Pistons in exchange for Tobias Harris, Avery Bradley, and Boban Marjanovic.

From the Clippers‘ perspective, the trade broke down as follows:

  • Griffin ($29,512,900) for Harris ($16,000,000), Bradley ($8,808,989), and Marjanovic ($7,000,000).
    • As a non-taxpayer, the Clippers could have absorbed up to $36,991,125 (125% of Griffin’s salary, plus $100K) in a simultaneous trade using Griffin, so a total combined salary of $31,808,989 for Harris, Bradley, and Marjanovic is fine.
  • Reed ($1,471,382) for nothing.
    • This segment of the trade is non-simultaneous, allowing the Clippers to create a traded exception worth Reed’s salary ($1,471,382). They have a year to use it.
  • Johnson ($1,331,160) for nothing.
    • This segment of the trade is also non-simultaneous, allowing the Clippers to create a traded exception worth Johnson’s salary ($1,331,160). They have a year to use it.

Here’s how it looked from the Pistons‘ perspective:

  • Harris ($16,000,000) and Bradley ($8,808,989) for Griffin ($29,727,900) and Johnson ($1,331,160).
    • The combined total of Harris’ and Bradley’s salaries is $24,808,989. The Pistons could have taken back up to $31,111,236 (125% of the combined total, plus $100K) in a simultaneous trade using the duo. Griffin’s and Johnson’s combined salary is $31,059,060, which barely fits within that limit.
    • Note: Griffin’s incoming salary is different than his outgoing salary due to a trade kicker, as detailed here.
  • Minimum salary exception for Reed ($1,471,382)
    • The minimum salary exception is often used to sign players, but it can also be employed to acquire them in trades, functioning as a de facto traded player exception. Any player on a one- or two-year minimum salary contract can be absorbed using the minimum salary exception.
  • Marjanovic ($7,000,000) for nothing.
    • This segment of the trade is non-simultaneous, allowing the Pistons to create a traded exception worth Marjanovic’s salary ($7,000,000). They have a year to use it.

More notes on traded player exceptions:

  • For salary-matching purposes, draft picks – like players on minimum-salary contracts – aren’t taken into consideration. For instance, if a non-taxpaying team was sending out $6MM in a simultaneous deal, that club could take back $10.6MM (175% of $5MM, plus $100K) and could receive one or more minimum-salary players or draft picks in the deal.
  • For contracts signed under the NBA’s current Collective Bargaining Agreement, a team’s outgoing salary for matching purposes is the guaranteed salary rather than the total salary. For example, a player with a $2MM partial guarantee on a $10MM salary would only count for $2MM for salary-matching purposes, unless he signed his contract under the old CBA. Between the end of a team’s season and June 30, the outgoing salary for a traded player is the lesser of his full current-season salary and his guaranteed salary for the next season.
  • When determining whether a team is over the cap or the luxury tax line for traded player exception purposes, the team’s total salary after the trade is the deciding factor.
  • Trade exceptions created in non-simultaneous trades can’t be combined with one another, with other exceptions, or with a player’s salary; they can’t be used to sign a free agent; and they can’t be traded outright to another team.
  • Teams that are under the cap before a trade and go over the cap as a result of the trade can’t create a trade exception as a result of that deal.

The traded player exception is one of the CBA’s trickier details, and makes it challenging for over-the-cap teams to navigate the trade market. It’s undoubtedly simpler to use ESPN’s Trade Machine to determine whether a deal is legal, but examining the rules and figuring out exactly how a blockbuster trade breaks down can provide rewarding insight into an NBA club’s management of its cap.

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.

An earlier version of this post was published in 2012 by Luke Adams.

Leave a Reply