Why NBA Sign-And-Trades Are Rare

With NBA free agency around the corner, speculation about teams’ targets and players’ potential destinations is running rampant, and that speculation often leads to discussion of possible sign-and-trade deals. After all, sign-and-trade arrangements seem like win-win scenarios — the player gets to go to his preferred landing spot, while his old team isn’t left without anything to show for a departing free agent.

While sign-and-trade deals may make sense in theory though, the NBA’s Collective Bargaining Agreement makes them tricky in reality, particularly for elite free agents. Since the 2015 offseason, a total of four sign-and-trade deals have been completed, an average of just one per year.

The Knicks acquired Kyle O’Quinn in a 2015 sign-and-trade, while the Grizzlies and Bucks signed-and-traded for Troy Daniels and Matthew Dellavedova, respectively, in 2016. In 2017, the Clippers acquired Danilo Gallinari via sign-and-trade. No sign-and-trade deals were completed in 2018.

Not only have sign-and-trades become rare, but the compensation for the player’s old team has been next to non-existent. The most valuable assets received in any of those four aforementioned sign-and-trade deals since 2015 have been distant second-round draft picks or cash.

Why exactly are sign-and-trades becoming so rare for NBA teams and players? Here are a few reasons:

1. Players can only get full maximum salary contracts (five years, 8% annual raises) if they remain with their previous team.

Under old versions of the NBA’s CBA, a sign-and-trade deal allowed a player to sign for the true max – in terms of total years and annual raises – even though he wasn’t remaining with his previous team. That’s no longer the case.

If, for instance, the Celtics were to sign-and-trade Kyrie Irving to another club this summer, he wouldn’t be able to receive the five years or 8% annual raises that he would if he re-signed with Boston — he’d still be eligible for the same starting salary, but would be limited to four years and 5% raises, reducing the overall value of his max contract by nearly $50MM, based on current cap projections.

2. Teams with cap room can sign a player outright without giving up assets in a sign-and-trade.

Let’s use Irving as an example again and assume he’s set on leaving the Celtics and decides to join the Nets or Knicks.

We already know there’s no incentive for Irving in terms of salary if he agrees to be part of a sign-and-trade — he could get the same contract by signing outright with the Nets or Knicks, since both teams have plenty of cap space. Similarly, there’s no incentive for those suitors to give up any assets to acquire Kyrie when they could simply use their cap room to sign him outright.

It’s still possible that the Nets or Knicks would be willing to do a sign-and-trade in this scenario, but if so, they certainly wouldn’t feel pressure to send anything of real value to the Celtics. In fact, they’d be doing a favor to Boston in that scenario.

For instance, when the Bucks acquired Dellavedova from the Cavaliers via sign-and-trade during the 2016 offseason, Milwaukee actually received an extra $200K from Cleveland in the swap. All the Cavs received in the deal were the draft rights to Albert Miralles, who was never expected to play in the NBA. The only reason the two teams turned it into a sign-and-trade deal was to create a trade exception for the Cavs, who actually had to pay the Bucks to make that happen.

3. Teams that acquire a player via sign-and-trade become hard-capped.

If teams with cap room have no incentive to acquire a player via sign-and-trade, that means it’s only really a viable option for over-the-cap clubs. But those clubs don’t necessarily have a ton of wiggle room.

Any team that acquires a player via sign-and-trade can’t be above the tax apron (a mark about $6MM over the tax line) when the deal is completed — or at any time for the rest of that league year.

That restriction eliminates a handful of teams from even being eligible to acquire a player in a sign-and-trade — the Thunder, Warriors, Raptors, and Trail Blazers all finished the 2018/19 season above the tax apron, and a handful of other teams were above that threshold earlier in the league year. The same thing figures to happen in future seasons, reducing the pool of sign-and-trade destinations available to free agents.

4. A free agent joining a new team won’t want to weaken that club.

Unlike traditional trades, sign-and-trade deals can’t simply be completed if two teams agree to them — the player has to sign off as well.

There are certainly plenty of good reasons why a player would do so. Maybe he’ll get a well-above-market deal if he agrees to go a specific team as part of a trade package, or maybe a sign-and-trade is the only way he can get to his preferred landing spot.

But there has to be some reason why it makes sense for the player to go the sign-and-trade route instead of signing outright. Otherwise, he’s just forcing his new team to give up assets for him when those assets could be used to make the team better in other ways. There’s no reason he’d want to do that.

5. Signed-and-traded players can be difficult to salary-match in trades.

If a free agent wants to join a team without cap room for a contract worth more than the mid-level, a sign-and-trade may genuinely make sense. However, even that scenario can’t necessarily be handled like a normal trade, since the Base Year Compensation (BYC) rule often applies.

As we explain in our full glossary entry on the subject, the BYC rule applies to a specific circumstance. If a player is being signed-and-traded via Early Bird or Bird rights by a team above the salary cap, gets a raise of at least 20%, and his salary is worth more than the minimum, his cap figure for salary-matching purposes will be affected. For the team acquiring him, his full salary would apply in a trade. For the team trading him, he would count for his previous salary or 50% of his new salary, whichever is greater.

Let’s use Irving as an example one more time and assume he signs a deal with a starting salary of $32.7MM, his projected max. Since he would fit the BYC criteria, Irving would count for $32.7MM for salary-matching purposes for his new team in a sign-and-trade, but would only count for about $20.1MM (his previous salary) from the Celtics’ perspective.

That would make it difficult for the two teams to meet the salary-matching rules in a trade — if Irving’s new team is above the cap, that team would have to send out at least $26.08MM in salary to make a deal work from its end, which is more salary than Irving’s outgoing $20.1MM cap figure would allow Boston to take on. Additional pieces would be required, which would complicate negotiations.

The NBA’s salary cap rules can be byzantine and confusing, but in this case, the rules related to sign-and-trades were implemented with a clear goal in mind. Unlike in the past, when a player was able to sign the longest possible max contract and join a new team via a sign-and-trade, the last couple Collective Bargaining Agreements have essentially made a player choose between those two options. In theory, that should make it easier for teams to retain their own star free agents.

With a series of max-contract, BYC, and salary-cap rules now in place, there are enough factors getting in the way of sign-and-trade deals that they’ve become a less realistic option, particularly for the very best free agents.

Information from Larry Coon’s Salary Cap FAQ was used in the creation of this post. A previous version of this post was published in 2017.

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21 thoughts on “Why NBA Sign-And-Trades Are Rare

  1. x%sure

    Yeah so when your fav team’s FA leaves, they get little or nothing in return. Maybe more capspace if that matters, maybe not. Quit dreaming, get over it, America has always featured freedom.

  2. brewpackbuckbadg

    So is there a time after the contract that these “rules” become less stringent? Say Kyrie signs early off season with the ridiculous agreement that he gets traded to —- for ——, would these rules change at anytime? Months or seasons?

      • brewpackbuckbadg

        I am guessing the answer is no based off your question. If they trade him later in the season or another year do the severe salary cap issues change?

        • Luke Adams

          In theory, someone like Kyrie could re-sign with the Celtics on a five-year deal and then get traded later in the season (probably after January 15, based on CBA rules) to his preferred destination and avoid most sign-and-trade restrictions.

          It’d of course be a CBA violation to work out that sort of agreement ahead of time, and so much could change in six months that it’d be hard to do it anyway.

          Blake Griffin re-signing with the Clippers on a five-year deal and then getting traded about seven months later is one example of a player getting his full five-year max while still changing teams shortly thereafter. On the surface that sort of looks like sign-and-trade circumvention, but obviously that wasn’t planned ahead of time — it’s not as if he wanted to go to the Pistons all along.

          • brewpackbuckbadg

            Thanks. Great example. Another article idea. Who won this year’s NBA trade deadline and what are the future ramifications of those deals? I know the obvious answer is the Raptors since they won the title but all I remember is how great it was for Philly to get Tobias and we see how that turned out.

  3. hiflew

    “Teams with cap room can sign a player outright without giving up assets in a sign-and-trade.”

    There is another way around that. If an acquiring team sees a free agent as an upgrade on an existing long term piece at the same position, it would benefit them to trade that existing piece for the new FA instead of trying to change one of their positions.

    (This is just a for instance, not what I really think will happen.)

    Let’s say Minnesota agrees to sign Kawhi Leonard, but decided that Andrew Wiggins and Leonard are best at the same position. It would makes sense for Minny to S&T Wiggins (and a couple of picks) for Leonard rather than keep both of them long term and hope you can trade Wiggins later. For Toronto, it would make sense because you would at least get something back for your best player instead of having to go through a complete tear down.

  4. alonsoball

    Teams ain’t doing any S&T’s for a while after Jerry West robbed the Rockets in the Chris Paul S&T. Heck, nobody is going to deal with the Clippers anymore, period. They got a haul of assets from an expiring Tobias Harris, and Zubac for a bag of Muscala Flavor Doritos.

    • Luke Adams

      The Chris Paul situation was actually another example of how rare sign-and-trades are — because it would have been extremely difficult to make it work as an actual sign-and-trade, Paul had to pick up his player option and have the two teams make a “normal” trade for it to happen.

  5. So can the Warriors do a sign and trade involving Kevin Durant?

    If Kevin Durant wants the most money, the Warriors can offer him the most via his BIRD rights. So what if a team like the Knicks or Clippers want to take advantage of that and work with GSW on a sign and trade for KD – is that possible?

    My only reference to a similar event is when CP3 signed with the Clippers so that they would get some assets from Houston when he chose them back a few years ago.

    • Luke Adams

      They could in theory, but there’d be no reason to. As explained in the post, Durant wouldn’t be able to get any more money/years in a sign-and-trade than he’d be able to if he signed outright with a team like the Knicks or the Clippers.

      Paul going from LAC to Houston wasn’t a sign-and-trade. He had to pick up his player option and have the two teams work out a trade because there was no other viable path to the Rockets. He didn’t sign a new contract at that time.

      • so KD can pick up his option just like Paul.

        A team then can clear cap space/roster space

  6. I knew the Warriors were going to do a Sign and Trade Kevin Durant.

    Bob Meyers is too good of a GM to let him walk away for nothing.

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