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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