CBA Breakdown

TRADED PLAYER EXCEPTION

The Traded Player Exception is the most intriguing (and inscrutable) part of the CBA. This exception allows teams to trade players and exceed the salary cap in the process. How this exception operates depends on (1) the perspective of the trading team (and trades can be structured entirely differently from each team’s perspective), (2) whether a team trades players simultaneously or in separate deals, and (3) whether a player’s salary is protected in full or not. The rules for simultaneous vs. non-simultaneous trades are discussed below. Note, non-simultaneous trades are the ones that result in a trade “credit” that can be used for up to one year; this credit is often confusingly referred to as a “trade exception” when the CBA never uses that term. If a player’s salary is not protected in full, the way the exception is calculated is based on just the player’s protected compensation (as opposed to the player’s protected and unprotected compensation).

• Simultaneous trades — For trades of players that occur at the same time, the Traded Player Exception permits a team to take back varying amounts in salary from other teams. Note, the only time a team may aggregate two or more players’ salaries for purposes of calculating the amount of outgoing salary is when they do so in the same transaction. (And this is the only time and the only salary cap exception that can be added together.)

  The amount of salary a team can take back depends on how the trade’s outcome would impact its team salary — would the outcome result in the team (a) still having room (with wiggle room of up to $100,000 above the salary cap), (b) going above the cap but below the tax level (i.e., a non-taxpayer), or (c) going above the cap and the tax level (i.e., a taxpayer)? These scenarios are explained in the examples below, pulled from the NBA’s “CBA 101” primer with additional explanatory notes. Each example assumes that the traded player’s salary is protected in full.

  • Room Scenario —

    • Rule — If a team’s team salary is below the salary cap, then a traded player may be replaced in the same transaction by one or more players whose salaries together do not exceed the team’s room plus $100,000. There are two important points for this rule. First, it means that the complicated salary matching formulas described below do not apply to a team receiving a player into cap space. Second, the CBA allows teams that are below the cap to use the rules for teams over the cap (which they’d do if it works to their advantage).

    • Example — Assume (i) salary cap = $99.093 million, (ii) team salary = $90 million, and (iii) tax level = $119.266 million. A team seeks to trade a $10 million player. That team could replace that player in a simultaneous trade with one or more players making $19.193 million. ($99.093 million minus $90 million, plus $10 million, plus $100,000.)

  • Non-Taxpaying Scenario —

    • Rule — If a team’s post-trade team salary is above the salary cap but below the tax level, then a traded player may be replaced in the same transaction by one or more players whose salaries together do not exceed the greater of (i) the lesser of (A) 175% of the pre-trade salary of the traded player plus $100,000, or (B) the pre-trade salary of the traded player plus $5 million, or (ii) 125% of the pre-trade salary of the traded player plus $100,000.

    • Example (Team A, Non-Taxpayer) — Assume (i) salary cap = $99.093 million, (ii) team salary = $110 million, and (iii) tax level = $119.266 million. Team A seeks to trade a $6 million player. Team A could replace that player in a simultaneous trade with one or more players making $10.6 million. (175% x $6 million, plus $100,000.)

    • Example (Team B, Options) — Make the same assumptions as above, but this time consider the trade from Team B’s perspective. To receive that $6 million player from Team A, Team B could (i) if it’s available, absorb that salary into room, (ii) if it’s available, absorb that player into a pre-existing trade credit (see non-simultaneous examples below), (iii) send out a single player making $10.6 million or less (so that the trade still works from Team A’s perspective), or (iv) aggregate two or more players’ salaries that do not exceed $10.6 million (again so that the trade still works from Team A’s perspective too).

  • Taxpaying Scenario —

    • Rule — If a team’s post-trade team salary would exceed the tax level, then a traded player may be replaced in the same transaction by one or more players whose salaries together do not exceed 125% of the pre-trade salary of the traded player plus $100,000.

    • Example (Team A, Taxpayer) — Assume (i) salary cap = $99.093 million, (ii) team salary = $130 million, and (iii) tax level = $119.266 million. Team A seeks to trade an $8 million player. Team A could replace that player in a simultaneous trade with one or more players making $10.1 million. (125% x $8 million, plus $100,000.)

    • Example (Team B, Options) — Make the same assumptions as above, but this time consider the trade from Team B’s perspective. To receive that $8 million player from Team A, Team B could (i) if it’s available, absorb that salary into room, (ii) if it’s available, absorb that player into a pre-existing trade credit (see non-simultaneous examples below), (iii) send out a single player making $10.1 million or less (so that the trade still works from Team A’s perspective), or (iv) aggregate two or more players’ salaries that do not exceed $10.1 million (again so that the trade still works from Team A’s perspective too).

• Non-simultaneous trades — For trades of players that occur at different times, the Traded Player Exception permits a team to take back 100% of the outgoing player’s salary, plus $100,000. Using the non-simultaneous trade rule permits a trade to initially “start” by sending out a player and then be completed down the road in a separate trade (i.e., in October, Team A sends out a player but only receives a draft pick from Team B; then Team A completes the trade in January by taking a player back into this “trade credit” from Team C).

  • Rule — A traded player may be replaced in a non-simultaneous transaction by one or more players acquired in a different trade whose salaries together do not exceed 100% of the traded player’s salary plus $100,000.

  • Example — Make the same assumptions as the non-taxpaying scenario above. A team previously traded a $10 million player for a draft pick. As a result, the team now has a $10 million trade credit that it has up to one year to use. That team could trade a draft pick for a player or players making $10.1 million. ($10 million plus $100,000.))

  • Example — A number of trade credits were created, and later used, as a part of the New York Knicks trading Kristaps Porzingis to the Dallas Mavericks in February of 2019.

    • Dallas, treating Wesley Matthews as a non-simultaneous trade for CBA purposes in the large Porzingis deal, sent Matthews ($18.6 million) to the Knicks. From Dallas’ perspective, they basically sent Matthews over for “nothing”. Dallas now held an $18.6 million trade credit that it could use for up to 1 year.

    • A week later, in a separate trade, Dallas sent Harrison Barnes ($21.3 million) to the Sacramento Kings for Zach Randolph ($11.7 million) and Justin Jackson ($2.8 million). Randolph’s contract was absorbed into the existing Wesley Matthews trade credit. Jackson was dealt with separately. Like the initial trade of Wesley Matthews, Dallas also treated the Harrison Barnes trade as a new, non-simultaneous trade and created a $21.3 million trade credit for him as well.

    • Finally, in July of 2019, Dallas absorbed Delon Wright ($9.2 million) into that $21.3 million trade credit in a separate trade with the Memphis Grizzlies.

MID-LEVEL SALARY EXCEPTION FOR ROOM TEAMS

A team may use the Mid-Level Salary Exception for Room Teams to sign one or more players to contracts that do not exceed, in aggregate, the permitted amounts ($4.767 million for 2019-20, pro-rated beginning on January 10). Contracts signed under this exception can cover up to 2 seasons.

• Teams may use this exception to re-sign their own free agents or another team’s free agents. A team may not use this exception to acquire a player through a trade.

• This exception can only be used if the team’s team salary, at any time during a salary cap year, is below the salary cap so that the team cannot use and has not yet used in the same salary cap year (a) the Bi-annual Exception, (b) the Non-Taxpayer Mid-Level Salary Exception, or (c) the Taxpayer Mid-Level Exception.

• Example — The Atlanta Hawks used a portion of this exception to sign Alex Len to a two-year deal in 2018.

BI-ANNUAL EXCEPTION

A team may use the Bi-annual Exception to sign one or more players to contracts that do not exceed, in aggregate, the permitted amounts ($3.623 million for 2019-20, pro-rated beginning on January 10). Contracts signed under this exception can cover up to 2 seasons.

• Teams cannot use this exception in consecutive years.

• Teams may use this exception to re-sign their own free agents or another team’s free agents. A team may not use this exception to acquire a player through a trade.

• This exception can only be used if:

  • the team’s team salary is above the salary cap (or only below the salary cap by less than the amount of the exception) but below the tax level plus the tax apron at the time the exception is used (and at all times thereafter during that salary cap year); and

  • the team has not used (a) the Taxpayer Mid-Level Salary Exception or (b) the Mid-Level Salary Exception for Room Teams in that same salary cap year.

• Example — The Milwaukee Bucks used the full amount of this exception to sign Brook Lopez to a one-year deal in 2018.

MINIMUM PLAYER SALARY EXCEPTION

A team may use the Minimum Player Salary Exception to sign a player to a one-year or two-year contract at the applicable minimum player salary (with no bonuses of any kind). Unlike the other exceptions, a team may use this exception to acquire a player through a trade, provided the acquired player was signed to a one-year or two-year minimum contract. This exception is pro-rated after the first day of the season.

Disabled Player Exception

A team may use the Disabled Player Exception to replace a player that suffered a season-ending injury with one player making the lesser of (i) 50% of the disabled player’s current salary or (ii) the Non-Taxpayer Mid-Level Salary Exception. Contracts signed using this exception must be for 1 season, or if the exception is used to acquire a player by trade, that player must be in the final season of his contract. If the replacement player is acquired in a trade, the team is granted another $100,000 in wiggle room to help use this exception.

• This exception may only be used by the team that had the injured player under contract at the time of the injury, and that player must still be under contract to that team from the time the team applies for this exception through the date the exception is granted. Thus, neither the Golden State Warriors nor the Brooklyn Nets could use this exception to replace Kevin Durant during the 2019-20 season, since his injury occurred while he was under contract with the Warriors and he later signed with the Nets..

• A team can apply for this exception from July 1 through January 15, regardless of when the injury occurred as long as the injury makes it substantially more likely than not that the disabled player is unable to play through the following June 15. The exception expires on the March 10 after it is granted.

• This exception can only be used if the team’s team salary is above the salary cap (or only below the salary cap by less than the amount of the exception).

• If a team is granted this exception and uses it, and the player recovers from the injury, the player can resume playing and there are no consequences for the team’s team salary. If a team is granted this exception, and before using it, the player resumes playing for the team or is traded, then the exception just expires.

• Examples — The Washington Wizards used the Disabled Player Exception following John Wall’s achilles injury to acquire Wesley Johnson. The Indiana Pacers, meanwhile, could not apply for this exception for the 2018-19 season when Victor Oladipo suffered a season-ending knee injury because his injury occurred (just) after January 15. After Rodney Hood tore his achilles during the 2019-20 season, the Portland Trailblazers applied for and received permission to use this exception in under two weeks.