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    Default Trade exceptions explained

    The Cavs have a very large trade exception from the Lebron trade. With trade season heating up, I thought this article would be helpful in explaining why they got it, and what they can do with it.
    Just my opinion, but I think Gilbert will use some, if not all, of it...I dont think he has the willpower not to. I'm guessing it's already in play.

    Cavs Trade Exceptions -
    Original Deal / Exception Amount / Expiration Date
    LeBron James / $14,500,000 / 11th July 2011
    Delonte West / $535,680 / 26th July 2011

    Some other teams with sizable exceptions...
    Toronto - 12.2M
    Utah - 6.5M
    Houston - 6.3M
    N.O. - 6.2M
    Phoenix - 5.7M

    Note: I'm not necessarily endorsing the use of it before the trade deadline. It can be a very valuable tool, but it can also solidify our spot on the treadmill of mediocrity for years.

    Anyhow, thought this might be interesting/educational for some of you.


    CBA 101: Trade Exceptions Explained
    By: Larry Coon Last Updated: 1/11/10 4:56 PM ET | 7107 times read

    With trade season in full swing, it's time to talk about one of the most misunderstood trade mechanisms: the trade exception. There's no formal definition for a trade exception in the Collective Bargaining Agreement; rather, their existence is an aftereffect of something called a non-simultaneous trade.

    There are two types of trades in the NBA: simultaneous and non-simultaneous. As its name suggests, a simultaneous trade is completed all at once. Teams can send away multiple players in a simultaneous trade, and can receive back 125% (plus $100,000) of the total salaries they send away (for the most part – however there are complicating factors like Base Year Compensation and Poison Pill, which are explained in my FAQ, that can change the salary equation).

    On the other hand, a non-simultaneous trade doesn't have to be completed all at once. Teams have an entire year to complete a non-simultaneous trade, and can complete it with any other team in the league – not just the team with which they started. A trade can be non-simultaneous only when a single player is traded away, and teams can receive back only as much salary as they send away (again, plus $100,000).

    So here's the idea to remember – a simultaneous trade gives the team more money but less time, while a non-simultaneous trade gives the team more time but less money.

    How do they determine whether a trade is to be simultaneous or non-simultaneous? The trade mathematics are the determining factor. If the team sent out more than one player in the trade, then it can only be simultaneous. If they acquired more salary than they sent away, then it also can only be simultaneous. But if they sent away just one player, and took back less salary than they sent away, then it's assumed to be non-simultaneous.

    Here are some examples (and a pop quiz). Determine whether these trades were simultaneous or non-simultaneous (for the team I list first):


    1. On February 18, 2009, Sacramento sent Brad Miller ($11.4 million) and John Salmons ($5.1 million) to Chicago for Andres Noccioni ($8 million), Drew Gooden ($7.2 million), Cedric Simmons ($1.7 million) and Michael Ruffin ($1.1 million).

    2. On June 9, 2009, Philadelphia sent Reggie Evans ($4.6 million) to Toronto for Jason Kapono ($5.7 million).

    3. On July 17, 2009, the Los Angeles Clippers sent Zach Randolph ($16 million) to Memphis for Quentin Richardson ($8.7 million).

    4. On June 25, 2009, the New Jersey Nets sent Vince Carter ($14.7 million) and Ryan Anderson ($1.2 million) to Orlando for Rafer Alston ($4.9 million), Tony Battie ($5.7 million) and Courtney Lee ($1.2 million).

    Answers:


    1. Simultaneous. The salaries don't matter – the fact that Sacramento aggregated two players (Miller and Salmons) together in the same trade means the trade had to be simultaneous.

    2. Simultaneous. Philadelphia received more salary than they sent away, so the trade had to be simultaneous. However from Toronto's perspective it was the other way around – Toronto took back less than they sent away – so the trade can be non-simultaneous for the Raptors (and a trade exception was actually created for Toronto in this trade).

    This illustrates a frequently misunderstood point about trades. The same trade may be simultaneous from one team's perspective, but non-simultaneous from the other team's perspective. It can even be configured differently (with different players) from each team's perspective. When looking at a trade, you always consider each side independently

    3. Non-simultaneous. The Clippers traded away one player and they took back less salary than they sent away. The Clippers received a trade exception in this trade.

    4. Non-simultaneous, but it was a trick question. It's true that New Jersey sent two players away in this trade, which would require it to be simultaneous. However, they were able to reconfigure it as multiple, parallel trades in which each player was traded alone. Therefore each trade was considered non-simultaneous, with New Jersey actually receiving two trade exceptions in this deal. The lesson here is that it can be hard even for experts to determine whether a trade exception has been created when a trade is completed.

    Hopefully you all got at least the first three questions right on the pop quiz!

    The sharp-eyed among you will note that I said a trade which meets all the criteria is "assumed" to be non-simultaneous. This is because we won't actually know if a trade was completed later until either: 1) The team acquires more players within the following year to complete the trade; or 2) A year passes.

    So what happens in the meantime? That's where the trade exception comes in. A trade exception is like a gift card with an expiration date. Those of you who just received gift cards for Christmas will relate – you have an amount of money you can spend. You can keep using the card until either: 1) You have exceeded the spending limit; or 2) The card expires.

    For example in one of the trades I listed above, the Clippers sent Randolph to the Grizzlies for Richardson last July 17. Since Randolph made about $7.3 million more than Richardson, the Clippers received a $7.3 million credit, with an expiration date of July 17, 2010. They used part of this credit last August 12 to acquire Rasual Butler. The remaining $3.4 million is still available for the Clippers to use until July 17. Any amount still outstanding on July 17 will simply vanish.

    Since Butler was acquired with the Clippers' trade exception, his acquisition was considered to be a part of the Randolph-Richardson trade. Therefore the Clippers did not have to send away any additional salary last August 12 in order to acquire Butler.

    Here are some other facts about trade exceptions:

    •When determining whether a trade is simultaneous or non-simultaneous, and the amount of any trade exception, only current contracts are considered. Any cash, draft rights and future draft picks are ignored.

    • Trade exceptions are known by many names, so be on the lookout when you're reading information from different sources. They are sometimes called Traded Player Exceptions, or simply TPEs. There is no definition for trade exceptions in the Collective Bargaining Agreement. Even worse, the CBA uses the term Traded Player Exception to refer to something else – the entire process by which teams can make trades when they are over the salary cap.

    •Trade exceptions can't be added to anything. A team can acquire 125% of the salary they trade away (in a simultaneous trade). So if they have a $10 million player, he can be traded for up to $12.5 million in incoming salary. If they also have an outstanding trade exception for $5 million, they can't add it to the $12.5 million in order to acquire a player making $17.5 million. The trade exception can only be used to acquire a player or players making the amount of the exception or less (plus a $100,000 fudge factor).

    •Trade exceptions can't be added to other trade exceptions, either. Right now the Lakers have two trade exceptions – one for $2.5 million, and the other for $1.9 million. They can't combine them to acquire a player making $4.4 million. The $2.5 million exception can only be used to acquire a player making $2.5 million or less, and the $1.9 million exception can only be used to acquire a player making $1.9 million or less (again, each also has a $100,000 fudge factor).

    •People commonly refer to teams trading their trade exceptions. This doesn't happen. A team never acquires a trade exception from another team. However, in the same trade a team might use their existing trade exception, while the other team generates a new trade exception of their own, which they then have a year to use.
    Last edited by Maximus; 12-21-2010 at 10:59 PM.

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    Default Re: Trade exceptions explained

    Toronto's is only worth $12.2m (they used some in the Bayless-New Orleans deal). In the same deal, New Orleans picked up a $9,656,000 TPE

    Also, there are teams far enough under the cap to have comparable means to our TPE. Sacramento is close to $13m under the cap (I don't think they're even at the minimum team salary?), and Minny is about $12m under the cap. Their advantage is that they can combine their space with players to take on a bigger salary. For instance, Minny could use their cap space of $12m along with the salary of a Corey Brewer to trade for someone making $15.7m

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    Default Re: Trade exceptions explained

    Totally forgot Utah had that trade exception. They might be able to put that baby to work before the deadline and turn themselves into an even more serious threat to the Lakers.

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    Default Re: Trade exceptions explained

    I really didn't know where this post would be appropriate...but I think we should go get Rip Hamilton, he hates it in Detroit now and wants out. Do we use some of the trade exception to him...if so, how much has to be spent?

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    Default Re: Trade exceptions explained

    Quote Originally Posted by KingJames1578 View Post
    I really didn't know where this post would be appropriate...but I think we should go get Rip Hamilton, he hates it in Detroit now and wants out. Do we use some of the trade exception to him...if so, how much has to be spent?
    What's different about being here vs being in Detroit? He's in the twilight of his career, and will want to go to a contender if he leaves at all.

    And what does Rip Hamilton do for us? We should not be looking at anyone over the age of 27 give or take. We want to stockpile high draft picks and players that will be peaking and entering their prime in about 3 years, when we could start seeing ourselves heading back toward the top, and not toward the bottom.

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    Default Re: Trade exceptions explained

    Quote Originally Posted by Rich View Post
    Totally forgot Utah had that trade exception. They might be able to put that baby to work before the deadline and turn themselves into an even more serious threat to the Lakers.
    If Utah uses the exception at all, it won't be until this summer at the earliest. They are either up against or just over the luxury tax. Any salary they take back for the exception costs them double this year.

    This summer, when AK47 comes off the books and they have this exception though, they will be able to make a big splash if they want to.

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    Default Re: Trade exceptions explained

    Quote Originally Posted by KingJames1578 View Post
    I really didn't know where this post would be appropriate...but I think we should go get Rip Hamilton, he hates it in Detroit now and wants out. Do we use some of the trade exception to him...if so, how much has to be spent?
    That is probably a good idea but that deal should come with their unprotected first pick next year. With the way our team and theirs are playing we may have a good chance to land two top 10 or top 5 picks next year.
    When in doubt, step up the defense

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    Default Re: Trade exceptions explained

    Didn't the recent Orlando trade creat two exemptions for them, one around 3 mil and the other 6 mill ?

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    Default Re: Trade exceptions explained

    So to break it down for everyone.

    What can we do with the trade exception?
    - Trade for any player or players making up to $14.5 million in combined salary.

    What can't we do with the trade exception?
    - Trade for any player making more than $14.5 million.
    - Combine the exception with players in any single trade.

    For example, to trade for O.J. Mayo and Hasheem Thabeet you COULD:

    Trade Mayo ($4.4 mil) for $4.4 million TPE, and trade Thabeet ($4.9 mil) for $4.9 million TPE.
    Trade Mayo ($4.4 mil) for $4.4 million TPE, and trade Moon ($3.0 mil) and Hickson ($1.5 mil) for Thabeet ($4.9 mil)

    You COULD NOT:
    Trade Hickson ($1.5 mil) and $2.9 million TPE for Mayo ($4.4 mil)
    Trade Varejao ($7.3 mil) and $2 million TPE for Mayo ($4.4 mil) and Thabeet ($4.9 mil)

    You also COULD NOT:
    Trade $14.5 million TPE and Moon ($3.0 mil) for Gilbert Arenas ($17.3 mil)

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    Default Re: Trade exceptions explained

    Quote Originally Posted by Cavalierfan View Post
    If Utah uses the exception at all, it won't be until this summer at the earliest. They are either up against or just over the luxury tax. Any salary they take back for the exception costs them double this year.

    This summer, when AK47 comes off the books and they have this exception though, they will be able to make a big splash if they want to.
    Utah gained that TPE from the Matt Harpring/Eric Maynor trade, which was completed on December 22nd, 2009. The TPE is good for one year, meaning that it expires today....

    Quote Originally Posted by RonG View Post
    Didn't the recent Orlando trade creat two exemptions for them, one around 3 mil and the other 6 mill ?
    Yes, they received a $6,322,320 TPE in their trade with Phoenix. They also received a $1,843,017 TPE in their deal with Washington

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