Revisiting Delly Fever with the best post-Game 3 tweets
July 27, 2015ESPN really, really likes the Cavs-Blazers deal
July 27, 2015The Cleveland Cavaliers traded Brendan Haywood, Mike Miller, and two future second-round picks to the Portland Trail Blazers Sunday night in exchange for, well, nothing really. They got some cash considerations, but the most impactful part of the return was two trade exceptions. Whereas the Cavs were on the hook for $10.5 million in salary to Haywood and $2.8 million to Miller, they now have those salary amounts in trade exceptions. What does that mean, how can they use them, and why does it matter? Let’s explore.
What is a trade exception?
Larry Coon is a computer scientist by trade — pardon the pun — and he has made breaking down the ever-complicated NBA collective bargaining agreement part of his life’s work, and thus he is an indispensable resource when it comes to figuring out the rules and regulations regarding roster rearrangement. He has penned a 126-question long CBA FAQ that seeks to answer any burning question you might have. Relevant to this trade exception discussion is an article he wrote for ESPN in 2011 after the Los Angeles Lakers traded Lamar Odom to the Dallas Mavericks for only a future draft pick and a $9 million trade exception.
Coon explains what such exceptions are, and how they function:
When a team trades a player by himself, it has a choice. It can take back up to 125 percent of the salary it sent away (the limit is higher under the new CBA for teams under the luxury tax line) and complete the trade right away; or it can take back no more than 100 percent of the player’s salary, but take up to a year to finish the job.
Teams receive trade exceptions when they trade one player and take back less salary than they send away. Teams don’t get a trade exception when they send players together, although it’s often possible to reconfigure a multiplayer trade as separate, parallel single-player trades in order to gain trade exceptions. Trade exceptions can’t be combined with anything — even other trade exceptions.
Think of it as a department store gift card, with a one-year expiration date. Teams can keep spending on it until they use it up, or they can let any remaining balance lapse after a year. It can be used only in a trade (they can’t use it to sign a free agent).
Generally, two teams engaging in a trade need to make sure that they are sending and receiving comparable amounts of salary.1 This was part of the appeal of Brendan Haywood’s contract, even if he never played — $10.5 million is a big number, and the Cavs were hopeful that they could use his deal to grease the skids on a major acquisition like the rumored Joe Johnson trade with the Brooklyn Nets. Now that the Cavs have traded Haywood (and Miller) for cash only, they get trade exceptions equal to those players’ contracts. Trade exceptions cannot be used on any sort of free agents, so this deal doesn’t affect any of the Cavs’ ongoing free agent negotiations except that they’ll have a slightly smaller tax bill.
A note on the “send players together” bit: it seems that Haywood and Miller were technically traded separately for one second-round pick each, with each trade giving the Cavs a separate exception. As Coon stated, multiple exceptions cannot be combined in one trade.
There’s a fairly recent, uncomfortable Cleveland precedent: the Cavs got a $13.2 million trade exception when LeBron James went to Miami, as the Cavs and Heat executed a sign-and-trade so LeBron could make more money. The Cavs didn’t use that exception within a year, so it expired, just as a gift card to Blockbuster would. Here’s hoping the Cavs fare better than that particular company.
What kind of trade could they swing?
Ed’s note: This section has been revised. It initially showed trades that combined current Cavaliers with the Haywood trade exception (for instance, Anderson Varejao and the Haywood exception for the Brooklyn Nets’ Joe Johnson), which is not permitted. As stated above, “Trade exceptions can’t be combined with anything — even other trade exceptions.”
The Cavs could, however, send away non-salaried assets like draft picks, rights to foreign players, or cash considerations — they pulled that trick last year when they sent two first-round picks to Denver for Timofey Mozgov, absorbing Mozgov’s $4.7 million contract into a $5.2 million exception that was created by various roster moves. I think this is how it works. Can’t wait for the next CBA! (Thank you to those who raised good questions and helped improve this section.)
They could use a portion of the Haywood exception in any number of trades for players making $10.5 million or less — they don’t need to use the $10.5 million all at once. If they wanted to pull off a earth-shaker like, say, acquiring the Denver Nuggets’ Randy Foye, they could use portions of either the Haywood or Miller exception to absorb Foye’s $3.2 million salary.
Since the two exceptions cannot be combined, the greatest amount of salary that the Cavs could bring back in a single deal is the $10.5 million that the Haywood exception is worth; Joe Johnson is not walking through that door. Among the names in the Haywood exception range are Indiana’s Monta Ellis, Toronto’s DeMar DeRozan, Memphis’ Jeff Green, and Houston’s Corey Brewer. This isn’t to say that any of those players are likely to become Cavaliers — Memphis and Houston are contenders in the West, while Ellis just signed with the Pacers; DeRozan is a slightly more likely possibility — it is just to offer a taste of what’s out there.
So are they going to use the exception(s) soon?
They could, but I wouldn’t bet on it. Teams generally aren’t looking to trade their high-priced (and usually high-talent) players late in the summer, at least not this summer. With the exception of the Philadelphia 76ers, there aren’t many teams who would be willing to trade away a major player for nothing but picks. There were some rumblings of major moves before the NBA Draft — most notably a Lakers-Kings trade built around DeMarcus Cousins — but it doesn’t make much sense for any team to blow it up now for nothing but cap relief and picks.
Even teams that aren’t good right now are in not-terrible shape. The Lakers are weighed down by Kobe Bryant’s contract, but that expires after this year and they have some promising young players. The Celtics aren’t great, but they have a bunch of pieces that they could move in a big trade, with Houston’s James Harden acquisition as the prototype. The Knicks have finally gotten themselves out of salary cap hell, and they signed Arron Afflalo and Robin Lopez this summer — they’d presumably like to see what they have before taking a wrecking ball to the roster. The Sixers would listen to any offer in the name of the #process, but they don’t have any needle-moving players and they would likely want a bevy of draft picks, on which the Cavs are growing increasingly light.
Cavs have no picks in 2016 and only 1 second-rounder in the next 5 drafts. And if they use their exceptions, they'll likely deal more picks.
— Kevin Kleps (@KevinKleps) July 27, 2015
The more likely path is for the Cavs to keep the trade exceptions in their pocket and keep an eye on the rest of the league before next year’s trade deadline — and until this time next summer. Some teams are bound to underperform2 or, in the case of the Western Conference, find themselves on the outside of an absurdly competitive playoff race looking in. When that happens, expect the Cavs to at least sniff around the carcasses and see if they can’t find a deal worth the cost — in both tax payments and (presumably) draft picks. Last year’s Mozgov trade is a perfect example.
Dan Gilbert has shown that he’s willing to foot the bill, and David Griffin has shown that he can hash out deals, but there’s no guarantee that the Cavs will use both or either of their trade exceptions — and that’s okay. It’s titillating to think about the Cavs picking up another All-Star, and by all indications the time to go gung ho for the title is now. But Griffin is as sharp as anyone in the 30-team poker game of NBA roster building, and he’s happy to fold his hand if that is ultimately the best move for the franchise. If nothing else, the Haywood/Miller moves save Gilbert money and give Griffin a few more chips to play with.
Should the Cavs decide to echo their playoff slogan and go all in, those extra couple chips could make all the difference.
34 Comments
Kobe Bryant?
On the Cavs?
Yeah, I’ll be thinking about That for the rest of the day…
The underrated aspect is that until this exception is used, Gilbert saves a small fortune of money. If they ultimately use it midseason, he’ll have effectively paid half the amount he would have before by doing absolutely nothing. And if they don’t use it, he’s saved something like $20-25M.
http://www.reactiongifs.com/r/shvrs.gif
Thanks big Will for some reason I want to keep referring to them as exemptions instead of exceptions. I’m leaving all this in the very capable hands of one David Griffin who I can’t help but feel is piloting a large ship through an iceberg loaded ocean right now. The Cavaliers are in a corner but somehow I don’t mind. I’m glad they finally were able to move Haywood and really moving Miller was a bonus. The interesting part I see out of all of this is when Griffin could potentially use one or both exceptions.
You can’t combine the traded player exception and another player to acquire a more expensive player.
“However, if that team has a $5 million player and a $1 million trade exception from a previous trade, it cannot add the trade exception to the 125% plus $100,000 margin from their $5 million player ($6.35 million), in order to trade for a player making $7 million. This cannot be done, as it would invoke using two exceptions on the same player.”
http://www.cbafaq.com/salarycap.htm#Q88
Yes, that portion of this post is currently being fixed. Thank you.
Correct, being amended as we speak,
he said, feeling quite stupid
Totally clear and excellent explanation, Will.
One side thing about Andy and Kobe: I’m not in love with any over-30s who have torn their achilles. Do not believe these guys ever fully recover and if hops was any part of their game that part is pretty much gone. Andy was never an above the rim guy but probably needs all the tippy-toeing and foot leverage possible, playing center at a slightly undersized 6’10”. Not sure we can count on his game being identical to a year ago, and wonder who would trade for him this year with another $19m guaranteed. Next year when he’s expiring, that’s another story. On the other hand … with salaries about to skyrocket, maybe in a couple of years $10m will be about right for a somewhat functional old center playing 55 games/year. And Mozgov will be laying on beds of cash like the dudes in Breaking Bad.
Pretty much.
This entire discussion is HUGELY confusing (thanks CBA lawyers), but…
“Trade exceptions can’t be combined with anything — even other trade exceptions.”
Is this particular statement referring to the creation of the TPE in the initial trade (what happened last night) and the Cavs could not receive anything in combination with the 2 TPE’s (from 2 separate trades)?
Because if that statement refers to how the exception can now be used – it means the Cavs can’t combine ANYTHING with them – no players, no other exceptions and no draft picks. Or is that sentence written purely from a salary point of view? Because if true, it means the trade exception is merely for absorbing money in a salary dump. That the Cavs can’t include any other assets to entice a team to trade?
Oh, it’s more confusing than that…
Basically, trade exceptions are considered an incomplete trade. They are called non-simultaneous trades by the NBA CBA.
So, the TPE is gained upon step-1 of the trade (what happened last night) and among the rules in place to gain the TPE is that only 1-player may be out-going on that part of the trade.
step-2 is the completion of the non-simultaneous trade in one of 2 ways:
(1) TPE expires, original trade is complete trade.
(2) 2nd trade is consummated. In this portion of the trade, the TPE may be used like a gift card, but you cannot aggregate other players/salaries into the trade because of the exclusionary rule.
—In addition, the salaries back may not exceed $100K more than what was sent out (unlike player-for-player swaps that are 125% + 100K for tax teams).
Pretty sure the Nets aren’t ever in dire financial straits due to the fact that their owner is reportedly worth around $10Billion (and, considering he is from Russia where nobody tells how much they really make, he could be worth twice that).
Would the Cavs really have to use picks in order to move their trade exceptions? Isn’t the trade exception providing cap relief for the other team? Those situations tend to demand picks rather than give them up.
They would not “have” to do it, but it is the more likely route as the salary cap continues to climb in coming years.
The only circumstance that I could see them not needing to give up an asset (international player rights count too) is if a team disappoints this season, then near the trade deadline realizes that they could get a full max-contract under the cap for July by making a salary dump (or get a full 2-max contracts under the cap).
Please, NBA CBA is circular logic throughout 🙂
That sounds like a number of teams… Kevin Durant’s services are going to be available.
Moving Miller was, in a word, necessary. Very happy they got rid of his corpse. If nothing else, this team needed to get younger and more athletic. Since Miller lost his shooting touch, that could basically be anyone.
possibly. we can at least hope.
QUESTION:
do teams have to pay the tax on players acquired in-season? For instance, if Joe Johnson were acquired at the deadline, wouldn’t the tax already have been paid by Brooklyn for the year? That would nearly halve his effective cost, and could make him a target in February.
I also like the thought of taking on a bad, undesirable contract for the Haywood exception AND a cheaper, potential rotation player for the Miller exception, from the same team (in 2 separate deals).
example? (or just spitballing?)
I don’t know if it was necessary it was just really a bonus for me and it sounds like Miller himself. Lets be honest he wasn’t going to play so if he thinks he still has something left the Cavs did him a favor. It’s not easy to get excited over two exceptions but when you are in the position, rightfully, the Cavs are you understand their value.
I don’t know but I would tend to agree with you unless maybe the cap hit follows wherever that certain player is regardless. Problem is what calendar date is chosen to make the determination.
according to Coon’s, the payroll is assessed AFTER the last day of the regular season and all actual line-items are accounted for in that payroll. once the contract is acquired, their contract would fall under normal payroll and the pro-rated portion would be taxable.
so, the Nets would not have paid the tax and they also would only pay their portion (though we cannot acquire JoeJ for the Haywood exception)
I have nothing off the top of my head, but say a team is looking to dump a player (like the Cavs did w/Jarrett Jack) Trade for the Jack-like player w/the Haywood TE and structure a parallel trade to pick up a Zeller/Karasev/1st rounder – like package for Miller’s TE. It’s not aggregating contracts, its just structuring two separate but integral trades with the same team.
I know the Cavs had injuries that they couldn’t help, but they had no viable defensive options off of that bench in the finals. (The Finals). Getting rid of Perkins and Miller were my numbers 1 and 1a propositions for this offseason (after re-signing LeBron and Love, of course).
If they had just had a random guy at SF who plays D like – geez – even Perry Jones or something, they would have been much better off. Miller looked like a blind, paraplegic baby with the coordination of an elk.
Now that’s rough, ouch. Either way I’m perfectly fine with Miller wanting to move on. James Jones is back. Delly is back. That just leaves Sybil and Cupcake (nod to RGB) left to bring back.
I wonder is the open bench spot might be available for Sasha Kaun now?
Round and round what comes around goes around I’ll tell you why!!!!
Ah yes the prorate I forgot about that Obi Wan Bode!
The owner is looking to sell the Nets and many prospective owners want the roster to be as purged as possible when acquiring. That’s not every case, but cleaning future liabilitiies off the books only makes a team more likely to be sold.
Is a 20M player contract still 20M in the middle of the season, or does it go down to $ remaining on the season.
Now you’re talking
From the Mozgov deal, I would have to think that the contract is overall value to match the TPE (as it was described Timofey’s full season salary was subtracted from that trade exception).
Problem#1: Only tradable asset with exception: 2016 1st round. That’s it. Moscov cost 2 1st rounders to get with the exception last year. No team is going to gift a player to CLE. This is the primary problem with this ‘chip’. There’s nothing left to attach to it.