Trade exception - what is the rule?

[cfechter]

I would like a mind out there, better than my own, to explain what the rules are dealing with "trade exceptions". To the best of my knowledge, when trades are consumated in the NBA, the salaries have to more or less match up within 10, or 15% I believe.

However, the first I heard of this "Trade exception" was last year when Indiana traded Peja to the Hornets for nothing, except for a former 2nd round pick and this trade exception. We saw it again this year when the Warriors traded Richardson (and his 10 million plus salary) for Wright (salary will be about 2 million).

Can anyone explain to me what this is? Why is it that some trades qualify for a trade exception, and some don't?

 

[VF21]

http://members.cox.net/lmcoon/salarycap.htm

This is the bible if you really want to find information out about the CBA, which governs trades, salaries, etc. The key to trade equality depends upon whether or not the teams involved are under or over the salary cap.

 

[supamari0]

I would like a mind out there, better than my own, to explain what the rules are dealing with "trade exceptions". To the best of my knowledge, when trades are consumated in the NBA, the salaries have to more or less match up within 10, or 15% I believe.

However, the first I heard of this "Trade exception" was last year when Indiana traded Peja to the Hornets for nothing, except for a former 2nd round pick and this trade exception. We saw it again this year when the Warriors traded Richardson (and his 10 million plus salary) for Wright (salary will be about 2 million).

Can anyone explain to me what this is? Why is it that some trades qualify for a trade exception, and some don't?

Trade exceptions are generated when a team that is over the cap trades a player to a team that is under the cap. Hence when Richardson was traded to Charlotte, the Warriors (who are over the cap) traded Richardson to the Bobcats (who are way under the cap). The differences between salaries, (Richardson - 11 million versus 0 dollars for a Charlotte draft pick) and thus GS gets an 11 million dollar trade exception.

In the Peja case, the Hornets could have just signed Peja outright since he was a free agent. However, the Pacers basically paid off George Shinn (who's notoriously cheap) to do a sign and trade and thus the Pacers functionally signed and then traded Peja to the Hornets and generated a 10 million dollar trade exception since the difference in salaries was 10 million versus 0.

Those trade exceptions can be used to trade for players and also avoid salary cap restrictions. Now the Warriors can trade for a player or players with salaries up to 11 million dollars without having to actually give up anything.

The Pacers got Al harrington with their trade exception.

 

[cfechter]

Thanks for the informative posts - helped me understand the whole thing and the virtual impossibility of it all. First off, very few times are under the cap - secondly, those who are, are usually not very good and are probably hesitant to take on more salary than necessary. This is almost a fluke event, it seems like.

Kings have nothing any team with cap space would want to potentially get an exception.