Exceptions could control deadline deals
Most years the NBA trade season is defined by the term "expiring contracts." This season, however, there's a different phrase that might be at the center of big-name transactions: trade exceptions.
Trade exceptions can be created several ways, but large ones typically are created when a team acquires salary-cap space in exchange for trading a player. The team that receives the cap space then gets a credit -- of the amount of the departing player's salary in the current year of his deal or the first year of a new deal -- that it can use in future transactions for a calendar year.
These deals were somewhat rare until this past summer. But with numerous teams having significant cap space and a great number of high-priced players to be had, several large trade exceptions were created via sign-and-trades.
Some of them already have been used. For example, the Jazz earned a trade exception worth roughly $14 million by signing-and-trading Carlos Boozer to the Bulls. Utah then used that exception (along with two first-round draft picks) to trade for Al Jefferson from the Timberwolves, essentially moving the Bulls' cap space to Minnesota via the Jazz.
LARGEST TRADE EXCEPTIONS
|Hawks (Childress)||Jul. 14||$3,631,449|
The team with the largest exception right now is the Cleveland Cavaliers, who own a $14.5 million exception from trading LeBron James to the Heat. The Cavs, according to league sources, also are the team most actively shopping theirs.
Mostly, the Cavs are looking to absorb a player or two to help facilitate a larger trade or to ease a team's luxury-tax burden. In return the Cavs are in search of multiple draft picks, with at least one being a first-rounder with limited or no protection.
The Cavs, sources said, have been in serious trade talks with several teams, including the Nets, who have been shopping for months for a trade partner to sweeten a deal for Carmelo Anthony.
Several potential three- and four-team deals involving the Jazz and Bobcats fell apart for the Nets in the fall, and ESPN's Chris Broussard reported that a recent three-way deal involving the Cavs, Nuggets and Nets fell apart when both Denver and Cleveland wanted the same future first-round pick the Nets own.
The Cavs, several league executives said, are using the SuperSonics' 2007 trade exception deal, famous among general managers, as precedent. The then-Sonics used a large trade exception received when they signed-and-traded Rashard Lewis to the Magic to absorb Kurt Thomas from the Suns.
It was a deal that saved the Suns more than $16 million including luxury taxes, but it cost them two first-round picks (one unprotected and one protected) that ultimately turned into Serge Ibaka and, through a draft-day trade, Cole Aldrich.
But this is where the current market is making things interesting for numerous teams, not just the Cavs. There are no fewer than seven trade exceptions available right now worth $5.4 million or more. The Raptors have $12.2 million left from trading Chris Bosh to the Heat, the Hornets have one for $9.6 million from Peja Stojakovic and the Mavericks have three separate ones.
All these have effectively saturated the market for them and created an odd competition the league hasn't seen before.
"It is simply a matter of supply and demand," one Western Conference general manager said. "There's a large supply of exceptions and not as high of a demand as there has been in years past. So what you have is teams with the trade exceptions and cap space competing with one another. Usually it is the other way around; teams who needed to move a player or get cap relief were the ones competing to make the best offer to the few teams that had one to offer."
In addition to all the exceptions, there still are some teams out there with salary-cap space that can be used in the same manner as a trade exception. The Kings ($15 million) and the Timberwolves ($14 million) are leaders of that pack. But there will not be takers for all those options.
"Over the last couple of years, there's been a lot of dead money cleaned off payrolls, so there just aren't as many opportunities to use big exceptions as there were," an Eastern Conference GM said. "A couple of these exceptions are probably going to be used in a big trade or two before the deadline, but some of them are going to become worthless."
Some teams don't plan on using their exceptions and will let them expire. The Lakers, who have a $5.4 million exception from trading Sasha Vujacic (plus a first-round pick for the trouble) to the Nets for cap space last month, are a team that probably isn't in a hurry to use it. The Lakers tried for months to move Vujacic off their books to save on luxury tax and probably will take that savings unless there's an injury.
Trade exceptions last a year, which means they can become valuable after the deadline when the draft arrives and in free agency. But with front offices preparing for a July lockout, teams realize that waiting until the next free-agency period might cost them their asset.
One general manager told ESPN that teams might not want to waste a draft pick or two to move a player for a trade exception if the new collective bargaining agreement has another amnesty provision. In 2005, the CBA allowed teams to waive a player and not have his salary count against the luxury tax.
"We're all guessing at what the rules will be right now but there's a chance that a trade exception in June or July could have a lot less value than it does right now," the GM said. "It's a weird time in the league."