Trading for Cash

[mvpshaq32]

Why and how are teams trading cash in deals?

Like this deal, for example: http://espn.go.com/nba/story/_/id/11413 ... em-thabeet

The Oklahoma City Thunder have traded center Hasheem Thabeet and cash to the Philadelphia 76ers for a protected second-round draft pick in 2015 and a trade exception.

Sources briefed on the transaction said Tuesday that the Sixers will receive cash considerations to take on Thabeet's contract.

The Sixers, sources said, are expected to immediately waive the former No. 2 overall pick, while Oklahoma City will create a trade exception worth $1.25 million by shipping Thabeet out without taking back any salary.

Hasheem was due $1.25m for this season and by dumping him to the 76ers, the Thunder get a $1.25m TPE. I get that, but why does the Thunder have also send cash considerations and in return, Philly also gives up a 2nd rounder? Does the cash go into the owner/GM's pockets since Thabeet was waived and thus received no salary? So essentially the Thunder paid the 76ers to take Thabeet in exchange for a TPE and a 2nd rounder?

I don't understand the incentive on both sides when deals like this happen.

[DBoys]

A team includes cash in a trade because the other team says, "If you don't pay the cost for ____, I'm not interested in doing the deal." Or maybe they say, "Cover the costs PLUS give me some extra money too." There are limits in the rules to how much money you can send and receive, but otherwise it's simply a matter of teams negotiating trades to give them what they want.

[DBoys]

As far as this trade, it was simply a giveaway of Thabeet, to get him off the OKC payroll/cap/tax.

The pick being "sent" from Philly was so highly protected that it will never change hands, and the trade exception was awarded but it wasn't sent from Philly.

OKC gave Thabeet to Philly because they wanted to get rid of him, and Philly could have done it for one of two reasons (a) let's take a shot and see if we can get something out of him worth keeping, or (b) we'll agree to take him off your hands - and off your cap - if you pay his salary for the rest of the season and also sweeten it with some extra cash for our trouble.

In this case, we know the answer is "b" because Philly is going to waive him after they get him. If we find out the amount of cash they received, we can calculate how much they are netting from OKC for the cap help. They are on the hook for the salary for Thabeet for the rest of the season, which is roughly $650,000-ish (just a rough estimate, I suspect someone will jump in the thread eventually with an exact calculation for you).

OKC did it to lower their cap payroll, which will lessen the tax they will have to pay. Before the trade, they were about $3.7M over the tax line, and now it's about $2.5M.

[Smitty731]

This deal actually happened before the season started.

Thabeet was waived before he hit any sort of guarantee date in his contract. I think he was partially guaranteed by some date in September, but I don't remember exactly. So, no one ended up paying him anything. The cash amount Philly got was 100k.

Beyond those minor details, it is exactly what DBoys laid out. OKC paid Philly to take him and waive him. The only real "asset" was that OKC created a TPE worth 1.25 million.

[DBoys]

This deal actually happened before the season started.

Ah, I did not realize it was a question about an old deal. Thanks.