(Not-so?) Quick sign and trade question...

[chakdaddy]

Can a team essentially clear cap space by sending players away in a sign and trade? And thereby avoid the need for 125% matching salaries in the same trade?

Team 1 is 14 million under the cap and wants to sign Player A (currently on Team 2) to a 17 million dollar contract. Player B on Team 1 has an expiring contract and makes 4 million per year.

Is this possible?
Team 2 re-signs Player A for 17, with his Bird rights, and sends him to Team 1 for Player B in a sign and trade.

Team 2 gets back 4 million in salary, gets a 13 million TPE, and the 4 million is obviously less than 125 pct of the outgoing 17 mil.

Team 1 remains 1 million under the cap, so the outgoing salaries don't have to match for them.

Does that work, and is that actually how most of these sign and trades work out, like with Marion and Turkoglu?


I don't understand what this line in the salary cap faq means:

68. What is the Traded Player exception?

As described in question number 67, exceptions are the mechanisms that allow teams to function above the salary cap. Any trade which results in the team ending up over the salary cap requires an exception. This is true even if the team is moving downward in salary.
...
Trades using the Traded Player exception are classified into two categories: simultaneous and non-simultaneous. As its name suggests, a simultaneous trade takes place all at once. Teams can acquire up to 125% plus $100,000 of the salaries they are trading in a simultaneous trade.

So in this case the Traded Player exception means the 125% rule. Which is required "even if the team is moving downward in salary.'' But a team moving downward in salary should always be acquiring less than 125% of the salary they are sending, meaning the exception/125% rule is NOT really required, or at least is automatically fulfilled and a moot point. Or could some weird BYC or trade kicker situation technically make a team acquire more than 125% of salary while still actually reducing their cap number???

That's right, I'm basically just questioning a phrase in the cap faq that seems redundant.

[FGump]

You've mangled so many rules and mixed together so many situations (some entirely unrelated) in your question that I don't even know where to start.

The summary answer is this: when the signing is done (or the incoming player in your scenario), the team has to end up under the cap in order for it to be legal. Make yourself a hypothetical "before" and "after" and play with the numbers and you'll see what might work and what won't.

To address some of the list of details in your scenario:

Can a team essentially clear cap space by sending players away in a sign and trade?

And thereby avoid the need for 125% matching salaries in the same trade?

Team 1 is 14 million under the cap and wants to sign Player A (currently on Team 2) to a 17 million dollar contract. Player B on Team 1 has an expiring contract and makes 4 million per year.

THE SCENARIO YOU CREATED (TEAM WITH 13M IN CAP ROOM SNT'S THEIR OWN PLAYER TO A 4M CONTRACT FOR A SNT OF A 17M INCOMING PLAYER) ACTUALLY WILL NOT WORK AT ALL, BECAUSE THE TEAM WILL END UP 4M OVER THE CAP WHEN ITS OVER AND IT DOESNT FIT WITHIN THE OVER-THE-CAP 125% LIMIT.

Which is required "even if the team is moving downward in salary.'' But a team moving downward in salary should always be acquiring less than 125% of the salary they are sending, meaning the exception/125% rule is NOT really required, or at least is automatically fulfilled and a moot point. Or could some weird BYC or trade kicker situation technically make a team acquire more than 125% of salary while still actually reducing their cap number??? ALL OF THIS PARAGRAPH IS GIBBERISH IN RELATION TO THE TRADE RULES.

[answerthink]

Actually, while I agree a few points have been mangled, I believe the proposed trade would be possible. As chakdaddy describes it, Player B is already under contract by Team 1 (and therefore Team 1 would be $14 million under the cap including Player B’s contract). Please correct me if I am mistaken, but I believe the trade would be viewed as follows:

Team 1 Perspective
Team 1 is currently $14 million under the cap. Team 1 is trading away $4 million in salary (Player B) and receiving back $17 million (Player A), leaving it $1 million under the cap. Team 1 does not need to utilize the TPE to complete this trade.

Team 2 Perspective
Assuming Team 2 is over the cap, it could utilize the TPE to complete this trade. Sign-and-trade deals can be made when players (such as Player A) are signed utilizing Bird rights for a minimum of three years. Since Team 2 is trading away 1 player and is receiving back less salary than it is trading away, this trade would be considered non-simultaneous and Team 2 would receive a trade exception of $13 million.


As it relates to the 125% rule, perhaps the following description might be helpful to chakdaddy: Under the TPE, trades can be structured (from each team’s perspective) as either simultaneous or non-simultaneous.

In a simultaneous trade (from each team's perspective), a team can (i) trade away and/or receive as many players as desired and (ii) can receive total salary less than, equal to, or up to 125% + $100k more than the salary traded away.

A non-simultaneous trade occurs (from each team's perspective) if, and only if, the team (i) trades away one player and (ii) receives less salary than it trades away in the initial trade. Any number of players can be received. Trade exceptions are created in, and only in, non-simultaneous trades. The value of the trade exception is equal to the positive difference between the salary traded away and the salary received in the initial trade.

All that is meant by the phrase “This is true even if the team is moving downward in salary” is that if a team ends up over the cap as the result of a trade it will need to utilize an exception, even if the team is taking on less salary than it is giving away. The point I believe chakdaddy is trying to make is that if a team’s salary is going down as a result of a trade, the trade would likely be approved (from that team’s perspective). The FAQ simply answers the question of how the trade would need to be structured.

[FGump]

I thought he said Player B is sent away for 4M in a SNT ("Can a team essentially clear cap space by sending players away in a sign and trade? "), as best as I could make out. Maybe that's not what he said, or meant, or I misinterpreted. Bottom line, if you're under the cap and do a deal, and end up still under the cap, it's doable ...so it should be as easy to determine as doing the math on whatever the scenario is supposed to be.

From the other end, all the talk about TPEs and so on is just muddling a simple equation. If a team sends away more salary and gets back less, it's legal regardless of whether they are over or under the cap.

[chakdaddy]

I thought he said Player B is sent away for 4M in a SNT ("Can a team essentially clear cap space by sending players away in a sign and trade? "), as best as I could make out. Maybe that's not what he said, or meant, or I misinterpreted. Bottom line, if you're under the cap and do a deal, and end up still under the cap, it's doable ...so it should be as easy to determine as doing the math on whatever the scenario is supposed to be.

My question basically was if a team wants to sign for a player that they don't *quite* have cap space for, can they structure it as a sign and trade where a cheap outgoing player creates that small amount of extra space so they wind up under the cap and are not subject to the 125% rule. I guess they begin and end under the cap so it works. Not sure why I questioned it in the first place - I guess I only thought of the all-or-none scenarios of the incoming player fitting completely under the cap, or the outgoing salary being within 125%. For some reason it sounded a little fishy to me. The sentence about exceptions being required ''even if the total salary goes down'' confused me a little bit.

Not exactly sure what rules or points I mangled, I thought I phrased things the same way answerthink interpreted it. I think you were kind of quick to call things gibberish without reading them.

I do wonder why it says ''an exception is required, even when the team is going downward in salary.' In the faq, since you guys said that if a team's salary goes down, it is legal from their perspective. So why is ''an exception required''? Is that a completely redundant phrase? Is it referring to the fact that the TPE still comes into play and a trade exception is generated? Or could there be a weird situation with trade kickers or BYC where the 125% rule could come into play?

[answerthink]

As long as the team remains under the cap after the trade it is permissible (and does not need to utilize the TPE).

I believe you may be confusing the differences between the TPE and the 125% rule. The TPE is the umbrella under which teams above the cap complete trades. It has two components: (i) simultaneous trades (or what you refer to as the 125% rule) and (ii) non-simultaneous trades (which produce trade exceptions). Your proposed trade was non-simultaneous, so the 125% rule didn’t apply. Is this more clear?

An exception is required any time a team ends a trade over the cap. So if a team starts a trade $10 million over the cap and ends the trade $5 million over the cap, an exception is still required. The trade is legal, but it still needs to be structured utilizing an exception. The exception being referred to is the TPE, not a trade exception.

The only exception to FGump’s last point that I can think of off the top of my head is a sign-and-trade agreement in which the player is signed with the mid-level, bi-annual or disabled player exception. Such a trade would not be permissible even if the team’s salary is going down as a result of the trade. But this is a different concept.

[chakdaddy]

An exception is required any time a team ends a trade over the cap. So if a team starts a trade $10 million over the cap and ends the trade $5 million over the cap, an exception is still required. The trade is legal, but it still needs to be structured utilizing an exception. The exception being referred to is the TPE, not a trade exception.

I think I see, it's just so weird semantically. So what does ''structured utilizing an exception'' mean in this case? Just that it is considered a non-simultaneous trade and a credit/exception is generated, right?

I think the confusing thing is the use of the word ''required'' when it makes more sense to just say that the TPE applies in the situation...''requires'' implies that there's uncertainty about the trade being legal.

[answerthink]

You just about have it.

In this case Team 2 will be over the cap when the trade is over, so they need to use an exception to complete the trade. The exception Team 2 will use is the Traded Player Exception (other exceptions that can be used by teams over the cap to complete a trade include the Disabled Player Exception and the Minimum Player Salary Exception). Now all that needs to be determined is whether it will be considered simultaneous or non-simultaneous. Given the details you provided, the trade would be considered non-simultaneous, and a trade exception would be produced.

Team 1 will not be over the cap when the trade is over. Therefore, they don’t need to use an exception to complete the trade.

[FGump]

~post removed as it muddied the waters somewhat~

[answerthink]

FGump,

I believe you are completely mis-interpreting what I am trying to say. The proposed trade as described is legal.

Team 1 starts under the cap and ends under the cap. They can therefore simply use cap room to complete this trade. They do not need to utilize the Traded Player Exception.

Team 2 starts over the cap and ends over the cap, so they need to use the Traded Player Exception. Team 2 is trading away 1 player (Player A, making $17 million) and is taking back less salary ($4 million) than it is sending away. This is considered a non-simultaneous trade, and Team 2 would receive a $13 million trade exception, which it then has up to one year to use. The non-simultaneous trade is completed when the trade exception is used (or it can expire unused).

Is this not correct?

[FGump]

~post removed as it further muddied the waters~

Answerthink's explanations are better for this thread.

[answerthink]

FGump,

I think you are confusing yourself. Every trade that utilizes the Traded Player Exception is either (i) simultaneous or (ii) non-simultaneous.

“What is "non-simultaneous” about it? Nothing.” This is WRONG.
What is “non-simultaneous” about this particular trade for Team 2 is that (i) one player is being traded away and (ii) less salary is being received than is being traded away… and that is why a trade exception is created.

Any trade that creates a trade exception is considered the first step of a non-simultaneous trade. The word "non-simultaneous" is used because the trade happens in multiple steps at multiple times (as opposed to all at once). The second step is any subsequent trade that utilizes the trade exception that was created in the initial trade. Together, the two steps are all part of one non-simultaneous trade. In a non-simultaneous trade (both the first and second step combined), a team can only acquire 100% + $100k of salary it trades away.

A simultaneous trade is a completely different concept. A simultaneous trade allows a team to acquire 125% + $100k of salary it trades away, but it must occur all at once. Therefore, no trade exception is created in a simultaneous trade.

I would encourage you to read Larry Coon’s response under the topic TPE. In it, he refers to simultaneous trades as “Option 1” and non-simultaneous trades as “Option 2.”

If you still feel any of my answers are wrong or nonsensical, please let me know.

[FGump]

I understand L Coon and the way trades work. It's just that I don't quite agree with your terminology here. However for purposes of clarity in this discussion/explanation yours will get the job done, and wrangling over terminology only adds to confusion, so at this point I'll defer to yours and put this to rest.

[answerthink]

Thanks FGump. I would only ask that you please try not to refer to my posts as wrong or nonsensical unless you know them to be so (particularly when yours are the posts that prove incorrect), as I am only trying to use my knowledge to help answer people’s questions. I hope that is how my responses are perceived.

[FGump]

Thanks FGump. I would only ask that you please try not to refer to my posts as wrong or nonsensical unless you know them to be so ....

I don't and didn't. But it got to the point where it was not an important enough distinction to belabor the issue since you ultimately had explained the gist of the situation accurately.

Carry on.

[answerthink]

Your post from 6:40 pm yesterday... I imagine you would agree that this post is not only incorrect but also quite insulting of my own...

I would be more than happy to erase this if you'd like me to, and I mean you absolutely no disrespect (I very much appreciate your knowledge and tenure), but perhaps you can see now what I am referring to.

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by FGump on Sun Nov 01, 2009 6:40 pm

THIS IS WRONG

"Team 1 Perspective
Team 1 is currently $14 million under the cap. Team 1 is trading away $4 million in salary (Player B) and receiving back $17 million (Player A), leaving it $1 million under the cap. Team 1 does not need to utilize the TPE to complete this trade."

THIS IS ALSO WRONG

"The exception Team 2 will use is the Traded Player Exception (other exceptions that can be used by teams over the cap to complete a trade include the Disabled Player Exception and the Minimum Player Salary Exception). Now all that needs to be determined is whether it will be considered simultaneous or non-simultaneous. Given the details you provided, the trade would be considered non-simultaneous, and a trade exception would be produced."

Even though you guys are kinda on the right track, you are mangling the use of terminology. That last bold sentence is especially nonsensical.

This supposed trade does not use a non-simultaneous exception and therefore would not be "considered non-simultaneous." Instead, it uses (and must use) part of the 17M TPE created by the trade away of the 17M player, and that is a simultaneous use.

When the trade is over, out of the 17M TPE there is a leftover 13M. In this situation, that allows a NSTPE of 13M to be created which can be used at a later time by Team 2, if they wish.

[FGump]

"I mean you no disrespect" (but let me put up your posts that you later edited or removed for whatever reason) ... how does that reflect what I'm wanting to say on the topic? If I wanted to discuss those things, they'd still be there. At this point, they'd only serve to confuse a discussion that has already more or less had the question answered for the one who asked.

I still think you're wrong on a couple of points. But given that you've made a nice explanation of the general concepts to clear up the question that was asked, the distinctions are now technicalities and as such, not worth chasing further.

[LarryCoon]

Just catching up after a long absence -- sorry, life continues to be overly hectic. Just some commentary on one of the earlier questions, why I pointed out that an exception is required even if a team moves downward in salary. The reason it's there is because: 1) It's true; 2) There are additional rules and stipulations that go along with the exceptions, and this makes clear that the team is still subject to them; 3) It helps train the reader how to think about the salary cap and exceptions.

The basic rule of the salary cap is that a team can't be over it, unless they're using an exception (see Article VII, Section 5(a)). So if a team is $10M over the cap and makes a trade that saves them $5M, then that still leaves them $5M over the cap -- and per the basic rule, they can't be over the cap unless they're using an exception. Ergo, they have to be using an exception -- and if the exception they're using has any nuances, the team is subject to them.

Here's an example: Team A just (let's say within the last week) traded Player W ($7M) for Player X ($5M). Now they want to aggregate Player X and Player Y ($5M) and send him to Team B for Player Z ($10M). Can they do this?

The answer is no -- per Article VII, Section 6(h)(1)(iii), ". . .no Player Contract acquired pursuant to an Exception may give rise to an aggregated trade exception for a period of two (2) months from the date the Player Contract is acquired." Here it is very important that Player X was acquired with an exception -- even though the team moved downward in salary when they acquired him.