Non-simultaneous trade and 3 way deals

GTO · Post #1 » by **GTO** » Mon Aug 16, 2010 10:29 pm

Is it possible to use a TPE generated from an earlier deal to eat salary as a part of subsequent 3-way deal?

For example, Houston just got a $6.3 million TPE from the recent 4 way deal that saw them send out Ariza, would the following deals be kosher (leaving aside questions of ?

1). Houston sends a 1st round pick to New Orleans; Orlando sends Gortat (making $6.3 mil) to Houston; New Orleans sends Ariza (also making $6.3 mil) to Orlando.

2) Houston sends 1st round pick to New Orleans; Clevland sends A. Parker and J. Moon (making $3 mil and 2.85 mil) to Houston, New Orleans sends Ariza to Cleveland.

My guess is that the first deal is kosher while the second deal is not. In the first one, essentially Houston uses its TPE to absorb Gortat's $6.3 mil salary, giving Orlando a $6.3 mil TPE, which it can then use to take on Ariza. In the second one, Houston absorbs Parker and Moon, but CLE gets a $3 mil TPE and another $2.8 mil TPE, neither of them is sufficient to absorb the Ariza's $6.3 mil salary.

Is this correct? If so, does it mean that any 3 or more party trades in which one party uses a TPE generated from an earlier deal must be viewed as several separate trades with one of these trades being a 2 party deal involving the TPE?

JNichols42887 · Post #2 » by **JNichols42887** » Tue Aug 17, 2010 12:06 am

I don't see why the second trade wouldn't be legal. Houston can fit both the salaries in the TPE, so that's fine. Cleveland can accept up to $7,350,000 ( (3,000,000+2,800,000)*1.25 + 100,000) in salary, which Ariza fits in. And New Orleans trades Ariza's $6.3 million contract, gaining a 6.3 mil exception.

I don't think the fact that one team is using a TPE (or the fact that another team is acquiring one) has any effect on any of the other teams. Each team views the trade separately. In this case, it's the completion of a non-simultaneous trade for Houston, the start of one for New Orleans, and a multi-player simultaneous trade for Cleveland.

GTO · Post #3 » by **GTO** » Tue Aug 17, 2010 12:40 am

How about the following? Houston has a $2.5 mil TPE from the David Andersen trade, and a $1.6 mil TPE left from the Landry trade.

Houston sends a 1st round pick to New Orleans; Orlando sends Gortat (making $6.3 mil), Ryan Andersen (making $1.4 mil), and Quentin Richardson (making $2.2 mil, can be traded after 12/15/2010, combined salary with Gortat and Andersen = $9.9 mil) to Houston; New Orleans sends Emeka Okafor (making $11.4 mil) to Orlando.

JNichols42887 · Post #4 » by **JNichols42887** » Tue Aug 17, 2010 1:40 am

GTO wrote:How about the following? Houston has a $2.5 mil TPE from the David Andersen trade, and a $1.6 mil TPE left from the Landry trade.

Houston sends a 1st round pick to New Orleans; Orlando sends Gortat (making $6.3 mil), Ryan Andersen (making $1.4 mil), and Quentin Richardson (making $2.2 mil, can be traded after 12/15/2010, combined salary with Gortat and Andersen = $9.9 mil) to Houston; New Orleans sends Emeka Okafor (making $11.4 mil) to Orlando.

I think that would be fine, too. Houston has TPE's for each of the 3 players, so for them it would be like 3 separate trades (it would have to be anyways since Richardson can't be traded until Dec. 15). You can't combine exceptions, but clearly that's not the case here. Okafor's contract fits in the 125% rule for Orlando, and New Orleans would gain a very large exception with this deal.

I don't recall ever seeing any special rules regarding TPE's and three-way deals, and it wouldn't make sense for those to be treated differently anyways.