Question regarding Trade Kicker

So Cal Blazer Fan · Post #1 » by **So Cal Blazer Fan** » Sun Aug 24, 2008 5:32 am

Player X signs a contract with Team A on August 1, 2008 that pays him $1 million per year for 3 years. There are no options in his contract. His contract does have a 10% trade kicker.

Team A trades Player X to Team B on August 10, 2009. The trade kicker amount of $200,000 is immediately paid to Player X as a bonus and is pro-rated to each of the remaining 2 years of the contract (meaning his salary is $1.1 million for each of the remaining 2 years).

Team B then trades Player X to Team C on August 20, 2010.

That's all setup. Here's the question: How does Player X count against the cap? Does he count as $1.1 million against the cap of Team C? Or does he count as $1 million against the cap of Team C and as $100,000 against the cap of Team B?

Dunkenstein · Post #2 » by **Dunkenstein** » Sun Aug 24, 2008 8:54 am

The full $1.1M counts against the cap of Team C.

So Cal Blazer Fan · Post #3 » by **So Cal Blazer Fan** » Mon Aug 25, 2008 1:29 am

Dunkenstein wrote:The full $1.1M counts against the cap of Team C.

So Team C pays him $1 million and gets a $1.1 million cap hit?

Interesting. Thanks, Dunk.

Dunkenstein · Post #4 » by **Dunkenstein** » Mon Aug 25, 2008 5:40 am

It's similar to a player who gets traded half way through the season. His new team only pays a portion of his salary for the year, yet his entire salary goes against its team salary when it comes time to figure out whether the team pays luxury tax or not. And by the same token, even though the original may actually have payed salaries that exceed the luxury tax threshold, because they traded the player away before the trade deadline, they get under the tax threshold and avoid being a tax-payer.

LarryCoon · Post #5 » by **LarryCoon** » Mon Aug 25, 2008 10:36 pm

Another situation where cap hit != salary is when there is a signing bonus. If a contract is $10M and the bonus is $2M, then the $2M is paid up front, and the salary paid comes out of the remaining $8M. However the $2M is applied to the entire contract*, and affects the cap in each season. When the player is traded, the new team is responsible for paying the lower salary, but assumes the higher cap number. That's either a good thing or a bad thing, in a glass-is-half-empty-vs-half-full sort of way.

*Ignoring factors like options and non-guarantees.