With all of the different traded player exceptions and hard cap rules, it can be daunting to look at the trade market. While every team’s situation is a little different, there are some categories that help us get a general idea of what teams can do.
Hard Capped
Let’s start right on the hot button. Hard caps have been around for a while now, but the triggers have been greatly expanded in the newest CBA. For teams that are already hard capped, they cannot exceed their hard cap even if using an exception to bring in additional salary.1 There are many things that can trigger a 1st or 2nd hard cap.2 The most relevant ones here have to do with trade exceptions.
Clément Bardot, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons
First, taking back more than 100% of the salary you send out imposes a 1st Apron hard cap.3 Next, aggregating salaries in trade imposes a hard cap at the 2nd Apron.4 Using a traded player exception that was created in the previous season hard caps a team at the 1st apron.5 When one of these tools is used, the team cannot exceed that apron to complete the trade or any time after the trade.6
Trade Perspective: Teams hard capped at the first apron can use the Expanded Trade Exception but can receive the lesser of their Expanded Traded Player Exception amount or their outgoing salary plus their room under the apron.
Example: New Orleans Decides to trade out Kevon Looney’s $8 Mil salary. Where the team would normally be able to take back $14.25 Mil under the Expanded Traded Player Exception, they would only be able to take back his salary plus their ~$3.7 Mil in apron space for a total of ~$11.7 Mil.
Room Under the 1st Apron
There are a great number of teams that are above the salary cap but below the first apron. This is mostly because there are some salaries that are counted toward the salary cap but not toward the aprons and vice versa.7 However, teams that are in this position can generally use the Expanded Traded Player Exception (ETPE) to bring in more money than they send out. This is probably one of the more complex math problems that occurs in the CBA, so stick with me.
Trade Perspective: The ETPE functions based on a percentage of the outgoing salary. The team can bring in the greater of 125% + $250k and a second amount which is the lesser of 200% + $250k and 100% + $8.527 Mil.8 The long and short of this long equation is that if a team sends out less than $11.036 Mil in salary, the 175% scenario would be in effect. If more than $33.108 Mil in outgoing salary, then the 125% scenario would take effect. Otherwise, the $8.527 Mil buffer is what teams are working with.
Example: In Charlotte, they could decide to trade out Tre Mann and take in $14.25 Mil (175% Scenario), or Grant Williams to take in $22,172,500 ($8.527 Mil Scenario), or LaMelo Ball to take in $47,698,450 (125% Scenario).
Absorbers
Teams that are under the salary cap do not need to use an exception to absorb salary.9 This means that they do not need to send out any salary to receive salary back, making them ideal spots to take in salary dump players.
Example: Dallas wants to trade Anthony Davis to the Golden State Warriors. The teams have agreed on Kuminga and Draymond being the return to Dallas. This would hard cap Golden State at the 1st Apron which they are far over, so they need to attach Buddy Hield’s salary to the deal. Dallas would be hard capped at the 1st Apron if they take on Hield’s contract which they also cannot do. Hield can be absorbed by Brooklyn into their cap space, so Dallas and/or Golden State can connect picks to Hield and send him to Brooklyn. Brooklyn is the only team hard capped at the 1st apron after this trade.
Way-Overs
While not the most elegant name, this is what I have come to call teams that are so far over the 2nd Apron that any transaction on the hard cap transaction table is not viable. There is only 1 team in this bucket this year; Cleveland. The Cavaliers are not only the only team over the 2nd Apron, they are so far over the 2nd Apron that their path to complete a hard capping trade is severely implausible.
Trade Perspective: Cleveland’s incoming salary ceiling should be viewed as the highest salary that they are willing to trade.
Example: Cleveland is willing to trade De’Andre Hunter. They can take back up to his salary of $23,303,571. Note: They can take back minimum salaries under the minimum exception.12
Wild Card Considerations
As evidenced by the Warriors’ trade last year that brought them Jimmy Butler, teams that are hard capped also need to leave enough room under their hard cap to sign prorated minimums to comply with roster minimums.10 The Warriors had to stagger their signings to ensure they had room to sign 2 players under their hard cap.
Teams can also carry a trade exception for a year before using them to take in salary of a player for more than they typically could.11 There are many teams that have large outstanding trade exceptions, the largest of which is Boston with a trade exception of around $22.5 Mil.
There is a provision outside of the CBA called the “Touch Rule” that dictates the minimum assets that teams must trade out for a trade to be approved.13 This is to prevent teams from trading players for “nothing.” This means that a team absorbing salary would need to attach draft right, cash or a player to the deal.
1 Art. VII Sec. 2(e)(2)
2 Art. VII Sec. 2(e)(4)
3 Art. VII Sec. 2(e)(4)(E), Art. VII Sec. 6(j)(3)
4 Art. VII Sec. 2(e)(4)(H)
5 Art. VII Sec. 2(e)(4)(F)
6 Art. VII Sec. 2(e)(2)(i)
7 Art. VII Sec. 2(e)(1)
8 Art. VII Sec. 6(j)(1)(iv)
9 Art. VII Sec. 6(j)(1)(v)
10 Art. XXIX Sec. 2(a-b)
11 Art. VII Sec. 6(j)(1)(i)
12 Art. VII Sec. 6(i)
13 NBA Operations Manual Pg. 53