To consider the agreement complete, both teams have to concur on all the details of the trade. Otherwise, the trade call should be postponed until Monday. If the teams want to complete the trade on the weekend, they will have to phone in the deal on Friday. When trades do happen, the teams involved must call the league office to inform them about the completed deal. If a team trades away a player (or players) with a higher salary than the one they acquired, they may do so with the trade exception. That amount is based on whether the team pays the luxury tax after the trade and the outbound salary. However, there is also a way to go around this rule this is called a trade exception.Ī trade exception enables a team to trade for a player as long as their composite incoming salary does not exceed a definite amount. The rule of thumb is a team could not make a trade that will make them $100,000 above the salary cap. What is the role of the salary cap in a trade? That is why timing or the sequence of the players who will sign is also very important. It is also common knowledge that teams can go over the salary cap if they choose to sign back their own players.
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(This is called the “luxury tax.”) Another is to utilize what’s called the mid-level exception if a team wants to sign free agents that are not initially with the team. One of those ways is to simply pay the penalty for going over. It’s not perfect, and savvy executives can maneuver their way around it because, as previously mentioned, the NBA utilizes a soft cap that allows certain exceptions. Generally, we can say salary caps work to a certain degree. There is only one thing that prevents these scenarios, and yes, you guessed it: the salary cap. Or imagine a big market team like the Los Angeles Lakers or the New York Knicks recruiting the top free agents. Imagine billionaire team owners like Mark Cuban or Paul Allen or Steve Ballmer hoarding superstars by offering them nine-figure contracts. So, why is the salary cap created? Because in a superstar’s league like the NBA, the absence of a salary cap would inevitably make it pretty unbalanced. The NBA’s salary cap system is called a “soft cap” because there are several exceptions that allow a team to go over the salary cap. Now, the salary cap may change from year to year depending on many factors, revenue being the first. It is the total amount of money that a team can spend on the salary of their players. Simply put, the salary cap is a way of leveling the playing field. At this point, that’s what you also have to do as part of your crash course about NBA trade rules. A trade is about math and financial planning as much as it is about the team’s personnel needs.īefore making a deal (as in a trade), the parties must first understand the salary cap. There are complicated aspects to it, no doubt, and that includes the aforementioned salary cap and the NBA collective bargaining agreement (CBA). That’s why they have agents to explain to them the nuances of a trade. The truth of the matter is, many, including NBA players themselves, do not fully understand how a trade works.
Wrapping Things Up: NBA Trade Rules Explained How Does Trade Work in NBA?
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