Trade Rules In The New CBA

The NBA's new Collective Bargaining Agreement carried many rules over from the 2005 agreement between the owners and players, but a number of key changes have been implemented. As this year's trade deadline nears, here's a rundown of a few trade rules, old and new, that may be helpful as you follow the latest rumors:

Salaries

A team under the $58.04MM soft cap can absorb a player's salary without sending any salary back, as long as the player's salary doesn't take them over the cap.

• Example: The Pacers, who have a $43.77MM cap figure, could acquire Chris Kaman ($14.03MM) without sending a player to New Orleans.

A team over the cap but below the tax line ($70.31MM) can acquire up to 150% (plus $100K) of the salaries it sends away in a trade, or the amount of its traded salaries plus $5MM, whichever is lesser.

• Example: The Nets, a non-taxpaying team, could trade Jordan Farmar ($4MM) for up to $6.1MM in salaries — 150% of Farmar's salary, plus $100K.
• Example: The Nets could trade Deron Williams ($16.36MM) for up to $21.36MM in salaries — Williams' salary plus $5MM.

A team over the tax line can acquire up to 125% (plus $100K) of the salaries it sends away in a trade.

• Example: The Lakers, a taxpaying team, could trade Steve Blake ($4MM) for up to $5.1MM in salaries — 125% of Blake's salary, plus $100K.

For the purposes of salary-related trade rules, a team's status (taxpayer vs. non-taxpayer) is based on their cap figure after the trade.

• Example: The Bulls, who are just $1.27MM below the tax line, could not trade a $5MM player like Richard Hamilton or Kyle Korver for a $7.5MM player, since it would take them over the tax threshold.

A team above the cap can take on salary without sending any back if they possess a trade exception from a non-simultaneous trade.

• Example: The Lakers made a non-simultaneous trade when they sent Lamar Odom and his $8.9MM salary to the Mavericks. The Lakers are permitted to take on any number of players whose salaries total $8.9MM within a year of the Odom trade to complete the deal. Our full list of current trade exceptions can be found here.

Players recently signed or traded

A player who signed as a free agent this season cannot be traded until two months after they signed or March 1st, whichever is later.

• Example: The Knicks could not trade Tyson Chandler, who joined the team as part of a sign-and-trade on December 10th, until after March 1st.
• Example: The Clippers cannot trade Kenyon Martin this season, since he signed on February 3rd. He would be eligible to be traded on April 3rd, at which point the trade deadline will have passed.

A player who was acquired in a trade this season cannot be reacquired by his former team until next season.

• Example: The Jazz could not reacquire Mehmet Okur from the Nets, since Utah traded him to New Jersey on December 22nd.

Extensions

Extension-and-trades are permitted, but are limited to three total years and maximum annual raises of 4.5%.

• Example: If a team acquired Dwight Howard and wanted to extend him as part of the deal, Howard could only add one year (2013/14) to his current contract. This season and 2012/13, for which he has a player option, would make up the first two years of the extension. As I explained earlier this month, these limitations mean we shouldn't expect many in-season extensions for veterans.

Cash

Teams are limited to paying or receiving an aggregate $3MM in trades per season. These cash payments are not considered when taking into account the salary rules for trades.

• Example: The Lakers, a taxpaying team, could acquire $5.1MM in salaries in exchange for  Steve Blake's $4MM salary and send another $3MM in cash to complete the deal. If they made such a deal, the Lakers would be at the $3MM limit and could no longer send cash in a subsequent trade (unless they received cash in a separate trade first).

Trade kickers

Trade kickers worth up to 15% of a player's total salary are allowed to be written into contracts. In this case, a player receives a bonus if he's traded. The bonus is spread out evenly across the remaining guaranteed years of the deal, and is taken into account for salary trade rules.

• Example: Josh Smith has a 15% trade kicker with a total of two years and $25.6MM remaining on his contract. If the Hawks traded him, he would receive a $3.84MM bonus spread over the two seasons for cap and tax purposes ($1.92MM each). Therefore, in the event of a trade, his cap figure for this season would increase from $12.4MM to $14.32MM.

For more trade rules and more detailed explanations on the rules listed here, please visit Larry Coon's CBA FAQ.

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