Explaining The Wolves’ Trade Exception

The Timberwolves reaped a trade exception worth $6,308,194 from Saturday’s completion of the Kevin Love trade, as Eric Pincus of Basketball Insiders confirmed Tuesday. That wasn’t the only avenue the Wolves could have gone down to create an exception from the swap, as Pincus pointed out, and the multitude of scenarios in play seemed to add to the confusion that swirled about the precise details of the trade almost until it went down. The creation of trade exceptions is one of the most difficult to understand facets of a salary cap that’s otherwise convoluted enough, but we’ll try to explain how the Wolves wound up with the exception and examine alternate scenarios they could have pursued.

The trade itself was a three-teamer that saw Love go to the Cavs, Thaddeus Young, Andrew Wiggins and Anthony Bennett go to the Wolves, and Luc Mbah a Moute, Alexey Shved and a draft pick go to the Sixers. Still, the league allows each team involved in a trade to frame it differently so that the ability to create trade exceptions is maximized. A trade exception is the product of a deal in which a team gives up more salary than it receives. They allow capped-out teams to participate in subsequent trades in which they take back more salary than they relinquish, trades that otherwise wouldn’t be legal under the terms of the collective bargaining agreement.

The Timberwolves chose to regard the transaction as a pair of trades, one in which they swapped Love for Young and another in which they gave up Mbah a Moute and Shved and took back Wiggins and Bennett, as Pincus pointed out. It doesn’t matter that Love went to a different team than Young came from, nor that Mbah a Moute and Shved went to a different team than Wiggins and Bennett did. For the purposes of creating trade exceptions, it simply matters what the Wolves relinquished and what they got back.

Each of the component trades had to meet the NBA’s salary matching requirements for the capped-out Wolves and Cavs, but not for the Sixers, who are far beneath the cap. The swap of Love for Young meets the requirements for Minnesota, since the Wolves are giving up more than they’re receiving. Love’s $15,719,062 salary is more than 150% plus $100K greater than Young’s pay of $9,410,869, which would exceed the amount the salary matching rules allow if Philadelphia were over the cap, but all that matters is what the Wolves gave up and what they’re getting, so Philly’s situation isn’t relevant as it applies to the trade from Minnesota’s perspective. Of course, Love isn’t, nor was he ever going to be, a member of the Sixers, but again, the NBA allows teams to structure “mini-trades” as they see fit within the larger structure of the transaction itself for the purpose of creating trade exceptions.

The other “mini-trade” the Wolves pull off here sees them exchange Mbah a Moute, who makes $4,382,575, and Shved, at $3,282,057, for the salaries of Bennett ($5,563,920) and Wiggins ($5,510,640). They’re receiving more than they’re giving up, so the sum of the salaries for Bennett and Wiggins have to come in under the matching limit, which, once more, is 150% of the outgoing salary plus $100K, since the outgoing salary is less than $9.8MM. Mbah a Moute and Shved combine to make $7,664,632, so 150% of that figure is $11,496,948, and another $100K makes it $11,596,948. That’s not too much more than $11,074,560, the sum of the salaries for Bennett and Wiggins, but it works. Since this swap is allowed, it lets the Wolves pair it with the Love/Young swap, which is the one in which they give up more than they get. The amount of the difference between the salaries for Love and Young results in Minnesota’s $6,308,194 trade exception.

That exception is better than the $4,644,503 exception the Wolves could have come away with if they had framed the transaction as a trade of Love for Wiggins and Bennett and a swap of Mbah a Moute and Shved for Young. That structure is more straightforward, since the “mini-trades” involve exchanges of players that mimic the real-life structure of the transaction, but it’s also less advantageous for Minnesota, which is why the team took a more complicated route.

The Wolves also had the option of creating a pair of smaller trade exceptions that would add up to more than the one they chose. They could have done that if they considered Love for Young, Bennett and Wiggins as one trade and the offloading of Mbah a Moute and Shved as second and third trades. The league wouldn’t allow Mbah a Moute and Shved to go out on their own without the Sixers giving anything in return if they were standalone transactions, but since this is within the structure of a larger trade, it’s OK. The salary-matching requirement for the other component of this structure is different because Love makes more than $9.8MM. So, the Timberwolves are allowed to take back Love’s salary plus $5MM, or $20,719,062. The salaries for Bennett, Wiggins and Young add up to $20,485,429, a shade under the limit. But, again, it works.

That means the Wolves could reap exceptions of $4,382,575 and $3,282,057 equivalent to the salaries of Mbah a Moute and Shved. That would allow them to add a greater amount of salary via trade overall, but it wouldn’t allow them to acquire a single player who makes more than either amount, as the $6,308,194 Love-for-Young exception would. Minnesota chose to give itself the chance to net a more highly paid player, and while it could still split that exception on multiple acquisitions, the team wouldn’t be able to accommodate quite as much salary as it otherwise could have.

Understanding trade exceptions is no easy task, but it’s a requirement for every NBA executive. Wolves president of basketball operations Flip Saunders and his staff surely spent plenty of hours during the weeks-long waiting period between the time the teams agreed to the trade and the time the trade became official crunching the numbers and weighing all the different scenarios at play. Cavs GM David Griffin and Sixers GM Sam Hinkie surely did, too, even though neither of them had a way to come away with a trade exception from the transaction. The Sixers have plenty of cap room that serves in place of any exception. The Cavs have Love and a team that will contend for the title. The Wolves have a new foundation and a mathematical weapon they can use to acquire a player they otherwise couldn’t within the next year.

Larry Coon’s Salary Cap FAQ and the Basketball Insiders Salary pages were used in the creation of this post.