Hoops Rumors Originals

Each year when July rolls around, a ton of NBA free agents sign new contracts and teams around the league consummate trades. However, on a few occasions, these two forms of transactions are combined into something called a sign-and-trade deal. Sign-and-trades occur when a team re-signs its own free agent, only to immediately send him to another team in exchange for players, draft picks, and/or cash.

In order for a sign-and-trade deal to be completed, the following criteria must be met:

• A free agent must be signed-and-traded by the team with whom he finished the season. For instance, the Sixers could sign-and-trade Jimmy Butler this offseason, but another team couldn’t sign Butler and immediately move him.
• If the free agent is restricted, he can’t be signed-and-traded after he signs an offer sheet with a rival team.
• A team acquiring a player via sign-and-trade cannot be over the tax apron after the deal, and can’t have used the taxpayer mid-level exception.
• A free agent can’t be signed-and-traded once the regular season is underway.
• A free agent can’t be signed using the mid-level exception or any exception that doesn’t allow for a three-year contract.
• A player receiving a Designated Veteran contract can’t be signed-and-traded.

Sign-and-trade contracts can be worth any amount up to the player’s maximum salary (with 5% annual raises), and must be for either three or four years. However, only the first year of the deal has to be fully guaranteed.

If a sign-and-trade contract includes a signing bonus, either team can agree to pay it, though if the signing team pays it, it counts toward that club’s limit for cash included in trades for that league year. As for trade bonuses, they would kick in upon any subsequent trades rather than as part of the sign-and-trade transaction itself.

Under some previous Collective Bargaining Agreements, there was more incentive for players to work out sign-and-trade deals, since the contract restrictions weren’t as strict. For example, when Kevin Durant hits free agency this summer, he’d be eligible for a five-year contract worth up to a projected $221.27MM if he re-signs with the Warriors, but only four years and approximately $164MM with another team.

Prior to 2011’s CBA agreement, Durant could have received that five-year deal if Golden State had signed-and-traded him. But if the Dubs sign-and-trade KD this summer, he’d only be eligible for that four-year, $164MM max.

Under the current CBA, there’s less incentive for teams and players to participate in sign-and-trades. Generally, if a player wants to change teams, it makes more sense for him to sign with the new team outright, rather than making that club give up assets to complete the acquisition. Even the player’s old team may prefer to simply let the free agent walk and claim the resulting cap space, rather than taking back unwanted assets in a sign-and-trade.

There are other roadblocks as well. A team acquiring a player via sign-and-trade subsequently becomes hard-capped for the rest of that league year. Plus, a signed-and-traded player’s salary may be viewed differently than it would be in a standard trade for salary-matching purposes, which can compromise a team’s ability to meet those salary-matching requirements.

If a potential suitor is over the cap and under the tax, and wants to sign a player for more than the mid-level amount, then a sign-and-trade could make sense, particularly if that team can offer the free agent’s prior team something of value. But these transactions are becoming less frequent than they once were.

Since the summer of 2015, only four players have been involved in sign-and-trade deals: Kyle O’Quinn (2015), Troy Daniels (2016), Matthew Dellavedova (2016), and Danilo Gallinari (2017). No sign-and-trades were completed during the 2018/19 league year.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

An earlier version of this post was published in 2013 by Luke Adams.

Players and teams have to meet certain criteria to earn Bird rights and Early Bird rights, but Non-Bird rights are something of a given. They apply to a player who has spent a single season or less with his team, as long as he finishes the season on an NBA roster.

Teams can also claim Non-Bird rights on Early Bird free agents if they renounce them. The primary motivator to do so would be to allow the team to sign the free agent to a one-year contract, a move that’s not permitted via Early Bird rights.

Teams are eligible to sign their own free agents using the Non-Bird exception for a salary starting at 120% of the player’s previous salary, 120% of the minimum salary, or the amount of a qualifying offer (if the player is a restricted free agent), whichever is greatest. Contracts can be for up to four years, with 5% annual raises.

The cap hold for a Non-Bird player is 120% of his previous salary, unless the previous salary was the minimum. In that case, the cap hold is equivalent to the two-year veteran’s minimum salary, which in 2019/20 projects to be worth $1,618,486. If a Non-Bird free agent only has one year of NBA experience, his cap hold is equivalent to the one-year veteran’s minimum salary.

The salary limitations that apply to Non-Bird rights are more severe than those pertaining to Bird rights or Early Bird rights, so in many cases, the Non-Bird exception may not be enough to retain a well-regarded free agent. For instance, the Grizzlies held Tyreke Evans‘ Non-Bird rights last summer, but would have been unable to realistically use them to re-sign the free agent guard.

The Grizzlies technically could have used Non-Bird rights to go over the cap to sign Evans, but because his 2017/18 salary was only $3,290,000, the club’s ability to offer raises using the Non-Bird exception was extremely limited — 120% of Evans’ previous salary worked out to just $3,948,000, which wouldn’t have been a competitive offer.

In order to make a realistic play for Evans, who ultimately signed a one-year, $12.4MM deal with Indiana, Memphis would have had to use cap room or another exception. Of course, during the 2019 offseason, the Pacers‘ Non-Bird rights for Evans will provide much more flexibility, since they could use those rights to offer up a salary up to $14.88MM — not that I expect them to do so.

Holding Non-Bird rights on a free agent didn’t help the Grizzlies, but there are cases in which the exception proves useful. The Spurs, for example, used the Non-Bird exception to give Rudy Gay a 20% raise last summer, bumping his salary from $8,406,000 to $10,087,200.

The Celtics took a similar route with Aron Baynes, re-signing him to a two-year, $10,646,880 contract using his Non-Bird rights. Baynes had initially signed a one-year, $4,328,000 deal with Boston in 2017, so the Non-Bird exception allowed the team to give him 120% of that amount ($5,193,600) in the first year of his new contract, without having to dip into the mid-level or bi-annual exception.

Meanwhile, Luke Kornet‘s deal with the Knicks provides an example of a team using Non-Bird rights on a minimum salary player. Kornet, whose minimum salary would have been $1,349,383, was eligible to sign for up to 120% of that amount via the Non-Bird exception. As such, his one-year deal with New York was worth $1,619,260.

Note: This is a Hoops Rumors Glossary entry. Our glossary posts will explain specific rules relating to trades, free agency, or other aspects of the NBA’s Collective Bargaining Agreement. Larry Coon’s Salary Cap FAQ was used in the creation of this post.

Earlier versions of this post were published in previous years by Luke Adams and Chuck Myron. Photo courtesy of USA Today Sports Images.