Questions, answers about the trade deadline

With the trade deadline drawing near, the league's general managers are spending a lot of time on the phone and trade rumors are rampant. What's all the fuss about? Here's an FAQ to get you up to speed ...

When is the trade deadline?

The deadline to trade players during the season is Thursday, Feb. 18 at 3 p.m. ET. After that, teams must wait until their season is over before they can make a trade.

Why is there so much trade activity at this point in the season?

It's the last chance to make a significant change to your roster or your payroll.

The deadline also takes place less than a week after All-Star Weekend, when most team personnel are together, allowing for new ideas to be discussed and existing discussions to pick up steam.

Almost all trades at the deadline involve one contender and one non-contender. The contenders are looking to make an upgrade in their lineup, while the non-contenders are looking to lessen their financial obligations and/or focus more on the future.

Why do teams wait until just before the deadline to make a trade?

They're trying to get the best deal. Making trades in the NBA can be a battle of wills, and if a non-contender is shopping a player, they might not want to trade him too early, because a contender might get a little more desperate as the deadline draws closer. A little patience could get the non-contender a better player or an extra draft pick in a deal.

Of course, it could also work the other way. If contenders know that a non-contender is desperate to unload a player, they may believe that the asking price will go down as the deadline gets closer.

What kinds of restrictions are there on trades?

The most important restriction that you should be aware of is the following: If the two (or more) teams making the trade are both over the salary cap, the salaries (for this season) that they gain in a trade must be within 125 percent + $100,000 of the salaries that they lose.

So if both Team A and Team B are over the cap, and Team A sends players making a total of $5 million to Team B, the salaries of the players that Team B sends to Team A must total between $3.92 million and $6.35 million.

1.25*x1 + 100,000 = 5,000,000
1.25*5,000,000 + 100,000 = x2

Teams under the salary cap can absorb extra salary as long as it doesn't take them over the cap, like the Thunder did when they acquired Matt Harpring and Eric Maynor ($7.8 million total) from Utah for the draft rights to Peter Fehse (no salary) in December.

But at this point, only four teams are under the cap, and none of them are under by much. The Grizzlies are about $3.3 million under the cap, the Thunder are about $1.9 under, the Kings are about $1.4 million under and the Blazers are about $1.3 million under.

If the salaries that go back and forth need to match (or come close to matching), how much money can a team really save by making a trade?

They may not save a lot of money this season, but a deal can relieve a team of future financial obligations, because only the salaries for this season need to match.

So Team A and Team B could exchange players that both make $5 million this year, but if the player Team A acquired has an expiring contract and the player they traded is owed $5.5 million next season, Team A just reduced their 2010-11 payroll by that $5.5 million.

A good example of this is the Spurs-Bucks trade involving Richard Jefferson that took place last June. Not only did Milwaukee lessen their payroll for this season, but the three players they acquired (Bruce Bowen, Kurt Thomas and Fabricio Oberto) all had contracts that expire on June 30, so they relieved themselves of the $15 million that is owed to Jefferson next season.

With strong free agent classes in both 2010 and 2011, many teams have been (and will be) looking to reduce their future payrolls by acquiring players with contracts that expire this season or next for players with contracts that don't.

What is the luxury tax and how does it come into play at the deadline?

The luxury tax is a dollar-for-dollar amount that high-spending teams must pay when their payroll exceeds a predetermined level.

The luxury tax level for this season is $69.92 million. So if a team's total player payroll is at $70.92 million at the end of the season, they must pay an extra $1 million in tax. That doubles the financial motivation for luxury tax teams to reduce their payroll at the deadline.

In fact, if you can reduce it enough to get under the luxury tax level, you're rewarded even more, because you get a share (1/30) of the total payments from the tax-paying teams.

Currently, there are 13 teams over the luxury tax level, owing a total of more than $125 million should their rosters remain as is through the end of the season. The other 17 teams then are set to receive about $4.2 million each. So when the Hornets traded Bobby Brown to the Clippers for a future second-round pick on Jan. 26 and brought their payroll under the tax level, they qualified for that $4.2 million check in July.

The teams closest now to getting under the tax level are Houston (about $2.6 million over) and Miami (about $2.8 million over). The Lakers have the highest payroll, more than $21 million over the tax level.

Are rosters set once the deadline has passed?

No. Players can still be waived and signed after the deadline. And a player is eligible for a team's playoff roster as long as he wasn't on another team's roster on March 1st or later.

For example, there are reports that the Nets may waive one or more of their veterans with expiring contracts (Tony Battie, Bobby Simmons) if they don't trade them before the deadline. Those players then would be able to sign with any other team. A contender might want to add Battie for frontline depth.

It is also possible that a player who is traded before the deadline could return to the team that traded him before the playoffs. If he has an expiring contract and isn't useful to the team that acquires him in the trade, they may choose to waive him. Once he clears waivers, he becomes a free agent and can sign with any other team. But he just can't sign with the team that traded him for 30 days (from the trade date) and such an arrangement can't be discussed before a trade is made.

John Schuhmann is a staff writer for NBA.com. You can e-mail him here and follow him on twitter.

The views on this page do not necessarily reflect the views of the NBA, its clubs or Turner Broadcasting.