Cohen 8-Ball: How Magic Can Benefit from Trade Exception
January 23, 2013
Josh Cohen’s Analysis: Aside from acquiring a collection of quality young players, including Nikola Vucevic, Arron Afflalo and Maurice Harkless in the Dwight Howard trade, the Magic also netted a $17.8 million trade exception, which is the largest of its kind in NBA history. While complicated to expand on all the details, essentially the deal was divided into separate trades – also known as a non-simultaneous trade – and Howard was virtually swapped for Vucevic. This exception is valid for one full calendar year. Therefore, if Orlando decides to use it, it must do so before it expires on Aug. 10, 2013.
Cohen’s Analysis: Trade exceptions are similar to that of a department store gift card with an expiration date. There are a variety of ways it can be used to benefit a team, however they cannot be combined together to attain a player earning more than the exception is worth. While it gained a $17.8 million trade exception in the Howard deal, Orlando also used two trade exceptions in two of the divided trades in that summer blockbuster. The Magic were able to add Josh McRoberts using the exception it received from the Ryan Anderson sign-and-trade with New Orleans and they were able to obtain Maurice Harkless from the TPE it got from last year’s Brandon Bass-for-Glen Davis deal. CLICK NEXT to learn how this massive TPE could potentially help benefit the Magic.
Cohen’s Analysis: If a team is desperate to shed a “bad” or simply an “expensive” contract, they may be willing to surrender a future draft pick/s in a deal. With the trade exception, Orlando can theoretically accept this “bad” contract with agreement of requiring the opposing team to add in a draft pick or multiple draft picks in the trade. It’s particularly attractive if this other team is lottery bound and the pick that is surrendered is unprotected or has minimal protection. The downside of this example is that the contract the Magic would be receiving could damage forthcoming salary cap space. CLICK NEXT FOR EXAMPLE
Cohen’s Analysis: After agreeing to a sign-and-trade with the Magic for Rashard Lewis in 2007, the Seattle Supersonics received a $9 million trade exception. They, subsequently, used that exception and helped the Phoenix Suns shed some salary by accepting Kurt Thomas’ contract. The deal, however, required the Suns to surrender two future First Round picks (one protected, one unprotected), which resulted in the selecting of Serge Ibaka in 2008. Seattle ultimately traded Thomas to San Antonio several months later for more draft picks.
Cohen’s Analysis: While the CBA does not permit a team from using a trade exception to sign a free agent, teams are allowed to negotiate a sign-and-trade with the exception. With $17.9 million to consume, it’s completely possible to acquire any of the marquee free agents that will be available this summer. It’s also realistic for the Magic to spread out this massive exception and obtain more than one impending free agent via sign-and-trade. CLICK NEXT FOR EXAMPLE
Cohen’s Analysis: After trading Lamar Odom to the Mavericks in 2011, the Lakers netted an $8.9 million trade exception. The following summer, L.A. utilized that exception to negotiate a sign-and-trade with the Suns for Steve Nash, who signed a three-year $27 million contract. In the deal, Phoenix received an unprotected 2013 draft pick and a 2015 pick with limited protection (top five).
Cohen’s Analysis: The Magic are allowed to acquire a player that is making up to $17.9 million per season (add in a $100,000 league allowance) or multiple players that total that same amount. They cannot, however, combine this TPE with a contracted player to obtain a player that is earning more than $17.9 this season or next. For the most part, since just about all players make less than this amount except for a few of the league’s superstars, most players are available for Orlando to pursue if its current team wants to move him. CLICK NEXT FOR EXAMPLE
Cohen’s Analysis: After receiving a $14 million trade exception in the Carlos Boozer sign-and-trade deal in 2010 with the Bulls, the Jazz immediately used that TPE to acquire Al Jefferson from the Timberwolves. Minnesota acquired Kosta Koufas and two future first round draft picks in the deal. It’s always a debate whether it is worth getting a proven expensive talent in exchange for impending draft picks, especially if they have limited protection.