Author Topic: How do the NBA salary cap rules really work?  (Read 4231 times)

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Re: Sign and Trade
« Reply #45 on: May 29, 2019, 12:48:37 PM »

Online nickagneta

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Hi,

Do some teams do sign and trades when the player could just sign as a free agent?   

In the case with Kyrie,  he would get a max deal and we would get some kind of asset.   But the team acquiring would be reluctant wouldn't they?   


In the case of Terry  we can match any deal then trade him to that team right?   So we would have a little more leverage. 

I'm wondering if Danny is comfortable taking a chance on Kyrie, with a back up plan of Terry.   Can't wait for June 30th.


Last question.  Can we sign and trade a player with another player on our team?   So sign and Trade a guy like Terry and Tatum for like Booker and TJ Warren?  (Not saying I'd do it, but it would be interesting)   
Some info on sign and trades:

Quote
92. Can a free agent be signed and immediately traded?
The sign-and-trade rule allows teams to re-sign their own free agents for trading purposes. Under this rule the player is re-signed and immediately traded to another team. This is done by adding a clause to the contract stipulating that the contract is null and void if the trade to the specific team is not completed within 48 hours. A sign-and-trade is treated like a single, atomic transaction, and not two separate transactions between which one party can change its mind -- if the trade is not completed, then the signing is invalidated.

To qualify for a sign-and-trade, all of the following must be true:

The player must re-sign with his prior team -- a team cannot include another team's free agent in a sign-and-trade.
The player must finish the preceding season with that team (deals are no longer allowed that sign-and-trade players who are out of the league, such as the sign-and-trade that sent Keith Van Horn from Dallas to New Jersey as part of the Jason Kidd trade in 2008).
The player cannot be a restricted free agent who has signed an offer sheet with another team (see question number 42).
The team receiving the player cannot be above the "Apron" (see question number 20) at the conclusion of the trade1, 2. A team above the Apron can receive a player in a sign-and-trade if the trade reduces the team's payroll and the team finishes the trade below the Apron.
The team cannot receive a player in a sign-and-trade if they have used the Taxpayer Mid-Level exception (see question number 25) that season.1
The trade must be completed prior to the first game of the regular season (sign-and-trades are not allowed once the season begins).
The player cannot be signed using the Non-Taxpayer Mid-Level exception, the Taxpayer Mid-Level exception, or any exception that cannot be used to offer a three-year contract (see question number 25).
A sign-and-trade deal can be made with a free agent who has been renounced (see question number 39), as long as all the above criteria are met. Sign-and-trade contracts must be for at least three seasons (not including any option year) and no longer than four seasons3. The first year of the contract must be fully guaranteed, but the remaining seasons can be non-guaranteed. The combination of a three-year minimum with a one-year guarantee ensures that the player's new team cannot acquire the player's Bird rights any sooner than if they had signed him directly (if they wanted to re-sign him in less than three years they would first have to waive him, and lose any Bird rights -- see question number 32).

A Designated Veteran contract cannot be used in a sign-and-trade.

The starting salary in a contract signed for a sign-and-trade may be any amount up to the player's maximum, however if the player meets the 5th Year 30% Max criteria (see question number 24) he cannot receive a salary greater than 25% of the cap. Raises are limited to 5%. The player also may be considered to have a lower outgoing salary for trade purposes, which can complicate the trade (see question number 93).

If a sign-and-trade contract contains a signing bonus, then either team can pay it. By default the team that signs the player pays the signing bonus (as with any other contract), but since a sign-and-trade is in essence a contract with the receiving team, the teams can agree that the receiving team will pay it. Any portion that is paid by the signing team counts toward the team's annual limit for cash included in a trade (see question number 98), which in effect limits the portion of the signing bonus that can be paid by the signing team.

If a sign-and-trade contract contains a trade bonus, then the bonus is not earned upon the trade that accompanies the signing, but rather on the first subsequent trade. See question number 96 for more information on how long a team must wait before they can trade a player.

If a team acquires a player in a sign-and-trade, then the Apron effectively becomes a hard cap for the remainder of that season. See question number 20 for details.

1   These teams are free to send players to other teams in sign-and-trade transactions, or to receive players in sign-and-trade transactions who weren't signed-and-traded themselves. Also, the restriction applies only to the sign-and-trade transaction itself -- teams are free to acquire players who had been signed-and-traded in earlier transactions.
2   A different team salary definition is used for determining whether a team is above or below the apron -- see question number 13 for details.
3   Since the contract must be for at least three seasons, the receiving team cannot use the Disabled Player exception to acquire the player. The Disabled Player exception can only be used to acquire players with one season on their contracts (see question number 25).

93. What is "Base Year Compensation?" How does it affect trades?
Base Year Compensation (BYC) is mostly an artifact of previous collective bargaining agreements. Its intent was to prevent teams from signing free agents to new contracts with salaries specifically intended to help facilitate trades. BYC was triggered when a team was over the cap and re-signed a player using the Larry Bird or Early Bird exception with a raise over 20%. Once triggered, BYC temporarily lowered the player's outgoing salary for salary-matching purposes (only), and therefore reduced or eliminated teams' ability to target salaries for trade purposes.

The 2011 CBA mostly eliminated BYC -- in fact, the term "Base Year Compensation" was removed from the agreement entirely. The rules formerly known as BYC now apply under just one circumstance -- during sign-and-trade transactions (see question number 92). If a team re-signs its Larry Bird or Early Bird free agent in order to trade the player in a sign-and-trade transaction, the player's new salary is greater than the minimum, he receives a raise greater than 20%, and the team is at or above the cap immediately after the signing1, then the player's outgoing salary for trade purposes is either his previous salary or 50% of his new salary, whichever is greater. The team receiving the player always uses his new salary.

For example, a player made $5 million last season, is a Larry Bird free agent, and re-signs with his previous team for $10 million. The team is a taxpayer, and therefore is over the cap following the signing. The signing is part of a sign-and-trade transaction for another team's $10 million player. Since the BYC conditions were satisfied the player's outgoing salary for the trade portion of this sign-and-trade transaction is $5 million. This trade therefore would not be allowed, even though the players' new salaries match, since a taxpaying team cannot trade a $5 million player for a $10 million player. The highest salary this team could acquire in a sign-and-trade arrangement is $6.35 million2.

Once a sign-and-trade is complete, the player's actual salary is included in his new team's team salary.

In lieu of the previous BYC rules for ordinary trades, teams are now prohibited from trading players for three months or until January 15 (whichever is later), instead of December 15, when the signing satisfies the BYC critieria3 (see question number 101). The extension to January 15 applies to both sign-and-trade transactions and regular signings.

1   The team salary being over the cap immediately following the signing is what triggers this rule. It does not matter whether the team was under the cap prior to the signing, nor whether the team is under the cap subsequent to the trade.
2   The sides also might be able to complete this trade if they both add additional salary to the transaction, or if they include a third team that is able to absorb excess salary.
3   Minimum salary contracts are excluded from this rule.

94. Why would teams or players want to do a sign-and-trade?
Teams benefit because they can get something in return for players they otherwise would lose to free agency. For players the benefits are limited, because a player can receive no bigger contract via sign-and-trade than he can get by signing with his new team directly (four years, 5% raises), and can receive a larger Bird contract or Designated Veteran contract only when staying with his previous team. It also is much simpler for the player to sign directly with his new team, as a sign-and-trade has to be agreed to by three parties rather than two. A player really only needs to seek a sign-and-trade if he wants to go to a team that is capped-out (or doesn't have enough cap room to give the player a high enough salary) and can't sign him directly.

Another factor encouraging a player not to seek a sign-and-trade is that his new team might be weakened by losing players or draft picks in the trade. So while a sign-and-trade is a useful tool when the team does not have the cap room to sign the player directly, the player and his new team have little reason to seek a sign-and-trade when the player can be signed without involving his previous team.

Re: Sign and Trade
« Reply #46 on: May 29, 2019, 01:11:36 PM »

Offline BitterJim

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Hi,

Do some teams do sign and trades when the player could just sign as a free agent?   

In the case with Kyrie,  he would get a max deal and we would get some kind of asset.   But the team acquiring would be reluctant wouldn't they?   


In the case of Terry  we can match any deal then trade him to that team right?   So we would have a little more leverage

I'm wondering if Danny is comfortable taking a chance on Kyrie, with a back up plan of Terry.   Can't wait for June 30th.


Last question.  Can we sign and trade a player with another player on our team?   So sign and Trade a guy like Terry and Tatum for like Booker and TJ Warren?  (Not saying I'd do it, but it would be interesting)   

Nick already commented on the sign-and-trade stuff, so I want to comment on the bolded part:

No, but also yes. If Terry signs an offer sheet from another team and we chose to match it, we would be prohibited from trading him to that team for a year (we could trade him to any of the other 28 teams in the league starting on January 15th (it might actually be December 15th, I'd need to look into that more)

However, if Terry came to an agreement with a team (WITHOUT signing an offer sheet) and they thought we were going to match it, they could work out a sign and trade with us. They can't trade us something in exchange for not matching the salary, but a sign and trade would be okay (even though it basically works out to be the same thing)
I'm bitter.

Re: Sign and Trade
« Reply #47 on: May 29, 2019, 02:27:14 PM »

Offline Diggles

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Hi,

Do some teams do sign and trades when the player could just sign as a free agent?   

In the case with Kyrie,  he would get a max deal and we would get some kind of asset.   But the team acquiring would be reluctant wouldn't they?   


In the case of Terry  we can match any deal then trade him to that team right?   So we would have a little more leverage

I'm wondering if Danny is comfortable taking a chance on Kyrie, with a back up plan of Terry.   Can't wait for June 30th.


Last question.  Can we sign and trade a player with another player on our team?   So sign and Trade a guy like Terry and Tatum for like Booker and TJ Warren?  (Not saying I'd do it, but it would be interesting)   

Nick already commented on the sign-and-trade stuff, so I want to comment on the bolded part:

No, but also yes. If Terry signs an offer sheet from another team and we chose to match it, we would be prohibited from trading him to that team for a year (we could trade him to any of the other 28 teams in the league starting on January 15th (it might actually be December 15th, I'd need to look into that more)

However, if Terry came to an agreement with a team (WITHOUT signing an offer sheet) and they thought we were going to match it, they could work out a sign and trade with us. They can't trade us something in exchange for not matching the salary, but a sign and trade would be okay (even though it basically works out to be the same thing)

TY ~   That makes sense.   
Diggles

Re: How do the NBA salary cap rules really work?
« Reply #48 on: September 27, 2019, 10:37:31 AM »

Online otherdave

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New nerdy topic:   Brad Wannamaker's contract status.  The reason I am asking is because various expert sites (Spotrac, Basketball Insiders, Keith Smith have conflicting info.  For example:

at the end of 19-20 season is he a RFA or UFA?

Do C's have non-bird rights or early bird rights?

Also every site's cap hold for Brad for next summer is a little different (although all in the 1.9 mil range).  I am assuming that this cap hold is based a future estimated salary table figure - so if different sites are using different future estimates, of course their figures would differ.  My question here is:  what is the calculation/formula in words?  For example, is his cap hold based on a 30% raise or the estimated veteran minimum for a player for 2 yrs experience?

I have looked at Larry Coon's FAQ, especially Q 37, but still need a little help.

Thanks for your thoughts.

Re: How do the NBA salary cap rules really work?
« Reply #49 on: September 27, 2019, 10:51:05 AM »

Offline BitterJim

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New nerdy topic:   Brad Wannamaker's contract status.  The reason I am asking is because various expert sites (Spotrac, Basketball Insiders, Keith Smith have conflicting info.  For example:

at the end of 19-20 season is he a RFA or UFA?

Do C's have non-bird rights or early bird rights?

Also every site's cap hold for Brad for next summer is a little different (although all in the 1.9 mil range).  I am assuming that this cap hold is based a future estimated salary table figure - so if different sites are using different future estimates, of course their figures would differ.  My question here is:  what is the calculation/formula in words?  For example, is his cap hold based on a 30% raise or the estimated veteran minimum for a player for 2 yrs experience?

I have looked at Larry Coon's FAQ, especially Q 37, but still need a little help.

Thanks for your thoughts.

Off the top of my head, I believe he will be an RFA with a cap hold based on the greater of his vet min or a 30% raise (so it'll be a 30% raise over this year's salary, which puts him around $1.9 million). We'll have his early-Bird rights, and I think the Gilbert Arenas provision could come into play if someone tries to steal him in RFA (although I can't see that mattering)

If I remember, I'll take a closer look after work
I'm bitter.

Re: How do the NBA salary cap rules really work?
« Reply #50 on: September 27, 2019, 11:42:18 AM »

Online saltlover

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New nerdy topic:   Brad Wannamaker's contract status.  The reason I am asking is because various expert sites (Spotrac, Basketball Insiders, Keith Smith have conflicting info.  For example:

at the end of 19-20 season is he a RFA or UFA?

Do C's have non-bird rights or early bird rights?

Also every site's cap hold for Brad for next summer is a little different (although all in the 1.9 mil range).  I am assuming that this cap hold is based a future estimated salary table figure - so if different sites are using different future estimates, of course their figures would differ.  My question here is:  what is the calculation/formula in words?  For example, is his cap hold based on a 30% raise or the estimated veteran minimum for a player for 2 yrs experience?

I have looked at Larry Coon's FAQ, especially Q 37, but still need a little help.

Thanks for your thoughts.

Off the top of my head, I believe he will be an RFA with a cap hold based on the greater of his vet min or a 30% raise (so it'll be a 30% raise over this year's salary, which puts him around $1.9 million). We'll have his early-Bird rights, and I think the Gilbert Arenas provision could come into play if someone tries to steal him in RFA (although I can't see that mattering)

If I remember, I'll take a closer look after work

Thatís largely right.  His cap hold will be the greater of his QO or 130% of his salary.  His QO will be the vet min +$200k or a 25% raise over the salary, so it technically depends on how much the cap rises next year (the numbers will wind up very near each other).  Different sites will have different numbers depending on assumptions they make ó some may use the 25% number, some may use the $200 + vet min number, and within that, some will base it off this yearís vet min while others will make an adjustment for the vet min next year based on the projection the NBA put out for next yearís cap.

Again, the numbers are ultimately very close and it is unlikely to truly matter, but thatís the source of the discrepancies across sites.
« Last Edit: September 27, 2019, 12:02:25 PM by saltlover »