NBA Trade Exception: What It Is and How It Works
Trade Exception is a term that has been heard often during the NBA Market: what is it specifically?
In our Complete Guide to the NBA Market, we discussed the topic of the Trade Exception, which we will explore in detail in this article.
How many of us have read a sentence like “The Boston Celtics will be able to use the Trade Exception by…”? Probably many, especially after the trade that sent Gordon Hayward to the Charlotte Hornets. But what does Trade Exception mean?
What is the Trade Exception?
This term refers to a clause in the Salary Cap. Generally, salary cap rules are very strict, but this exception allows a team to exceed this limit in certain exceptional cases.
In simple terms, this option allows a team to acquire a player via trade even if it exceeds the league’s maximum salary cap, avoiding the Luxury Tax.
If a team trades a player with a higher salary than the one being acquired, the team will receive a Traded Player Exception equal to the difference between the two salaries and will have up to one year to use it.
The Hayward Case
Let’s use a famous case as an example: Gordon Hayward was traded by the Boston Celtics, along with two draft picks, to the Charlotte Hornets through a Sign-and-Trade. Essentially, Hayward, as a Free Agent, signed a contract with the Celtics to be immediately traded to the Hornets.
In exchange for what? For nothing. In fact, this trade earned the Boston Celtics over 28 million in Trade Exception.
In practice, the Celtics could have used this “treasure” (within the one-year limit) to sign any player without worrying about salary cap restrictions.