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View Full Version : Traded Player Exceptions: Let's Get This Straight (w/ Nets/Nugs/Cavs rumour example)



bholly
01-07-2011, 02:52 AM
This is in response to this article by Broussard, and a million other like it that I've seen over the last 6 or so months, that have all sorts of trouble understanding Traded Player Exceptions:
http://espn.go.com/blog/truehoop/post/_/id/23646/nuggets-nets-and-cavs-discussed-melo-deal

I understand most are happy with willful ignorance and won't read on, but if you have any interest in how trades work, or how to stop sounding like an idiot when you talk about these things, then try it. This is all my own work, so there's probably mistakes - hit me up if you see one.

Here's the main thing we need to clear up: TPE's DON'T MOVE!!!

Basics
Here's how they work, using Cleveland's LeBron James TPE as an example:
A TPE is essentially just an allowance to absorb a certain amount of salary (via trade only), even if it takes you over the cap.
The Cavs have a $14.5m TPE from the LBJ sign and trade, so they can absorb a player (or combo of players) up to that amount of salary, regardless of what it does to their cap figure. They also have a $535.6K TPE from Delonte West, for which the same rules apply.
You get a TPE when you trade away a (single) player and take back less salary in return. The value of the TPE = Salary sent out - Salary brought in + $100K. There is no 125% + 100K rule with TPEs, like there is with regular trades.

Clearing up misconception #1:
They can't be combined. You can't combine TPEs with each other, with other exceptions, or with cap space. Cleveland can't, for example, combine both TPEs to absorb a $15m contract, nor can they combine the LBJ TPE with the Mid-Level Exception to sign a $20m+ player, nor could they get themselves some cap room and combine it with that. In fact, if the team's salary dropped far enough below the cap that they could use the TPE and still have cap room left over, they lose the TPE permanently.
This also includes combining it with outgoing salary. You can't combine a $5m TPE and $10m in outgoing salary and bring back a $15m player. A player's contract fits under the TPE or it doesn't - if it doesn't, you can't use the TPE to acquire them.

Clearing up misconception #2:
You can only use a TPE to acquire salary via trade, not via FA signing.

Clearing up misconception #3:
You can only acquire a TPE if you're sending out one player, not a package of players. Sometimes it seems like this is violated, but really what's happening is that the trade is being configured as two separate trades, with one of them including only a single player and creating a TPE. (see example below)

Clearing up misconception #4 (this is the main mistake Broussard makes):
They don't move. If the Cavs use their TPE to take on extra salary, their TPE gets used up. It doesn't go to the other team. It's gone (or at least, it shrinks by the amount of salary taken on).
What CAN happen is that another team can dump salary on the Cavs and in doing so create a TPE of their own. If, for example, my Sixers sent Iggy to the Cavs for just a pick, we'd get a TPE. But WE WOULDN'T BE GETTING THE CAVS' TPE. The TPE we get wouldn't be the $14.5m one the Cavs had, it would be a new one, created in this trade, worth Iggy's outgoing salary ($12.3m) + $100K. The Cavs would use $12.3m of their TPE to absorb Iggy's salary, and end up with Iggy and $3.2m of the LBJ TPE left over for acquiring other players.
Again: The Sixers' wouldn't acquire the Cavs' TPE. The Cavs' TPE would shrink by the incoming salary, and the Sixers' TPE would be completely new. There's a significant difference.


Example:
This is the trade Broussard mentions, with the problem in bold:

Denver would have received Favors, Devin Harris and three first-round picks. Cleveland would have received Murphy and one or two first-round picks, and the Nets would have received Anthony, Al Harrington and the Cavaliers' trade exception, the sources said.

Really, the Nets wouldn't receive the Cavs' TPE at all. In fact, with that configuration they wouldn't get any TPE. The Cavs would use $11.9m (Murphy's cap figure) of the LBJ TPE up, leaving them with about $2.5m of it for future use. The Nets wouldn't get anything, because you don't get a TPE in a deal where you send out more than one player.

What Broussard was probably thinking, but didn't explain:
What I assume Broussard was thinking was an alternate configuration in which Murphy to the Cavs is technically a separate deal, with his salary being absorbed by the Cavs' TPE. This would give the Nets a $12m TPE (Murphy's $11.9m + $100K) to use later. Then, in a second deal, the Nets/Nuggs would do Anthony/Harrington for Favors/Harris. Anthony's salary is too big to fit within the TPE, though, so it could only be used for Harrington's $5.7m salary (and the Nets would have $6.3m of TPE left). That means the Nets still have to account for Anthony's incoming salary ($17.1m), but are only sending out Harris and Favors ($13m combined). This doesn't work, as the Nets are taking back more than 125% + $100K of outgoing salary. In order to work, they'd have to send out another ~$0.75m to the Nuggs (~$0.656 if you use Storyteller's numbers, but I've just been using ESPN's for convenience). Maybe Broussard realized this and just didn't mention the extra player, but it's more likely he just didn't do the math.

How it's more likely to actually work:
I suspect, if they're smart, Denver would configure it like this.
Deal #1: Start with Murphy to the Cavs again, with the Nets creating a $12m TPE and Cavs using $11.9m of the LBJ TPE.
The Nets/Nuggs now do the same Anthony/Harrington for Harris/Favors deal, only they configure it as two deals.
Deal #2: Harrington to the Nets. The Nets use $5.7m of the Murphy TPE, and Denver create a $5.8m TPE because they traded Harrington on his own.
Deal #3: Anthony to the Nets for Harris, Favors, and the ~$0.75m (or ~$0.656m, depending on your figures) in extra salary needed to make it work. Again, by trading Anthony by himself the Nuggets create a TPE equal to [Anthony's outgoing salary - incoming salary + $100K].
Why they do it this way: They move the exact same assets but, by moving Anthony and Harrington separately, Denver get two significant TPEs. Of course, from the Nets point of view it's still the same straight up 2 for 2 trade, but from Denver's point of view it's significantly different.

So, yeah. I guess I just wanted to criticize Broussard and clear up the common misconceptions about the TPE, because these mistakes are made all the time on here (and ESPN, Yahoo, etc), and people get in big arguments about trade rumours that don't make sense in the first place. I imagine the people that don't already understand probably didn't read the whole way, and didn't learn anything, but at least I tried.

Sources: Larry Coon's CBA FAQ (Link (http://members.cox.net/lmcoon/salarycap.htm#Q72)) and the CBA (Link (http://www.nbpa.org/cba/2005)).
Salaries are taken from the ESPN Trade Machine because I'm lazy (Link (http://games.espn.go.com/nba/tradeMachine)) and Storyteller when I wanted something reliable (Link (http://storytellerscontracts.wordpress.com/))

daleja424
01-07-2011, 03:04 AM
this seems to be factually correct, but most users dont concern themselves with the cba... much like most analysts/beat writers

bholly
01-07-2011, 03:11 AM
Noted. For those that do, or would like to, here it is.

daleja424
01-07-2011, 03:18 AM
And thank you for it!

I really do encourage everyone to read up on the cba so we can have more educated discussions... it just seems like no one ever does...

yanksrock
01-07-2011, 03:43 AM
Nice work. Thanks.

John Walls Era
01-07-2011, 03:49 AM
Once again Broussard is an idiot. TBH I already knew this, but its good that other people can see how it TPEs work.

Giraffes Rule
01-07-2011, 03:49 AM
Thank you for the information! I've been trying to figure out how trade exceptions work for a few days now, and this is the first thing I've read that actually explains how they work, rather than how they are given out.

bholly
01-07-2011, 04:33 AM
Thanks for the kind words, guys, and I'm glad to see it being of some use.

I completely agree about wanting a better level of understanding (and thus better debate) in here, so I'm happy to try and contribute.

Giraffes, if you haven't already, definitely check out the link at the bottom to the CBA FAQ when you have questions like these. Larry Coon explains these things far more eruditely than I can.

210Don
01-07-2011, 04:47 AM
great post. im sure it took u a while to write lol

Chacarron
01-07-2011, 04:51 AM
bholly, you are amazing. Hopefully, some of the posters read this thread.

millerandco
01-07-2011, 05:16 AM
nicely put

Niro
01-07-2011, 06:34 AM
thanks for clearing that up

SteBO
01-07-2011, 10:18 AM
Thanx alot bro. Gud to know what we really gave up through S&T. :)

llemon
01-07-2011, 01:01 PM
Why wouldn't Nets get Cav's TPE for Murphy? That seems like a deal not connected to the Nuggets.

Rivera
01-07-2011, 01:12 PM
good post :clap:

pebloemer
01-07-2011, 01:47 PM
And thank you for it!

I really do encourage everyone to read up on the cba so we can have more educated discussions... it just seems like no one ever does...

I do think many PSD users do read through the rules, or at least glance by them, but with the large population of new accounts and overall accounts, people who understand the CBA often seem like a minority. I know we have had Statistics threads in the past, but a CBA Q & A thread stickied could be beneficial. But the likelihood is that people going there will have the drive to read up the rules on their own.

It is very disappointing if any analysts/beat writers don't understand the CBA when speaking about possibilities. It misleads the masses.


Thanks for the kind words, guys, and I'm glad to see it being of some use.

I completely agree about wanting a better level of understanding (and thus better debate) in here, so I'm happy to try and contribute.

Giraffes, if you haven't already, definitely check out the link at the bottom to the CBA FAQ when you have questions like these. Larry Coon explains these things far more eruditely than I can.

It was an excellent, educated post. Anyone who's had their frustrating CBA conversations with ignorant posters will appreciate the effort here on your part. Good job.

Just another example as explain by Larry Coon of ESPN is the Jack/Bayless deal that went down earlier in the year. Here is a small piece of how it was arranged:


At first glance the trade appeared as though it shouldn't be legal.

Another issue was the salaries. Teams can acquire 25 percent (with a $100,000 fudge factor) more than the salaries they send away in a trade. The salaries of Jack, Andersen and Banks added up to $12.05 million, which means the Raptors could trade them for up to $15.16 million in salaries. But Stojakovic and Bayless are earning a total of $16.55 million this season, and Stojakovic has a trade bonus that would have pushed the total to $17.76 million. So how did Hornets GM Dell Demps and Raptors GM Bryan Colangelo pull this off?

Colangelo acquired Bayless using part of the trade exception he received in last summer's Chris Bosh deal. Bayless consumes about $2.3 million of the Raptors' $14.5 million trade exception, leaving Colangelo with about $12.2 million to use in other deals. Colangelo had to use the Bosh trade exception for Bayless because he needed the salaries of all three Raptors to acquire Stojakovic.

http://sports.espn.go.com/nba/columns/story?columnist=coon_larry&page=HornetsRaptorsTrade-101123

A simple deal of Peja and Bayless for Anderson, Banks, Jack and TPE was never possible. It was through the details that it became possible. Just to reinforce your point.

xbrackattackx
01-07-2011, 02:50 PM
Nice article, I have nothing but good things to say. I read it and it was completely right and better then I could explain it.

bholly
01-07-2011, 05:32 PM
Why wouldn't Nets get Cav's TPE for Murphy? That seems like a deal not connected to the Nuggets.

Well, a) you don't get another team's TPE. They use up theirs and you create your own. It would only be the size of Murphy's contract, they wouldn't be getting the entire LBJ TPE.
b) if it's configured as a single 3-team trade, then the Nets are sending out multiple players and thus can't get a TPE.
c) if it's configured as multiple trades - a Nets/Cavs trade, and one or two Nets/Nuggets trades - then the salaries don't match in the current form, and the Nets would need to send someone additional to Denver. But yes, in this scenario the Nets would get a TPE from moving Murphy, and would use most of it acquiring Harrington.

SteveNash
01-07-2011, 05:42 PM
http://games.espn.go.com/nba/tradeMachine?tradeId=2clxtp6

What's the problem with the trade?

MrfadeawayJB
01-07-2011, 06:12 PM
you just blew my mind lol...good info thanks for clearing it up

bholly
01-07-2011, 10:24 PM
http://games.espn.go.com/nba/tradeMachine?tradeId=2clxtp6

What's the problem with the trade?

Nothing, it works as a three team trade, except the Nets won't get a TPE like Broussard reports. I know the trade machine says they do, but that's just how it shows a TPE being used up - it looks it's going to the other team, but it's not. That's the point of the thread.

llemon
01-07-2011, 10:46 PM
But yes, in this scenario the Nets would get a TPE from moving Murphy, and would use most of it acquiring Harrington.

Riddle me this, bholly.

If the Nets traded Troy Murphy to Cavs for a TE, then used about half of said TE to acquire Al Harrington, would the Nets then have to renounce the rest of the TE in order to stay under the salary cap when they make the Favor/Harris for 'Melo trade?

bholly
01-07-2011, 11:39 PM
^^ To be honest I hadn't really looked at the Nets cap figure and thought about it - I just assumed they were far enough over the cap that there would be no point in the deals where they'd have any reason to renounce anything. But now that you've made me look at it, I think you're right.

Here's my basic working, using Storyteller's numbers:
First off, I'm assuming the Nets have no other exceptions to complicate things. I think they went far enough under during the summer that they would've lost the MLE, etc.

NJN have a current cap figure of $58,089,907. NBA salary cap is currently $58,044,000, so they're a touch over it. If they trade away Murphy ($11,968,253) and get nothing in return, their cap figure drops to $46,121,654. Add the $12,068,253 TPE created by moving Murphy to their cap figure and you get $58,189,907 - because that's over the cap, they don't lose the TPE.

In the next trade, they get Harrington ($5,765,000) for nothing, and their TPE reduces by exactly that amount, to $6,303,253. Obviously because the salary figure goes up by the same amount that the TPE goes down, their combined figure is still $58,189,907 and they can keep the reduced TPE because that's above the cap.

So now they have a $51,886,654 total salary, which has them pretty significantly under the cap, and the $6,303,253 TPE. They acquire Melo ($17,149,244) and send out Harris and Favors ($8,981,000 + $4,133,280 = $13,114,280) for a net salary increase of $4,034,964. That brings total salary to $55,921,618 not including the remaining TPE, which is under the cap so the 125% + $100k rule doesn't apply.

So yeah, I think you're right that doing the trade in three parts (what I called 'How it's more likely to actually work' in the OP, for those following along) works if they renounce what is remaining of the TPE after absorbing Harrington. Of course, the same applies to doing Favors/Harris for Melo/Harrington in one big trade, if they renounce the entire TPE beforehand, but that way Denver don't get to trade Harrington alone and create their own TPE, which they would no doubt want to do. They're going to be over the cap no matter how it works out, so the TPE is valuable to them.*

So I stand corrected - the trades can actually go through without another player being involved, but only if the Nets renounce the TPE. At the same time, the initial point/motivation of the OP remains, and that's that the Nets don't end up with a TPE like was reported.

Thanks for pointing that out, man.

bholly
01-07-2011, 11:48 PM
* (from the last post)
One thing I also didn't point out earlier, because I didn't want to complicate things too much, is what would happen if there are any draft picks moving from Denver to Cleveland (which may or may not happen, as it wasn't reported which picks would go where).

In that scenario they might technically combine Murphy to Cleveland and Harrington to NJN (ie the first two of the three deals) into one deal. Denver still get a TPE equal to Harrington's salary + $100k, and New Jersey still get a TPE equal to Murphy - Harrington + $100k (although, as we just established, they'd renounce it anyway).

So the outcome is exactly the same. The reason they might do it this way is that by having one deal with all three teams gives them a way to get a draft pick from Denver to Cleveland without having to do another separate deal.

IBleedPurple
01-08-2011, 12:31 AM
Appreciate this, as sometimes the basic explanation doesn't allow people (including myself) to fully grasp the concept of the TPE

SteveNash
01-08-2011, 03:08 PM
Nothing, it works as a three team trade, except the Nets won't get a TPE like Broussard reports. I know the trade machine says they do, but that's just how it shows a TPE being used up - it looks it's going to the other team, but it's not. That's the point of the thread.

When a team uses a TPE they include it in the trade, sending it to their trading partner where it expires. In this scenario it is still considered being sent to the Nets, making your thread a worthless response to a person that's not even going to read it.

Please study up more before speaking again.

bholly
01-08-2011, 06:08 PM
When a team uses a TPE they include it in the trade, sending it to their trading partner where it expires. In this scenario it is still considered being sent to the Nets, making your thread a worthless response to a person that's not even going to read it.

Please study up more before speaking again.

I don't believe this to be true (even having re-read Article VII to try and find it), but like I said before, I don't claim to know everything about the CBA, so if you could point me to a source on that then I'd love to see it. Thanks.

Even if it were true, the TPE would only move to the other team in a technical sense - the receiving team has no prospect of actually using it. The effective difference between not getting a TPE and getting a TPE that expires immediately is nil, and both contrast in exactly the same way with the implication most fans would get from a report like Broussard's that the team ends up with a usable TPE.

Finally, the post wasn't purely a response to Broussard, as evidenced by the very first sentence and, you know, the majority of its content. There are a large number of misconceptions about the TPE, which I also tried to address, and from which I believe people benefited. If you don't think there's a benefit to it, then I'm completely fine with that.

Overall, I stand by what I posted and believe it to be correct. If you've found a technical error that has no real effect on the workings of TPEs (other than to make Broussard technically correct, if misleading) then again, I'd love to see a source, but I don't think it makes much difference with respect to the way we discuss these things on the forums.

Update, January 17th:
SteveNash hasn't provided a source on his claim, which I'm pretty sure is wrong, other than to tell me to read the CBA again. I asked Larry Coon on twitter, and I believe he backed me up:

@larrycoon: Settle a debate: Technically speaking, do [non-simul trade] TPEs move in trades and expire with new team, or simply get used up?

@BHolly86 Simply get used up.