With two trade deadlines coming up, it really is a tale of two different leagues. The NBA, with a deadline of this Thursday at 3PM, has already bore witness to three or four blockbuster trades, depending on your opinion of Mike Bibby. Shaquille O’Neal, Jason Kidd, Shawn Marion, Devin Harris, Kyle Korver, Mike Bibby, and Pau Gasol are all big names that have moved and seriously improved teams or signalled rebuilding mode. In the NHL, there has been very little in the form of news, except for Forsberg’s withdrawl from free agent consideration and a two-for-two swap between the Senators and Hurricances. With a deadline of next Tuesday, there isn’t even that much speculation on the hockey side of things.
This is quite a move from years past. The NHL is better known for superstars being sold for playoff runs at full or above value, whereas the NBA has long been called the No Balls Association, with teams weary of trading stars for fear of a Vince Carter-like haul in return. Additionally, the NHL’s collective bargaining agreement makes it much easier for teams to make such big deadline deals. Still, even with a more stringent CBA and several big trades in the book, the NBA appears poised for a bigger deadline than the NHL for the first time in recent memory.
With both deadlines looming, I thought I’d take the time to publish the answer to a question I get asked a lot around this time of year: What are the salary cap rules for trades?
Note that all of the examples and figures I use are made up for simplicity of calculation. TSN.ca has great NHL deadline coverage, and ESPN.com should be your spot for basketball coverage.
The NBA has a lot of small and relatively unknown rules regarding trades and the salary cap (see: Devean George). The muddy waters get even less clear when you talk about free agency in the offseason. Luckily for us, the scope of this column is the trade deadline only, so we can ignore certain rules like draft picks not being traded within 90 days and free-agent signings not being traded within 90 days.
-The biggest rule of all is that the salaries in the two sides of the trade must match. The way the language in the CBA is structured, trading makes it very easy for teams to cross the NBA’s ‘soft’ salary cap. Because the length of contracts is inconsequential here, you can load up on future salary whereas you couldn’t sign an equal-valued player in free agency. As an example, the Nets did not have the cap room to sign Vince Carter, but by trading expiring contracts and scrub players that added up to his contract total, they were able to bypass the financial inflexibility to get a 3rd star (glad that worked out for them).
-The NBA rules stipulate that in a trade, the salaries match exactly, plus or minus 25%, plus or minus $100,000. That is, if one side is trading $10M, the other side can trade anywhere from $12.6M (10M+25%+100k) to $7.4 (10M-25%-100k). Seems simple enough, especially considering any number of minimum-contract players can be used to make the salaries match (though you cannot trade a player within 30 days of signing him, during the season). There are, however, further rules to this relatively simple math.
-Foremost, if a team is under the salary cap, they can take back as much salary as they want, so long as it doesn’t put them over the cap. Currently, only Charlotte and Memphis are below the cap (roughly $55M) and even they are very close to it, so this rule seems inconsequential for this year’s deadline.
-For salary cap purposes, draft picks hold a value of $0. They are exclusively meant to balance the trade between teams as they see fit. Note also that teams may not trade their first round pick in back-to-back years, and picks can only be traded five years into the future.
-Certain players count as more for cap purposes in trades than their actual salary cap figure. The foremost of these is a BYC Player, or a Base Year Compensation player. BYC players are those who have recently signed a new contract extension and are in the first year of it, with the raise from the previous year being 20% or greater. These players will count at either 50% of their current salary or will count as their salary from the previous season. This rule is in place to keep teams from overpaying players simply to make trades work (e.g. signing someone for $3M more than they are worth so that salaries match in a trade). It gets more complicated if two BYC players are traded for each other, because the other team has to view your player at his full value (i.e. while a player’s BYC value may be $5M, his actual contract is $10M, which is what matters to the other team. Thus, you couldn’t trade two $10M BYC players for each other because from both sides it would look like $5M for $10M). I realize this aspect is complicated and I apologize for not being able to explain it in more clear terms, but rest assured that it is very unlikely two BYC players would be traded for each other, since BYC players are usually those signed to longer term deals by their respective teams, meaning the team likes that player, and because these rules make it difficult.
-For players who have had their rookie contracts extended, the BYC rule counts, though their trade value is the average of this year and last year (e.g. in Bosh’s first extension year, his trade value was not the $16M he was making, but was $10M, the average of $16M that year and $4M the year before).
-Trades, like the recent Jason Kidd one, can include cash considerations of up to $3M, but it does not count towards the salaries matching in the above rules. Instead, it is treated like a draft pick and is strictly business between the two teams.
-The final thing about trades at the NBA deadline is individual player considerations, which I probably would have missed if it weren’t for Devean Geroge. Foremost, some players have no-trade clauses. While Kobe Bryant has the only full no-trade clause in the league, players who have been re-signed to a one year contract by their previous team have a no-trade clause as well, because moving to another team hurts their earnings potential as a free agent. I won’t get into detail, but know that players on a one-year deal can get in the way. An additional individual player note is that some players have trade ‘kickers’ in their contracts, where their pay increases if they are traded. It can be a percetange or a fixed amount, for a single year or the whole contract, and it is prorated (e.g. if the season is half done, they only get half). Trade bonuses can go as high as 15% (though they can’t push a player’s pay above the maximum contract level) and are difficult for trade purposes – they require simple but tedious math to determine how much of the trade bonus counts in the trade. Fortunately, I won’t go into detail since they are somewhat rare and usually pretty small with respect to the amount that counts for salary-matching in a trade.
Yes, there are a few more rules that I have skipped over. This is because most apply to the extremely complicated offseason where drafted players, free agents, sign-and-trades, and strict cap rules fluster even the most intelligent basketball fans. The important thing to remember for the deadline is that the salaries must match, +/- 125% +/- $100k. Luckily, ESPN.com’s Trade Machine figures this stuff out for you if you’re only reading this so you can play with potential trades.
I’m glad to be at the NHL part of this article. The NHL makes it much much easier on us, as their collective agreement has a lot less literature surrounding trades. For those of you who don’t like math, you’ll be saddened to know that I haven’t found an NHL version of ESPN.com’s Trade Machine, but rest assured calculations are easy.
Instead of using a soft cap like the NBA where teams can bypass the rules, the NHL employs a hard cap like the NFL. That is, teams simply cannot pay more throghout the course of the season than this cap figure. The ‘throughout the course of the season’ part is important, because for trade purposes the NHL treats salary as an ongoing number rather than a fixed total of all the contracts.
For example, if the Senators have a $40M payroll and the season is three quarters done, they have used $30M of their salary cap. This is because technically they have only paid $30M to players. Think of it like your job: you don’t get paid $15,000 all at the start of the year, you get a $500 bi-weekly cheque (you broke bastard). The NHL does the same thing (as all sports do) and they only count salary as the season progresses.
Thus, there are teams out there with a good deal of cap room available for the stretch run. If you think you can field a cheap and competitive team, there is a real advantage to having a low salary figure up until the deadline, where you could then load up on the Mats Sundins of the league, and you only have to absorb what’s left of his $6.5M contract.
A note here is that the NHL uses days of the season, not games played, to figure out how far into your contract you are. So, even though you’ve played 41 games (half of the season’s 82), the season may be 100 days in (out of 187), so you would count as slightly less than half your total instead of exactly half.
If you’re looking at websites and trying to figure out these numbers, the NHL salary cap is just over $51M. Most teams have cap space, but if you look at total accumulated salary thus far, some teams are simply not able to take on extra salary without sending some out, too (e.g. the Leafs probably can’t trade for Dion Phaneuf (da-da, da-da) unless Calgary was willing to take back McCabe’s monster contract).
Basically what you need to know for the NHL deadline is this: for most teams, the salaries will have to be pretty close to even, though there are a handful of teams with salary space the rest of the way. This is an unbelievable resource to track the salary team’s have paid and have remaining to spend, and it is updated almost every day. From this you can see that some teams (Philly, Toronto) have almost no space left, while others (Nashville, Washington, Phoenix) have enough to pay an all-star team the rest of the way.
So there you have it, your ugly math guide to the trade deadline for each league. I’ll take this time to let you know that on Thursday we will have comprehensive NBA Trade Deadline coverage here at The On Deck Circle, as I’ll be sitting on the computer all day ready to update you and give you my take on what goes down. Additionally, Friday’s podcast will be focused on the deadline, and we are working on getting sound NHL Trade Deadline coverage for Tuesday. That said, make sure you holler back the rest of the week for all your deadline news and analysis.