NBA Trade Season Opens Up Monday

Back in October, I put together a handy list of important dates for this NBA Season. One of those dates listed was today:

December 15th, 2014:

Hawks are now permitted to trade Bazemore, Brand, Mack, Scott, and Thabo with the added caveat that Elton Brand can block any trade.

This is also the case for every free agent signed this past offseason, which opens up a large list of available players. You can browse the list of free agents who signed new contracts in the 2014 offseason on the NBA Free Agent Tracker. You can also get creative in thinking up hypothetical trades that could occur by combining the salary information found at Shamsports.com with the RealGM Trade Checker. We're bound to see rumors from "sources" starting around this time that are sparked from this same process. So why not do it yourself?

This week has another added factor for why I am writing this article about Trade Season. This is because of another important date in the NBA Calendar that I discussed:

February 19th, 2015 at 3:00 p.m. ET: NBA Trade Deadline

This is always a busy time of the year for NBA rumors and we at Peachtree Hoops will keep you informed on any rumblings surround the Hawks.

This means that two months before the Trade Deadline is December 19th. This Friday. Undoubtedly, this means that teams have an incentive to complete trades before Friday if they wish to aggregate the salaries of acquired players in a future trade this season. If you're not sure what I mean by this, then the next section will help.

Trade Rules

The typical way for a trade to occur in the NBA is through the use of the Traded Player Exception. The reason for this is because trades are generally between teams that are over the cap (which is the case for 23 of 30 teams right now). To borrow from Larry Coon, here are some general rules:

84. How do simultaneous trades work? How much salary can a team take back in a simultaneous trade?

A simultaneous trade takes place all at once. The amount of salary a team can take back in a simultaneous trade depends on the outgoing salary and whether the team is a taxpayer. They always use the post-trade team salary when looking at whether a team is a taxpayer, so a team under the tax level would be considered a taxpayer if the trade takes them over the tax level.

For non-taxpaying teams (again, they must be under the tax level after the trade), the salaries that can be acquired depend on the total salaries the team is trading away:

Non-Taxpaying Teams

Outgoing salary	Maximum incoming salary
$0 to $9.8 million	150% of the outgoing salary, plus $100,000
$9.8 million to $19.6 million	The outgoing salary plus $5 million
$19.6 million and up	125% of the outgoing salary, plus $100,000

Taxpaying teams can take back up to 125% of their outgoing salaries, plus $100,000, no matter how much salary the team is sending away. For example, a taxpaying team trading away $10 million in salaries can acquire one or more replacement players making up to $12.6 million.

Taxpaying Teams

Outgoing salary	Maximum incoming salary
Any	125% of the outgoing salary, plus $100,000

If a taxpaying team trades away a $10 million player, they can take back one player making $12.6 million or less, two $6 million players, three $4 million players, etc. However, there must be enough roster spots for the incoming players. A team with a full roster of 15 players cannot trade one player for two players without first waiving a player on its roster (or sending him away in another trade). This team could not acquire two players and simultaneously waive one of the incoming players.

Teams can send out more than one player in the same simultaneous trade. If the outgoing salaries are combined in order to acquire a replacement player with a higher salary than would be available by trading any outgoing player alone, the process is called "aggregation." For example, since the most a taxpaying team can receive for a $10 million player is $12.6 million, it cannot trade its $10 million player for another team's $15 million player. However, it can aggregate the salary of its $10 million player with that of another player making $2 million. With the combined $12 million the team can trade for up to $15.1 million, which lets them trade for the $15 million player. An aggregated trade must be simultaneous -- aggregated non-simultaneous trades are not allowed. Also, if a team used an exception to acquire a player (which means it acquired the player by any means other than using cap room), it cannot include that player in an aggregated trade for two months.

I have bolded the important piece which is the last sentence here. This important piece is generally misinterpreted to mean that a team cannot trade a player for two months after acquiring them. This is not true, this only means that a team cannot aggregate the salary of the acquired player with another player in a trade for two months. And generally, aggregating salaries in a trade is beneficial. This is where the famed "cap filler" term comes into play. A team can take back more in salary if they trade away $10 million as opposed to $5 million.

And so because of this last tidbit, some teams will want expedite trades this week if they have any plan to acquire a larger contract this Season.

Why This Isn't As Important For The Hawks

All of the above applies to the use of what is called the Traded Player Exception. This is necessary for teams over the cap to make any move that subsequently leaves them over the cap. It is also necessary for teams that are under the cap in order to make any moves that subsequently over the cap.

The Hawks are roughly $3 million under the cap (a more elaborate post on this is coming later this week). And they can use this to their advantage.

With the Hawks current cap position, this means the Hawks do not need an exception to acquire a contract of roughly $3 million. They are permitted to do so via their cap space. And if a team acquires a player via cap space, then they are not limited to the two month rule. The Hawk would be free to aggregate that player with others using the Traded Player Exception as described above. You can check out the current salaries on this Hawks team over at Shamsports.

To illustrate, let's take Shelvin Mack for example. He currently has a salary of $2,433,333. The Hawks would be able to trade Shelvin Mack for a player worth roughly $5.43 million without exceeding the cap. The Hawks could then turn this player around with John Jenkins (who is paid $1,312,920 right now) using the Traded Player Exception. The aggregated salaries would be around $6.75 million. This would imply that the Hawks could take back 150% + $100k of this amount, which is around $10.2 million in salary they could take on.

Importance of Cap Space

Take a minute to think about this. My above hypothetical situation has the Hawks trade away $3,746,253 in salary for approximately $10.2 million. This is because of the cap space and sequence of events. If the Hawks did not have cap space, then Shelvin Mack and John Jenkins would only be able to return the Hawks a player of $5,719,380 in a trade. That ~$3 million in cap space turns out to be worth around ~$4.5 million under this scenario. And the ~$3 million in cap space becomes even more valuable if the initial first trade involves a player whose salary is more than Shelvin's. It also increases in value if the second player traded has a higher salary than John Jenkins. And it increases in value even more if the second trade involves more than two players.

The hypothetical is in no way shape or form a suggestion by me to trade Shelvin Mack or John Jenkins. That hypothetical is an illustration that the current cap space for the Hawks proves to be more valuable than the current price tag of ~$3 million. It also illustrates that the Hawks management has positioned this team to have the buzzword of CAP FLEXIBILITY (although I prefer to think of this as being wise with your assets...flexible doesn't really fit this description).

The NBA Trade Season certainly begins today and it's clear that the Hawks have had a vision that gives them lots of options to consider. But just because you have options does not mean you have to use them.