How the Kirk Hinrich trade affects the Atlanta Hawks' salary cap

The Hawks have reportedly traded away Shelvin Mack and Justin Holiday for Kirk Hinrich in a three-way trade involving Utah (receiving Mack) and Chicago (receiving Holiday and a 2nd round pick from Utah to make the trade legal). In the process, the Hawks are awarded a trade exception equal to Justin Holiday’s $947,276 salary.

From a bookkeeping perspective for this season, the Hawks are trading away $3,380,609 in salary and receiving $2,996,008 in salary.¹ The Hawks are still over the $70 million Salary Cap with a total team salary of $71,162,768 at the moment.² For the 2016--17 Season, Mack is set to earn a non-guaranteed $2,433,334 (which fully guarantees on July 7th) and Holiday a fully guaranteed $1,015,696 that the Hawks will now avoid on their cap sheet. Kirk Hinrich's deal expires at the end of this season and while the Hawks will retain Bird Rights over Hinrich, this will carry a $5,692,416 cap hold. This cap hold will undoubtedly be renounced at some point in the off-season and after which this trade will have clear $3,449,030 for cap space the upcoming off-season.

Oh, and the Hawks now have an open roster spot for this season.

Uses of the Traded Exception

So what can the Hawks do with this trade exception? They can acquire 1 or more players for so long as the total salaries acquired do not exceed the trade exception + $100,000. It is a bit odd that the $947,276 trade exception the Hawks own can be used to acquire $1,047,276 in contracts, but that is the Collective Bargaining Agreement for ya.

Now when I say the Hawks can acquire a player, this means through one of two methods: 1) via trading with another team or 2) by claiming a player off of waivers. With the trade deadline now gone, the Hawks cannot trade for a player until their season is over sometime in May or June. After that, then the Hawks would be able to use the exception to claim a player whose salary is at most $1,047,276.

But for this immediate season, the Hawks may use their trade exception to claim a player off of waivers. This will only be useful for the Hawks up until early March.  This is because if a player is waived after March 1st, then that player is ineligible for the playoffs. And what use would the Hawks have for claiming a player after this deadline? Right, not much. The Hawks could still utilize this exception after the season to claim a player off of waivers, which they did back in 2013 with Gustavo Ayon (although the Hawks made a waiver claim for Gustavo using their cap space and not a trade exception).

One thing that the Hawks cannot do with their trade exception is use it to sign a free agent. This will not matter much as the Hawks still have their Room Mid-Level Exception (Room MLE) available to sign a free agent in excess of the always available minimum player salary. The Room MLE for this year is $2.814 million, although it has been declining in value since January 10th by $16,552 each day.

^{1. As Kirk Hinrich has a 15% Trade Kicker on the remaining value of his contract, he receives a $141,068 bonus paid by the Chicago Bulls. His salary this season is $2,854,940 and there were 56 remaining days in the 170 day long NBA season on February 18th. The Hawks will end up paying Kirk the remaining $940,451 on his contract while Shelvin and Justin still have $801,569 and $312,044 remaining on their contracts. The Hawks avoid those payments, so they actually save money on this transaction.↩}

^{2. The trade exception does have a cap hold, but that does not have any consequence on the Hawks payroll. And if the Hawks were anywhere close to paying the Luxury Tax, which they are not, it would not count towards that either.↩}