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Why can't Ryan Kelly re-sign with the Atlanta Hawks?

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Let’s figure this out together.

NBA: Preseason-Atlanta Hawks at Memphis Grizzlies Jim Brown-USA TODAY Sports

The Collective Bargaining Agreement (CBA) is an almost 600-page legal document that details most of the rules pertaining to player acquisition in the NBA. If a detail isn't found in the CBA, then it's either in the NBA’s Constitution or By-laws. To fully understand why the Atlanta Hawks cannot re-sign Ryan Kelly at the moment, we need both the CBA and By-laws.

I'll detail what specific issues in these documents bar Atlanta from re-signing Ryan Kelly, how this could have been avoided, and what Atlanta could do to reacquire Ryan.

Trade Details

In late June, the Houston Rockets were on a mission to acquire as many non-guaranteed contracts with their cap space to then repackage these deals for a larger contract. Ryan Kelly had a salary of only $286,785 in the 2016-17 season but that increased to $1,577,230 on July 1st when the new Salary Cap year went into effect. His 2017-18 salary was non-guaranteed until July 7th, at which point if he was not placed on waivers by 5:00PM EST it would fully guarantee. Houston traded cash considerations (at least $75,000 and at most $2.75M) to Atlanta for Ryan.

Houston never did repackage their non-guaranteed contracts in a trade (aside from the Chris Paul one) and eventually waived Ryan Kelly on July 7th. Ryan Kelly cleared waivers at 5:00PM EST on July 9th and Atlanta didn't claim him. In fact, Atlanta couldn't claim him because of the By-laws.

The By-laws bar a Team from reacquiring a player (ie trade or waiver claim) for roughly a one year period, depending on when the initial trade occurs. Because Ryan Kelly was traded by Atlanta in-between NBA Seasons (which is from October 1 until the end of the NBA Finals), Atlanta could not reacquire Ryan until the end of the 2017-18 NBA Season... unless Ryan Kelly cleared waivers:

4.05. Additional Trade Rules.

(a) A Member who has assigned its rights to the services of a Player may not retain any rights to such Player, conditional or otherwise, following consummation of the Assignment Transaction.

(b) A Member who has assigned its rights to the services of a Player may not reacquire such rights prior to the end of the Season in which the assignment occurred, or, if the assignment occurred between Seasons, prior to the end of the next succeeding Season; provided, however, that the foregoing prohibition shall not apply in the event that the assignee shall have first offered the services of such Player to all other Members through the waiver procedure.

Ryan Kelly has cleared waivers, so Atlanta should now be able to reacquire Ryan Kelly (sign, trade, or waiver claim) except for the dang CBA.

CBA Restrictions

Prior to 2005, it became a common late season practice for a contending team to trade away a high salaried expiring contract to a tanking team for a valuable contract. The tanking team then had no use for the high salaried veteran (they didn't want to win anyway) and so a buyout was usually reached. And after the buyout, the high salaried player often went back to their original team. See former Hawk Gary Payton for more details.

In response to this practice, the 2005 CBA added a new section to its trade rules to try and stop this from happening. Initially, it was a 30 day waiting period for returning to a team until the 2011 CBA which added on this further language (Article 7.8.h):

(h) If a Team trades a player and the assignee Team subsequently places the player on waivers, the assignor Team shall not be permitted to sign the player to a new Contract (or claim the player off of waivers) before the earlier of: (i) one (1) year following the date all conditions to the trade were satisfied; or (ii) the July 1 following the last Season of the player’s Player Contract.

This is a signing restriction and not a re-acquisition restriction. In other words, the CBA doesn't bar Atlanta from trading for Ryan Kelly although it does stop Atlanta from making a waiver claim.

This CBA section directly relates to Ryan Kelly as he was traded by Atlanta and his contract’s last Season is 2017-18, even though the last Season is non-guaranteed. He is under this signing restriction at the moment.

There's a very good argument that if Houston waived Ryan Kelly prior to July 1 -- which is when the NBA’s Salary Cap year turns over -- that the NBA could deem his last Season to have been 2016-17. Ryan wouldn't have been on any teams cap sheet at any point for the 2017-18 Salary Cap year and his contract would have been terminated. Atlanta would have a good argument that they could re-sign Ryan.

However, Ryan Kelly was on Houston's cap sheet on July 1st. It is extremely hard to then argue that his contract’s last Season was not the 2017-18 Season. Which implies that the earliest that Atlanta could re-sign Ryan would be 2018 June 28. Effectively ending any chance for him to re-sign with Atlanta for the entire 2017-18 Season. One may then wonder, does Ryan Kelly fall under the spirit of the CBA rule change?

Atlanta must have known this was a risk. I even pointed this restriction out at the time that the trade occurred.

Did The Rockets Bamboozle Ryan Kelly?

Yes. Although Atlanta did as well because the Hawks could have chosen to not trade Ryan Kelly which would have avoided this entire mess.

If Houston had traded away Ryan Kelly to any other team, then the CBA signing restriction on Atlanta goes away. That's because Atlanta would no longer be the previous team. They'd be the previous previous team and could re-sign Ryan. This was clarified by Bobby Marks after Andrew Bogut was traded by Dallas to Philadelphia and bought out -- but able to re-sign with Golden State that traded him that off-season.

Houston never did trade Ryan and now he's stuck in a weird situation where Atlanta likely wants to sign him, but cannot. And he likely wants to return to Atlanta (hence he's on the summer league team), but cannot be on the NBA team.

The Loophole

Let's clarify. The CBA bars Atlanta from re-signing Ryan Kelly and the By-laws initially barred Atlanta from trading for Ryan or claiming him off of waivers. But the By-laws restriction only lasts until Ryan Kelly clears waivers. Which he has. Ergo, Atlanta can acquire Ryan through trade.

The earliest Atlanta could acquire Ryan Kelly through trade is December 15th. This is because all free agents are under trade restrictions after their signing their contract. Sign and trades are a special exception where a team that has rights over a free agent can trade that free agent. But since Houston waived Ryan, no one has rights over him.

No player who signs a Contract as a Free Agent (or who signs a Standard NBA Contract while under a Two-Way Contract) may be traded before the later of (A) three (3) months following the date on which such Contract was signed or (B) the December 15 of the Salary Cap Year in which such Contract was signed; provided, that if a Contract is signed in connection with an agreement to trade the Contract in accordance with Section 8(e) below, the foregoing rule shall not apply to the initial trade but shall instead be applicable if the Contract is traded a second time. For the purposes of this rule, a Two-Way Contract that is converted to a Standard NBA Contract pursuant to such Contract’s Standard NBA Contract Conversion Option will be deemed to be signed at the date of the conversion.

A trade is possible, although the amount of time that would need to pass makes this situation untenable.

An Argument for the Waiver

The language in the CBA which bars Atlanta from signing Ryan Kelly to a contract in Article 7.8.h is straightforward and clear: “the assignor Team shall not be permitted to sign the player to a new Contract (or claim the player off of waivers)

Atlanta is still barred from claiming Ryan Kelly off of waivers. This would eliminate the possibility for Ryan Kelly to convince a team to sign him to a contract and get that team to waive him. Which might have opened up the possibility for Atlanta to put in a claim for Ryan.

Unless the NBA has a very loose interpretation of this rule, Atlanta cannot put in a waiver claim. The NBA could interpret the rule to imply that Atlanta cannot claim the player off of waivers for the immediate waiving. They could. But it is very unlikely that the NBA would hold that interpretation because if the rule was only meant to bar the first time the player was on waivers then that would be qualified in the CBA. And it’s not.

But honestly, the restriction on Atlanta from signing Ryan Kelly is not the intent of the CBA rule which places this restriction -- it was meant to stop situations like Gary Payton. And the restriction is on Ryan because Houston never traded his non-guaranteed contract, which Atlanta must have anticipated Houston trading it.

Since this is mostly Houston's fault, the least they could do is sign Ryan to a non-guaranteed contract. Then waive him again and see if the NBA will be amenable to Atlanta in their interpretation of Article 7.8.h. It would make all parties satisfied.