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C.J. Wilcox to Orlando: A Case Study in NBA Trade Rules

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Just what you wanted for your Saturday morning: NBA Salary Cap minutiae.

This is the face you'll make while trying to understand this article.
This is the face you'll make while trying to understand this article.
Harry How/Getty Images

The Clippers traded C.J. Wilcox to the Orlando Magic yesterday in a salary and roster-clearing move.  All of the decision-making is done, the deal and subsequent moves have been finalized, and it's time for analysis.  Aside from talking about if the trade is good or bad, it's always fun (for me, at least) to look at how a deal got done instead of analyzing if it's any good or not.

Here's exactly how it all shook out:

Team Orlando Magic Los Angeles Clippers
Gives up Devyn Marble, Cleveland 2020 2nd round pick* C.J. Wilcox, $947,276 TPE, $229,169 in cash considerations**
Acquires C.J. Wilcox, $229,169 in cash considerations** Devyn Marble, $1,209,600 TPE, Cleveland 2020 2nd round pick*

*Why do I say it's Cleveland's 2020 pick?  Magic GM Rob Hennigan hasn't traded any of Orlando's own future picks--but they happen to have Cleveland's in 2020.  The combination of Hennigan not liking to trade Orlando's picks, and the pick happening to come in 2020, which happens to be the year Orlando owns another team's second rounder?  Too much to be a coincidence.

**I'm making a strong educated guess at the $229,169 figure here.  That's the difference between Wilcox's salary and the salary Orlando would have paid Marble (or the veteran's minimum player they signed once they waived Marble).  Orlando is over the cap but well, well under the tax, so the additional $229,169 doesn't cause basketball problems for them, and the Clippers took away the slight hurt from the pockets of Orlando's owners.

So what the hell happened with those trade exceptions?  How did the Clippers do that crap?

Well, here's how.  In the NBA, there are a complex array of trade rules that must be followed for any swap (it's far easier for teams well under the cap, but otherwise it gets tricky).  Most fans are aware of the concept of "salary matching"--where depending on the amount of outgoing salary and the team's tax status, the incoming salary must be within a certain range.  That's why the Clippers can't legally trade Branden Dawson for LeBron James even if Steve Ballmer slipped something in Dan Gilbert's drink at the board of governors meeting.

There's more ways to finesse trades than just lumping together what you want to give up and lumping together what you want to send out, then checking the math.  Frequently, team's will use bizarre combinations of trade exceptions and salary matching to pull of multiple separate trades which are all part of one big agreed-upon deal by the front offices.

The craziest part is that when the teams get together to show their work to the league and officially complete their trades, they don't have to get there the same way.  Both teams could have wiggled through different loopholes and completed separate smaller "trades" as part of the big, actual deal.  Here's an excellent example from an old HoopsRumors article:

Let's take a look at a real-life example from this year's trade deadline: the Bucks' trade of Andrew Bogut and Stephen Jackson to the Warriors for Monta Ellis, Ekpe Udoh, and Kwame Brown.

From the Bucks' perspective, the trade broke down as follows:

Bogut ($12MM) for Ellis ($11MM) and Udoh ($3.29MM). As a nontaxpayer, the Bucks could have absorbed up to $17MM (100% of Bogut's salary + $5MM) in a simultaneous deal for Bogut, so Ellis' and Udoh's $14.29MM fits comfortably.
Jackson ($9.26MM) for Brown ($6.75MM). This segment of the deal is non-simultaneous, meaning the Bucks received a traded player exception for the difference between the two salaries ($2,506,500). They'll have until next March to use it.

And here's how it looked from the Warriors' perspective:

Ellis ($11MM) for Bogut ($12MM). The Warriors could have taken back up to $16MM for Ellis (100% of his $11MM salary + $5MM), so they can easily absorb Bogut's $12MM salary.
Brown ($6.75MM) for Jackson ($9.26MM). In this case, the Warriors could take up to 150% of Brown's salary, plus $100K, which would have been nearly $10.23MM, more than enough to absorb Jackson's $9.26MM figure.
Udoh is left over and is essentially going to the Bucks for nothing, from Golden State's perspective. So the Warriors received a traded player exception worth Udoh's salary ($3,294,960), which they'll have until next March to use.

That trade is far more complicated than the one the Clippers and Magic pulled off, but you can see how complex it can be--not only is the trade being split up into smaller swaps to make it legal, but each team found separate ways to make it work that are more advantageous for themselves.  And don't be scared by the term "non-simultaneous trade"--a simultaneous trade is one where everything is completed at once (meaning that no team walks away with a trade exception), and a non-simultaneous trade is one where at least one team has one year to "complete" the trade (by taking back additional salary using a trade exception).

The Clippers completed a non-simultaneous trade in January, when they moved Josh Smith to the Houston Rockets:

  • Houston's perspective: The Rockets acquired Smith without having to send salary back because the Clippers signed him using the minimum salary exception.  Players signed using the minimum salary exception do not count as incoming salary in trades.  For the Rockets, this trade is simultaneous and complete.
  • Los Angeles' perspective: The Clippers traded Smith's $947,276 salary for "nothing", creating a trade exception for that value.  The trade is non-simultaneous and the Clippers have one year to utilize that exception and "complete" the trade before the exception expires.

Both perspectives offer something of value for examining the Wilcox-Marble swap.

The minimum salary exception essentially allows players to be signed by a team that does not have any other cap room or exception to sign them.  Unlike the mid-level exception and other exceptions, the minimum exception can also be used to acquire minimum-salaried players in trades, even if the acquiring team is over the cap.  While the new salary counts on the team's cap sheet, they do not have to account for it as incoming salary in the trade.

Devyn Marble's contract for next season was for the league minimum of $980,431.  That means that the Clippers could take him back for free, which is how they were able to create a Wilcox TPE, right?  Wrong.  Even though Marble's salary is for the league minimum, he is not eligible for this rule because he was not signed using the minimum salary exception.  That exception can only be used for contracts that run up to two years, and Marble's was for three.  In order to give him a three-year contract, Orlando had to use cap space (or an exception which can be used for three-year deals).

So how did they do it?  Marble's salary fit into the Clippers' TPE from the Josh Smith trade ($947,276 plus $100,000 in wiggle room allowed by NBA rules).  Then the Clippers sent Wilcox to Orlando for "nothing", creating a new TPE worth $1,209,600.  Here's how it looks broken down:

  • From Orlando's perspective:
  1. In a simultaneous trade, the Magic sent out Devyn Marble's $980,431 salary and brought in C.J. Wilcox's $1,209,600 salary.  Because they aren't taxpayers and the outgoing salary is lower than $9.8 million, Orlando could take back 150% + $100,000 of outgoing salary, which totals over $1.5 million.  Wilcox fits well within that margin.  They also sent out Cleveland's 2020 second rounder and acquired $229,169 in cash considerations, which is irrelevant for cap purposes.
  • From the Clippers' perspective:
  1. In a simultaneous trade, the Clippers absorbed Devyn Marble's $980,431 salary into their $947,276 TPE, which was created in the Josh Smith trade (Clippers-Rockets, 1/22/16).  The Clippers get $100,000 wiggle room on that TPE, which allows them to take back up to $1,047,276.  Marble's salary fits snugly into that window.  In return, the Clippers sent out $229,169 in cash considerations, which is irrelevant for cap purposes.
  2. In a non-simultaneous trade, the Clippers sent out C.J. Wilcox's $1,209,600 salary to Orlando for no cap return.  For this, they now have a $1,209,600 trade exception which they may use to absorb future salary and "complete" the trade.  If this exception isn't used by 7/15/17, it expires.  In return, the Clippers received Cleveland's 2020 second round pick, which is irrelevant for cap purposes.

Fascinating stuff, right?  The outcome of the trade is still the same as you already knew it was, but now you understand just how complicated this stuff is for front offices to conjure up.  The Clippers even waited a day between agreeing to the trade and officially completing it so that they will have the Wilcox TPE for an extra day next summer.