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Forsberg: What the trade exception means and how the Celtics could use it

/ by Chris Forsberg
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So what exactly is a trade exception and how can it help the Boston Celtics?

The Celtics finalized a sign-and-trade deal with the Charlotte Hornets Sunday that delivered Gordon Hayward on his four-year, $120 million contract and brought back the largest trade exception in NBA history.

When a team trades a player but does not take back any salary in the process — something that happened Sunday because the Hornets were able to create enough salary cap space to absorb Hayward’s new contract — that team creates an exception equal to the first-year salary of the outgoing player.

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For the next 365 days — or at least through the first three weeks of free agency in the 2021 offseason because of the NBA’s pandemic-shifted calendar — the Celtics can receive players in trades without needing to send out salary to match.

Boston has actually generated three trade exceptions this offseason for Hayward, Enes Kanter ($5 million), and Vincent Poirier ($2.5 million). The Hayward exception could be valued somewhere between $27.9 million to $32.4 million depending on the structure of his contract.

Trade exceptions cannot be combined and the Celtics can only absorb a player whose salary is equal to or lower than the individual exception. The exception also cannot be combined with a player's salary to take on a bigger contract. Boston can, however, use smaller chunks of each exception to sign multiple players and can send out additional players as part of any deal.

 

An example: The Celtics cannot combine their three exceptions and a player salary to make a trade for, say, Paul George’s $35.5 million salary. Boston could, however, trade for Denver’s Gary Harris and absorb his $19.6 million salary with the trade exception without having to otherwise match salaries.

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It’s important to note that most trade exceptions simply vaporize without being used. And it’s more likely the Celtics will utilize smaller chunks of that bulky Hayward exception to take on multiple different players.

But the large nature of the exception does allow Boston to dream big. Go look up any list of NBA contracts and you can daydream about anyone south of roughly $28 million.

One other thing to keep in mind for this season. The Celtics are expected to utilize the full value of the non-taxpayer mid-level exception when they finalize the signing of Tristan Thompson on Monday.

Because of that, the Celtics cannot exceed the NBA’s tax apron ($138 million) and will desire to stay below the luxury tax ($132 million) altogether in order to lessen future repeater penalties.

Once the dust settles on all of Boston’s offseason signings, that would leave them with roughly $16 to $22 million in space below those thresholds. Which means that, unless Boston was to send out a lot of salary as part of any trade, it could not use the full value of the Hayward TPE.

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One other possible but rare use for a traded player exception is to use it to claim a player off waivers.

The Golden State Warriors, dealing with the loss of Klay Thompson, used a $17.2 million trade exception to acquire Kelly Oubre via trade this month (taking on his $14.4 million salary).

So let your mind wander. Maybe the Magic fizzle and Aaron Gordon ($18.1 million) becomes available. Maybe if the Celtics needed more point guard depth because of Kemba Walker’s balky knee, they could call Oklahoma City about George Hill ($9.6 million) and try to pry him out while dangling draft picks at Sam Presti.

A trade exception can be a valuable asset in adding impact talent to the roster and yet there’s no guarantees of making a deal.

Remember, any trade partner looking to do more than dump salary would want assets in return. The Celtics would have to send out young talent or draft picks in addition to utilizing the exception. But it gives Boston more flexibility and ensures the team doesn’t have to send out a core piece of the team to make a deal.

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Boston’s treasure chest of future first-round picks is currently bare, having utilized three first-rounders in this month’s draft. The team currently has nothing but its own first-round picks moving forward.

It puts an even greater premium on either making deals to restock that supply or developing recent draft picks in order to have desirable assets when the Celtics utilize that exception.