During free agency we will surely see a few sign-and-trade deals go down around the NBA. A sign-and-trade deal involves a free agent signing with their current team and then being immediately traded to another team. Why wouldn’t the team that desires the player just sign them themselves? Why give up assets to acquire a player that they can sign in free agency?

 

Higher Salary and Longer Contract

 

Players can sign contracts that are more lucrative and longer in duration than they could if they signed directly with the new team. This is because the player is using the Bird rights retained by their current team.For example, players can sign up to a five-year contract with their current team, which is then traded, whereas they could only sign up to a four-year contract with a new team without a sign-and-trade. Bird rights let teams offer up to the player's maximum salary with annual raises up to 8%, compared to the 5% raises other teams can offer. A sign-and-trade has to be for a minimum of 3 seasons but only the first year has to be guaranteed.

 

Acquiring Talent Despite Cap Limitations

 

Teams that are over the salary cap can acquire significant talent that they wouldn't be able to sign outright due to cap restrictions. The sign-and-trade mechanism allows them to absorb the new player's contract via trade exceptions or by matching salaries in the trade.

 

What is in it for the Player?

 

The market opens up to include teams that would otherwise not have cap space. The team that is willing to pay the player the most money and/or the team that the player desires to go to may not have been a viable option if not for the sign-and-trade option.

 

The Player’s Current Team



 

For the team losing the free agent they would at least recoup some assets instead of having the player walk for nothing. The Golden State Warriors are reportedly willing to offer Paul George a 4 year max contract. If George wants to sign there, then the Clippers can trade him to the Warriors and get something back for him. They would have to take on some salary to offset but would also receive assets likely in the form of draft picks or potentially one or two young players.

 

Under the CBA

 

The CBA details the specific mechanisms and rules with regard to trade restrictions, including the necessity for both teams to comply with salary matching rules and the subsequent hard cap restrictions imposed on teams acquiring salary.

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Notably, Section 2(e)(2)(i)(A) says: A team may not engage in a transaction if, immediately following such transaction, the team's Apron Team Salary for that Salary Cap Year would exceed the "Applicable Apron Level" that corresponds with such transaction in the Transaction Restrictions Table.

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Published June 26, 2024.