Why 2019 Has Been the Year the Sign-and-Trade Rose From the Ashes

Betting
Wed 3rd July 2019

One of the biggest takeaways from the 2019 NBA free agency bonanza has been the re-emergence of what for some time looked like a forgotten art; the sign-and-trade.

5 of the biggest deals done on that wild Sunday – Kevin Durant to Brooklyn, Jimmy Butler to Miami, D’Angelo Russell to Golden State and Malcolm Brogdon to Indiana – were all reportedly completed by virtue of the NBA’s sign-and-trade provisions. Oh, and Tomas Satoransky to the Bulls. Yeah. That one’s a little bit less exciting.

In the case of Butler, Philadelphia managed to extract a surprisingly valuable asset in the form of rising 3-and-D star Josh Richardson.

This time last year there was one transaction were conducted during NBA free agency using the sign-and-trade – Danilo Gallinari to the Clippers. In 2016-17 there were two – Matthew Dellavedova to Milwaukee and Troy Daniels to Charlotte. In 2015-16 Orlando signed and traded Kyle O’Quinn to the Knicks for cash and a 2nd round pick swap in 2019. Prior to O’Quinn, the most recent sign-and-trade was Kris Humphries from the Celtics to the Wizards in 2014.

Just process that for a second. In the previous 4 offseasons we saw as many sign-and-trades combined as we saw in a single 24 hours this year.

Something is afoot. Let’s break it down.

What is a sign-and-trade?

The sign-and-trade rules under the NBA’s CBA allow a team to re-sign their own free agent and then trade them immediately by including a clause in the contract which mandates that the contract is null and void if the trade is not completed within 48 hours. I.e., if the trade isn’t completed then the contract becomes invalid.

As with everything related to the CBA, there are some complex rules governing the sign-and-trade provisions. The most important are:

  • The player must have finished the preceding season with the signing team
  • The player cannot be a restricted free agent who has signed an offer sheet with another team
  • The team receiving the player cannot be above the luxury tax “Apron” at the conclusion of the trade 
  • However, a team above the Apron can receive a player in a sign-and-trade if the trade reduces the team’s payroll and the team finishes the trade below the Apron.
  • The team cannot receive a player in a sign-and-trade if they have used the Taxpayer Mid-Level exception
  • The trade must be completed prior to the first game of the regular season.
Why were sign-and-trades so unpopular prior to this week?

The simplest answer is because they’re kind of pointless and counter-productive to the whole idea of free agency.

A “free-agent” is (as the name suggests) completely free to sign where they want. They have the autonomy to go anywhere and sign any contract they want. Obviously, a sign-and-trade is only really beneficial to the team they’re planning on leaving – without the “trade” part of the sign-and-trade the team would be left with nothing in place of their asset.

However, under the old CBA, a player could game the system by signing a max 5-year deal with their current team as part of a sign and trade, exploiting their current team’s Bird rights. For example, under the previous system Kevin Durant would have been able to sign a 5-year $221 million max deal with the Warriors before being traded to the Nets.

For obvious reasons, players were quite happy doing this.

Under the new CBA though a sign-and-trade contract must be for at least three seasons (not including any option year) and no longer than four seasons. That meant Durant would only have been eligible for the 5-year max if he re-signed with the Warriors. Although, given the uniqueness of his injury circumstances, there was some suggestion he may have signed the 5-year max and then been traded to the Nets in December. Under the CBA that would have been a legitimate move.

One of the obvious questions when addressing a sign-and-trade is “why the heck would a free agent going to a team want to weaken that team by causing it to trade one of its assets back the other way when it could just get me for free?”

There’s no real answer to that. The general vibe is also particularly against sign-and-trades given one of the CBA’s conditions is that if a team acquires a player in a sign-and-trade, then the Apron effectively becomes a hard cap for the remainder of that season. Effectively this means the receiving team is bound to use only their salary cap to sign players, and cannot use any trade exceptions (mid-level etc.).


The circumstances have to be just so for a sign-and-trade to work, which brings us to the ultimate question…

Why are we suddenly seeing so many sign-and-trades?

There are number of factors crucial to a successful sign-and-trade, all of which have to be met in order and in time if the transaction is to succeed. It just so happens that all of these conditions have fortuitously occurred during 2019 free agency for all 5 of the deals mentioned above.

The first is that the player the subject of the transaction has to be signing a contract for roughly their market value. I.e. the team receiving the player has to be happy with the deal they’re on. In this climate, with tampering rampant, this is never really going to be an issue. Teams are talking to each other left right and centre.

The second is that the team receiving the player has to be pretty keen to get them, given they’re throwing away assets for something they could nominally get for free. Otherwise, they’re likely to try and find a way to manoeuvre around the sign-and-trade and use, for example, the mid-level exception.

The final and most important element is that the team receiving the player has to be in some salary-cap strife. The key here is that a team above or close to the Apron can receive a player in a sign-and-trade if the trade reduces the team’s payroll and the team finishes the trade below the Apron.

Effectively, the receiving team has to be throwing in their part of the trade to get themselves below the apron. There is a lot more nuance to this in the form of outgoing and incoming salaries, and a thing called base-year compensation, but for now this is enough for a working knowledge.

In Durant’s case, the Nets did not have enough to sign him, Kyrie Irving and DeAndre Jordan using their cap space. They needed to offload something in return, which left them perfectly placed for a sign-and-trade. The Nets are likely to be unconcerned about the fact they are now hard-capped under the Apron for next season as they are unlikely to be genuinely competing for a title regardless without Durant.

Similarly, the Warriors, Heat and Pacers did not have enough cap space to sign Russell, Butler and Brogdon. They needed to get creative with the way they squeezed players under the cap, and this instance the sign-and-trade suited them perfectly.

Are we likely to see more sign-and-trades in coming seasons?

No.

For many reasons, the 2019 free agency period has been one of a kind.

If you’re ever wondering why a team has given up an asset, ostensibly for free, make sure you look behind the curtain. Nothing in the NBA is as it seems.

All CBA information thanks to Larry Coon’s NBA Salary Cap FAQ.


Written and produced for Sportstips.com by Eddie Dadds


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