Each season, teams may trade or sell to one another player contracts, draft rights to a player, or draft choices. (The league’s Constitution and By-Laws prohibit any team from using loaned players, like international soccer.) While all trades must comply with the CBA, many of the procedures associated with trades are determined by the league’s Constitution and By-Laws, not the CBA. This page breaks down trade procedures, but the traded player exception to the salary cap (discussed in the salary cap exceptions page) has a significant impact on what trades teams can actually make.
TIMING and PROCEDURES
Teams can make trades between the start of the regular season up to the NBA’s trade deadline — 3pm (eastern) on the seventeenth Thursday of the season. (The trade deadline for the 2018-19 season was February 7, 2019.) For teams that do not make the playoffs, they can start making trades again on the day after their last regular season game. Playoff teams can start making trades once they’re eliminated from the playoffs. However, no trades can take place during the moratorium period.
To finalize a trade, teams have to participate in a trade call with the league where they confirm the trade’s details. Teams must disclose all relevant information they have about a player during this call. (And this is why the New York Knicks disclosed the sexual assault allegations surrounding Kristaps Porzingis to the Dallas Mavericks during their trade call; if they had not disclosed this information, the league could have rescinded the trade, fined the Knicks up to $1 million, taken away future draft picks, or a combination of these punishments.)
(Note, the league’s By-Laws prevent a team from trading or selling its first round draft picks if the result of that trade leaves the team without a first round pick in any two consecutive future drafts.)
A team may sign a contract with its own player and simultaneously trade that player. These sign-and-trade transactions are generally subject to these rules:
For a veteran free agent, a sign-and-trade is allowed if (i) the player to be signed and traded finished the prior season on his prior team’s roster, (ii) the contract covers between 3 (excluding any option year) or 4 seasons, (iii) the contract is not signed using the non-taxpayer mid-level salary exception or the taxpayer mid-level salary exception, (iv) the first year of the contract includes 100% compensation protection, (v) the contract is signed before the first day of the regular season, (vi) for any “5th Year Eligible Player” that met the max performance-based criteria, the contract does not provide for compensation of more than 25% of the salary cap at the time the contract was signed, and (vii) the team acquiring the player has room for the traded player’s salary (including unlikely bonuses) for the first season of the contract. Note, a team may only acquire a veteran free agent through a sign-and-trade if, after the transaction is completed (and at all times thereafter for that salary cap year), the team’s team salary is less than the tax level plus the tax apron.
For a player and his current team, a sign-and-trade is allowed if (i) they are amending the contract to do so (but not by renegotiating the contract, i.e., by increasing the player’s salary), (ii) the amendment is not made between the last day of the last regular season covered by the contract and June 30, and (iii) the contract, if also being extended, meets the extension-and-trade rules described below.
The maximum annual salary increases for any sign-and-trade are 5% of the first season covered by the contract.
A team may extend and trade a player within these rules. An extension-and-trade is allowed if (i) the contract covers no more than 3 seasons (including any years remaining in the original contract), (ii) the salary in the first year of the extended term is no more than 105% of the salary in the last year of the original term, and (iii) the annual salary increases are no more than 5% of the salary in the first season covered by the extended term.
To prevent teams from getting around these limitations, teams cannot trade any player that signs an extension covering more than 3 seasons, a higher salary, or with larger annual increases for the next 6 months.
Similarly, if a team receives a player in a trade, then for the next 6 months following that trade the team cannot sign the player to an extension that would violate the limitations for an extension-and-trade transaction.
limits on cash transfers
Instead of trading a player for another player or a draft pick, teams can also include cash in the transaction (including as salary reimbursement for a player they’re trading away). The aggregate amount of cash teams can pay or receive is limited in each salary cap year. The aggregate cash limit in the 2019-20 season is $5.617 million, and the limit increases (or decreases) each season at the same rate as the salary cap.
Cash that a team pays during that season’s trades is not netted against cash received in that season’s trades.
For example, in the 2019-20 season, a team could pay out $5.617 million in an October trade and also receive $5.617 million from another team in a November trade. However, they could not pay or receive any cash in any trade for the rest of the salary cap year.
No Re-Acquisitions — Once a team trades a player, it cannot reacquire that player during the same season. If the team trades a player between seasons, it cannot reacquire that player until the end of the next season. The only exceptions to these rules are if the player is waived and no other team claims the player.
“Bird” & “Early Bird” One-Year Contracts — A player on a one-year contract (excluding any option year) that will be a qualifying veteran free agent (i.e., a “Bird” rights player) or an early qualifying veteran free agent (i.e., an “Early Bird” rights player) at the end of the contract can only be traded with the player’s consent. If the player consents to the trade, he loses his “Bird” or “Early Bird” rights.
No-Trade Example — In 2018-19, the Golden State Warriors could not trade Kevin Durant without his consent, given that he was on a one-year deal (with a player option for the second year) and was a “Bird” rights player at the end of the season. As NBA salary cap expert Eric Pincus notes in this helpful 5-minute video, this is the same reason why the Los Angeles Lakers cannot trade Kentavious Caldwell-Pope during the 2019-20 season without his consent.
Consent Example — In 2018-19, Wayne Ellington consented to the Miami Heat trading him to the Phoenix Suns. While this meant Ellington lost his “Bird” rights, he consented to the trade so that the Suns would waive him and he could join a contender. Once waived, Ellington signed with the Detroit Pistons on a rest-of-season contract for just under $2.4 million, with the Pistons using the remaining balance of the non-taxpayer mid-level salary exception to close the deal. The Pistons then made the playoffs.
New Contracts —
Any draft rookie (whether drafted in the first or second round) that signs a standard NBA contract and any player that signs a two-way contract may not be traded for 30 days after they sign.
Any free agent playing on a standard NBA contract (or if they are converted to one) may not be traded until the later of 3 months after they sign or December 15. (For sign-and-trade deals, this rule only applies to any subsequent trade and not the initial sign-and-trade.)
If the signing of a new contract with a “Bird” or “Early Bird” free agent causes a team’s team salary to exceed the salary cap and the player’s first-year salary in that new contract is more than 120% above the player’s salary in the prior season, then the player may not be traded until the later of 3 months after they sign or January 15.
With one exception, no contracts can prohibit or limit a team’s right to trade the player to another team. The only players who can prohibit or limit their team’s trade rights are those players (1) with 8 years of service and (2) who have already played for 4 or more years with the team that has agreed to the trade prohibition or limitation.
Note, the CBA allows trade bonuses, and does not treat those bonuses as prohibiting or limiting a team’s trade rights.