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How Could Pacers Use Trade Exception? Q.O.D 7/13

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  • How Could Pacers Use Trade Exception? Q.O.D 7/13

    How Could Pacers Use Trade Exception?


    Thursday, July 13, 2006
    ---------------------------------------------------------------

    QUESTION
    OF THE DAY
    Conrad Brunner

    Q
    . Can you explain how the Pacers' acquired a $7.5 million exception from the Hornets in the sign-and-trade deal with the Hornets and what are its ramifications to the Pacers' ability to sign free agents this year or in the future? Also, is it foregone conclusion that (Andrew) Betts will never be in blue and gold? (From Tim in Indianapolis)

    A. A traded player exception is basically a one-year credit line a team receives when it trades away a player (or players) whose contract far exceeds those received in return. In this case, because the Pacers gave up Stojakovic, who signed a deal reportedly worth nearly $13 million per over five seasons, and received the draft rights to 1998 second-round pick Andrew Betts, the trade exception was necessary to balance the deal for salary-cap purposes.

    The Pacers have up to one year to use the exception, but it can not be used to sign free agents. It can only be used to acquire existing contracts from other teams; on other words, to consummate a trade.
    The Pacers, in theory, could now trade away a player making $3 million in return for a player making up to $10.6 million (there's a $100,000 allowance on top of the $7.5 million). A traded player exception can also be used in parts, rather than as one whole amount. This therefore gives them enormous flexibility on the trade market.


    As for Betts, the 7-footer from England appears to be headed the way of Joe Kleine, which is to say his only link to the Pacers will be as the answer to a trivia question. Kleine, you'll recall, was the player thrown into the deal that brought Jermaine O'Neal to the Pacers from Portland for Dale Davis in 2000. Though Kleine's contract was still active, he was no longer playing and had already begun his career as a broadcaster. Betts, a 7-footer considered one of England's brightest basketball talents, has spent his professional career in Europe and it appears likely that is where he will remain.

    Pacers.Com

    Why Not Us ?


  • #2
    Re: How Could Pacers Use Trade Exception? {Bruno's Q.O.D 7-13}

    I think that he is wrong here. I don't think that you can combine the TE with the salary of another player, as in the example he gives above. I thought that the TE has to be used alone.
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    • #3
      Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

      I'm confused. So we CAN combine the exception with a player? After last night I thought it was only good alone (maybe I misread).

      Secondly, what are the rules for when you can or can't "make" a trade exception? What allowed New Orleans to "make" one to trade to us? Can anyone do that? Can you theoretically trade anyone for anyone in this league, and just add a trade exception to make the deal work?

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      • #4
        Re: How Could Pacers Use Trade Exception? {Bruno's Q.O.D 7-13}

        Originally posted by FrenchConnection
        I think that he is wrong here. I don't think that you can combine the TE with the salary of another player, as in the example he gives above. I thought that the TE has to be used alone.
        You're right I believe they are certain loopholes but not to the extent he described as far as I am aware

        There are some common misconceptions about non-simultaneous trades. For one, teams cannot use a Traded Player exception to sign free agents; it can be used only to acquire existing contracts from other teams. For another, teams cannot combine a Traded Player exception with other exceptions (such as the Mid-Level exception or the 125% plus $100,000 margin from another trade) in order to trade for a more expensive player. For example, a team with a $1 million Traded Player exception cannot combine it with their $2 million player to trade for a $3 million player (see question number 72 for more information on combining exceptions).

        What is not allowed is using two different exceptions for the same player. Here is something that is not allowed: A team has a $5 million player and a $1 million Traded Player exception from a previous trade, and wants to add the Traded Player exception to the 125% plus $100,000 margin from their $5 million player ($6,350,000), in order to trade for a player making $7,000,000. This cannot be done
        Maybe there is a loophole or something that is not being discussed ?

        Here is a more complicated example of a legal non-simultaneous trade: a team has a $4 million Traded Player exception from an earlier trade, and a $10 million player it currently wants to trade. Another team has three players making $4 million, $5 million and $7 million, and the teams want to do a three-for-one trade with these players. This is legal -- the $5 million and $7 million players together make less than the 125% plus $100,000 allowed for the $10 million player ($12,600,000), and the $4 million player exactly fits within the $4 million Traded Player exception. So the $4 million player actually completes the previous trade, leaving the two teams trading a $10 million player for a $5 million and a $7 million player. From the other team's perspective it's all just one big simultaneous trade: their $4 million, $5 million and $7 million players for the $10 million player.

        Why Not Us ?

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        • #5
          Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

          Originally posted by Hicks
          I'm confused. So we CAN combine the exception with a player? After last night I thought it was only good alone (maybe I misread).

          Secondly, what are the rules for when you can or can't "make" a trade exception? What allowed New Orleans to "make" one to trade to us? Can anyone do that? Can you theoretically trade anyone for anyone in this league, and just add a trade exception to make the deal work?
          I am confused also. I didn't think it could be packaged with a player in a trade

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          • #6
            Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

            im confused as well
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            • #7
              Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

              At least one player from each team needs to be involved.

              An exanple would be the Pacers trading AJ to Milwaukee for Magloire. AJ makes far less but with the trade exception we are permitted to take on the extra salary.

              I think the only reason we got the exception in the first place is because New Orleans is under the cap & so they were allowed take on the extra salary in the first place.

              Comment


              • #8
                Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

                You can add it to a player. But the player + the exception has to be no more that 100,000 dollars more than the player you are getting.

                Like Conrad said, a 3 million player plus 7.5 exception can be traded for a 10.6 million player.

                But the difference between an exception and a regular player salary is this:

                If you traded a 3 million player and a 7.5 million player, then you could aquire a 13.225 million player in return. You add the salaries, add 25%, and finally add 100,000.

                With the trade exception, you can't add 25% to make the salaries match.

                Does that make sense?
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                • #9
                  Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

                  Originally posted by FlavaDave
                  You can add it to a player. But the player + the exception has to be no more that 100,000 dollars more than the player you are getting.

                  Like Conrad said, a 3 million player plus 7.5 exception can be traded for a 10.6 million player.

                  But the difference between an exception and a regular player salary is this:

                  If you traded a 3 million player and a 7.5 million player, then you could aquire a 13.225 million player in return. You add the salaries, add 25%, and finally add 100,000.

                  With the trade exception, you can't add 25% to make the salaries match.

                  Does that make sense?
                  What you are saying makes perfect sense and I understand that. However, I was under the impression that the TE could not be used in conjunction with a player for a trade for a player making the same combined amount of salary. I thought that the TE had to be used alone.

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                  • #10
                    Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

                    Either way, this is a really smart deal by the Pacers.

                    They could conceivable work a sign and trade with just about anyone now. If they wanted, they could work a S&T for Bonzi, for Wilcox, for Harrington, and only give up the trade exemption and a low salary player. Being able to trade $8-11 million gives us a lot of flexibility.


                    "Like [Jonathan Bender], AMC's Pacer was supposed to be fitted with a rotary engine--but both rotaries had technical problems late in their development (read: after incurring heavy research costs) that prevented them from seeing the light of day. Of course, both vehicles had plenty of problems that did reach production. The Pacer was a dud in terms of quality, execution and particularly styling. Make your own assessment about its bizarre proportions, but don't miss the one door that's bigger than the other."

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                    • #11
                      Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

                      Originally posted by FlavaDave
                      You can add it to a player. But the player + the exception has to be no more that 100,000 dollars more than the player you are getting.

                      Like Conrad said, a 3 million player plus 7.5 exception can be traded for a 10.6 million player.

                      But the difference between an exception and a regular player salary is this:

                      If you traded a 3 million player and a 7.5 million player, then you could aquire a 13.225 million player in return. You add the salaries, add 25%, and finally add 100,000.

                      With the trade exception, you can't add 25% to make the salaries match.

                      Does that make sense?
                      Ok yes that does, and after reading Coon's outline I see I misunderstood.

                      As long you aquire a player back that is no less than a 100K and more likely a player that is more salary than your TE and the player you are trading away your fine.

                      So basically what you cannot do is use the 125% plus 100K rule to your benefit in trading for less salary.

                      So you can trade a TE and player in one trade ?

                      Why Not Us ?

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                      • #12
                        Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

                        Originally posted by IUColtPacerFan
                        What you are saying makes perfect sense and I understand that. However, I was under the impression that the TE could not be used in conjunction with a player for a trade for a player making the same combined amount of salary. I thought that the TE had to be used alone.

                        Nope.

                        In another thread, someone said something that made me think the same thing, but he was trying to explain the "no 25%" rule.

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                        • #13
                          Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

                          Originally posted by Jose Slaughter
                          I think the only reason we got the exception in the first place is because New Orleans is under the cap & so they were allowed take on the extra salary in the first place.
                          This is correct, I believe. Since salaries don't have to match in a trade if one of the teams is under tha cap, the team giving up more in salary gets the Trade Exception.
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                          • #14
                            Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

                            So...does that mean...that we cannot straight up use the TE for a direct trade with Atlanta for Harrington...as in AJ+TE for Harrington?

                            If that is the case...then does that mean that we can use it in a 3 way trade...as in....what DD00 suggests.....Indy/Mil/Atl trade trading the TE+Filler for Magliore....then sending Magliore to Atlanta in return for Harrington?
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                            • #15
                              Re: How Could Pacers Use Trade Exception? Q.O.D 7/13

                              AJ makes, what, 3 mil a year?

                              So we can trade the TE + AJ for Al if Harrington's contract has a first year salary of about 10.5 or lower.
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