When a team trades a player by himself, it has a choice. It can take back up to 125 percent of the salary it sent away (the limit is higher under the new CBA for teams under the luxury tax line) and complete the trade right away; or it can take back no more than 100 percent of the player's salary, but take up to a year to finish the job. (Both choices come with a $100,000 fudge factor.)
For instance, the Lakers recently sent Lamar Odom to Dallas, receiving only a future draft pick (which counts as zero dollars for trade purposes) in return. They now have a year to acquire up to $9 million to complete the Odom trade. The subsequent trade doesn't need to be with the Mavericks; as long as the Lakers can find a player or players making $9 million or less, they can do the acquiring without needing to send out matching salaries. Any incoming salary is charged to the Odom trade.
This one-year credit is commonly referred to as a trade exception.
Teams receive trade exceptions when they trade one player and take back less salary than they send away. Teams don't get a trade exception when they send players together, although it's often possible to reconfigure a multiplayer trade as separate, parallel single-player trades in order to gain trade exceptions. Trade exceptions can't be combined with anything -- even other trade exceptions.
Think of it as a department store gift card, with a one-year expiration date. Teams can keep spending on it until they use it up, or they can let any remaining balance lapse after a year. It can be used only in a trade (they can't use it to sign a free agent), and they can't overspend with it: If a player makes more than $9 million, then the Lakers' trade exception is useless. For instance, if the Lakers and Magic ever do a trade for Dwight Howard, then the Lakers potentially could use the trade exception to acquire Jameer Nelson ($8.6 million) as part of the deal, but they couldn't use it on Hedo Turkoglu ($11 million).
A number of past trades created trade exceptions that were set to expire between July 1 and December 9 -- when all business was halted because of the lockout. When the labor dispute was settled, the sides agreed to extend the deadline on these trade exceptions. Any trade exceptions due to expire from July 1 to Dec. 15, 2011, now expire Dec. 16 -- today. As a result, we could see a flurry of trade activity before the close of business.
So today is the last chance many teams have to use their trade exceptions. The most famous example is the Cleveland Cavs. They have a $13.2 million trade exception as a result of the sign-and-trade transaction that sent LeBron James to Miami.
Here is a roundup of the trade exceptions due to expire today, for all 30 teams. The amounts represent the difference in salaries between the outgoing player (named below) and incoming player(s) received in trade. These amounts do not include the $100,000 fudge factor. Trade exceptions that expire later than Dec. 16 are not listed.
• Atlanta: $3.6 million (Josh Childress)
• Boston: none
• Charlotte: none
• Chicago: none
• Cleveland: $13.2 million (LeBron James), $500,000 (Delonte West)
• Dallas: $4.2 million (Matt Carroll), $900,000 (Eduardo Najera)
• Denver: none
• Detroit: none
• Golden State: $2.0 million (Anthony Morrow), $1.8 million (C.J. Watson)
• Houston: $800,000 (Jermaine Taylor), $400,000 (Trevor Ariza), $400,000 (David Andersen)
• Indiana: none
• Los Angeles Clippers: none
• Los Angeles Lakers: $5.5 million (Sasha Vujacic)
• Memphis: none
• Miami: none
• Milwaukee: none
• Minnesota: none
• New Jersey: none
• New Orleans: $6.6 million (Peja Stojakovic), $1.4 million (Darren Collison), $1.4 million (Morris Peterson)
• New York: none
• Oklahoma City: none
• Orlando: none (however $6.3 million trade exception for Marcin Gortat expires Dec. 19)
• Philadelphia: $2.2 million (Jason Smith)
• Phoenix: $5.7 million (Amare Stoudemire, with a $1.9 million trade exception for Earl Clark expiring Dec. 19)
• Portland: $2.3 million (Jerryd Bayless)
• Sacramento: none
• San Antonio: $800,000 (Curtis Jerrells)
• Toronto: $9.0 million (Chris Bosh)
• Utah: $1.4 million (Carlos Boozer), $1.3 million (Kosta Koufos)
• Washington: none