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Milwaukee and Golden State: The Power Of The 150% + $100,000 Trade Rule

One of the changes in the new Collective Bargaining Agreement from the previous CBA was to the terms of the Traded Player Exception. Previously, a team that was over the cap could only take back 125% + $100,000 of the salary amount that they sent out in a simultaneous trade. But now, as long as the team remains under the luxury tax threshold after the trade is finalized, they can take back either 150% + $100,000 of the salary that they send out or 100% + $5,000,000, whichever is less.

The power of that rule (and for Golden State, the impact of the change) came to light in Tuesday night's trade between the Bucks and the Warriors. In that deal, 2 players making $21.26 million were traded for 3 players making $21.04 million. Sounds like an even trade financially, right? Neither team sent out significantly more money, right? So neither team generated a trade exception, right? Wrong.

In actuality, under the new trade rule, both teams generated significant trade exceptions. From Milwaukee's perspective, 100% + $5.00 million of Bogut's $12.00 million outgoing salary was able to absorb the combined salaries of Ellis and Udoh ($14.29 million). Meaning that essentially, Jackson's $9.26 million salary was traded for Brown's $6.75 million salary - which generates a $2.51 million trade exception. Not bad, especially considering that the Bucks actually see their Team Salary figure drop slightly.

Now, here's how the trade looks from Golden State's perspective: 100% + $5.00 million of Ellis' $11.00 million outgoing salary easily creates enough room for Bogut's incoming $12.00 million. And since 150% of Brown's $6.75 million outgoing salary is large enough to absorb Jackson's incoming $9.26 million salary, essentially Udoh's $3.29 million is traded for no incoming salary, meaning that the Warriors get a trade exception for that $3.29 million. Under the previous rule, 125% + $100,000 of Brown's salary would not have been large enough to account for Jackson's incoming salary, so no trade exception would have been generated. Similarly, had the Warriors been over the tax threshold, again, there would have been no trade exception created. But they were able to take advantage of the new rule and earn for themselves another trade asset that can be used any time in the next year.

Typically, when you think of scenarios in which significant trade exceptions are generated, you imagine one in which one team either trades away a lot more money than the other or uses an existing trade exception to facilitate the deal. Neither was true in this case. And, yet, each team created a sizable trade exception tonight, even though the Team Salary figures of both franchises stayed almost exactly the same.

All of this to illustrate a nuance of the trade rules that cap savvy teams will be able to take advantage of under the current CBA - it's possible under these rules to take back an equal amount of salary in a trade AND still generate a significant trade exception. It also points out yet another advantage for teams that are able to stay under the tax threshold - the ability to facilitate trades that might not be possible for teams over the threshold because of the difference between 150% and 125% of outgoing salary.

-- Storyteller | Twitter

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