Traded Player Exception, You Are My Best Friend

What if the Pelicans created the largest trade exception to ever exist?

Travel back to November 2020 with me. The world was in a weird place due to COVID, but the NBA was trying to get moving on its offseason. The Boston Celtics were in a tough situation. One of their premier players in Gordon Hayward was angling his way out of there. There were some very publicized sign-and-trade discussions between Boston and Indiana that ultimately broke down when Charlotte offered Hayward $120 million. Boston had to salvage what it could of the situation and sent over a few second round picks to secure a sign-and-trade. This transaction would create a $28.5 million trade exception for the Celtics, the largest in NBA history. The Pelicans should attempt to create an even bigger one this summer.

Enter Brandon Ingram and any team with cap space that might have interest. I’m looking at you, Philadelphia 76ers. Ingram is slated to earn $36,016,200 in the 2024-25 season. If the Pelicans and Sixers were to conduct a trade where the Pelicans would send Ingram into the Sixers’ enormous amount of cap space with only draft picks in return, the Pelicans would create the largest TPE to ever exist. This exception would be exactly $36,016,200, and from this point the possibilities are endless. (For simplicity, I am ignoring Ingram’s trade kicker, which could make the exception larger.)

You see, the new CBA has made exceptions stronger than they were before. Teams are no longer allowed to carry large amounts of cap space into the season. The 90% rule forces teams spend at least 90% of their cap space by the season’s start. Trade exceptions exist for one whole year after they are created. This means the Pelicans would be able to carry $36,016,200 of “space” into the season. This would give them a significant competitive advantage in trades moving forward.

The ability to absorb contracts up to $36,016,200 is something no other team would be able to offer. Say for example the Pelicans wanted to wait out the Cavaliers and Jarrett Allen. The Pelicans could sign a MLE level center this summer and just bide time until the Cavs start to crumble the financial pressures. They would be able to absorb Allen’s $20 million with ease, and compensate Cleveland with draft picks.

The Pelicans can apply this approach in a variety of different ways. They could absorb Capela. They could absorb Brook Lopez. They could absorb Naz Reid. They could absorb two players! There is even a possibility they would get compensated to take on some of these players by teams facing financial issues.

The TPE opens up endless pathways for the Pelicans to take. Let’s follow the Celtics again. The Celtics ended up splitting the Hayward TPE into Evan Fournier and Josh Richardson. Through a series of transactions, Fournier was turned into a $17,450,000 TPE which would ultimately expire, and Richardson would get traded along with Romeo Langford for Derrick White - a key piece in their championship.

During this time, the Celtics had the opportunity to turn the Hayward TPE into an even larger TPE with Kemba Walker. You see, the Celtics saw that Walker was declining small guard and needed to do something about his contract. They ended up moving Walker and a first round pick for Horford - another player viewed to have a negative contract, but was a better fit. Had the Pelicans absorbed Horford into the Hayward TPE, they would have created a second, larger TPE with Kemba outgoing. This would have been roughly $36 million. The Celtics opted to use salary matching mechanics with Horford instead, and use the Hayward TPE on Fournier and Richardson. Fortunately this worked out splendidly for them.

If the Pelicans wanted, they can kick the TPE can down the road endlessly as displayed in the Celtics situation. Like the Celtics, the Pelicans have a small guard they might need to move in the next 12 months. McCollum earns $33,333,333 this coming season and has another year left on his deal. If the Pelicans were to say flip him for a similarly “distressed asset” like Horford was at that time, the Pelicans can that new player into Ingram’s $36,016,200 TPE and create a new, smaller $33,333,333 TPE equivalent to McCollum’s salary.

The player I have in mind for this scenario is Deandre Ayton. If the Pelicans create the Ingram TPE and don’t have any great deals by the deadline in place, I would engage Portland in a CJ for Ayton swap. This would clear the way for Clingan in Portland, while securing the Pelicans a starting center and a $33,333,333 TPE that would last 12 more months until the following trade deadline. Now, this scenario would still apply if the Pelicans traded CJ for any number of player or combination of players, so don’t get too caught up in Ayton as a specific name. I just like the fact that Ayton fits and his contract has only 2 years remaining.

I absolutely love the idea of creating a TPE that continues roll over year after year until the right piece is found. This is the CBA version of money laundering and it is perfectly legal. The plan would require patience from the organization and a little bit of creativity, but the potential for improvement is nearly limitless. Let’s see what happens with the Paul George situation. If he ends up back in Los Angeles, the Sixers could become the perfect trade partner.