You probably heard Gordon Hayward left the Boston Celtics for the Charlotte Hornets as a free agent this offseason. You may have heard the Celtics got the largest Trade Exception in NBA history when Hayward left. If questions asked on Twitter, message boards, podcasts and right here on CelticsBlog are any indication, you may not fully understand exactly what happened and what it all means going forward.
Fret not! As we approach the start of the 2020-21 NBA season, CelticsBlog is here to answer all your Gordon Hayward Trade Exception questions. Well…except how Danny Ainge will use the Trade Exception. We’d need the Ghost of Christmas Future to help us out with that one. And despite Ainge’s reputation as a bit of a Scrooge, we don’t think that’s actually going to happen.
Q: What exactly happened with Gordon Hayward?
A: Well, you see, five minutes into his Celtics debut, Hayward broke his leg. After that…Oh. You know all that? Alright then. Ghost of Christmas Past checking out and Ghost of Christmas Present checking in…
Essentially, Hayward wanted a bigger role. He confirmed this himself at his introductory press conference with the Hornets. Hayward also said that going all the way back to 2014, he wanted to be in Charlotte. Back then, the Utah Jazz matched the offer sheet Hayward signed with the Hornets. And, it’s pretty likely that $120 million fully guaranteed over the next four years entered into the decision as well.
Q: Why didn’t Hayward just sign with Charlotte directly? He could have, right?
A: Hayward absolutely could have signed with the Hornets outright and left the Celtics with nothing to show for it. Charlotte had already worked out creating the necessary cap space to do just that. But Danny Ainge, being wary of losing Hayward for nothing, worked with Mitch Kupchak (the Hornets GM) to structure the deal as a sign and trade. Charlotte got Hayward, plus a little something extra, and Boston created the largest trade exception in NBA history.
Q: Wait a minute… the Celtics gave up something just to lose Hayward? Why?
A: Yup. Sure did! Boston sent their own second round picks in both 2023 and 2024 in the deal. In return, because each side has to get something in a trade, the Celtics acquired a top-55 protected second round pick from the Hornets in 2022.
Basically, in order to create the giant trade exception (and maybe recoup something of value later), Boston paid Charlotte the price of two second round picks to do the deal as a sign and trade vs. just signing Hayward outright. And that second from the Hornets is never coming to Boston unless Hayward becomes the MVP and Charlotte is a title contender in 2022.
Q: Shouldn’t Ainge have just traded Hayward to Indiana for Myles Turner?
A: Hey! That’s not a trade exception question! And that topic has been covered endlessly already. Let’s stay on subject here!
Q: Fine. Whatever. You keep saying “largest ever” and “giant,” but just how much is this trade exception thing for?
A: $28,500,000. The exact amount Hayward signed for in starting salary for 2020-21.
Q: How did we get this $28.5 million trade exception? Did Charlotte trade it to us?
A: A trade exception (actually called a Traded Player Exception or TPE) is created, not traded, when one team sends a single player out in trade and takes back less salary for that single player than they take back. For example, If Boston sent out $10 million in salary, but took back just $5 million, they would create a TPE of $5 million.
In this case, because the Hornets absorbed Hayward’s entire contract via cap space, the Celtics created a TPE equal to the amount of the entire 2020-21 salary.
Q: Awesome. So, why didn’t Danny Ainge use this money to sign a player to help this year?
A: A TPE can’t be used to a sign a player. You can use a TPE to trade for or claim off waivers a player, or players, whose salary, or salaries, fit inside of the TPE.
Q: So, we can trade for someone who makes up to $28.5 million?
A: Correct. Technically, it could be a touch more, because trade rules dictate that teams can take in $100K more than they send out.
Q: I have an awesome idea! What if we packaged someone who makes like $13 million with the trade exception to get a guy who makes $41 million. We could get James Harden!
A: In the words of the immortal Lee Corso, “not so fast, my friend!” The trade exception can’t be aggregated with player salaries, nor other trade exceptions to bring in more salary. This means that the Celtics have the Hayward TPE of $28.5 million, a TPE of $4,767,000 for Enes Kanter, and another one of $2,505,793 for Vincent Poirier. They can use all of them, but they all have to be used individually.
Q: Got it. So, just one player who makes up to $28.6 million then?
A: Not exactly. A TPE can be split up to acquire multiple players. Let’s say Boston wanted to acquire a player who makes $15 million and one who makes $13 million. They can do that using the Hayward TPE, since both fit inside of the TPE.
Q: Do the Celtics have to trade anything to use this trade exception?
A: Yes. Each side has to give something up. It can be a “nothing something” like a protected second round pick, like what Charlotte gave to Boston in the Hayward sign and trade. Or it can be something value of like a player or a desirable draft pick.
Q: Since Boston can’t combine a player with the trade exception, it has to be a draft pick they trade out to use the trade exception?
A: Nope. This is where NBA trade rules get a little complicated. Each side of a trade is allowed to structure the deal in a way that suits them best, as long as it meets all of the rules. For example, Boston could acquire a player or players that fit within the $28.5 million TPE, but could also send out players in the deal. In that case, they would be acquiring the players via the TPE, not via the NBA salary-matching rules.
What they can’t do, once again, is add those players’ salaries to the TPE to bring in more than is allowable by the TPE.
Q: I heard we can’t even use the whole trade exception this year? Why is that? Something about a hard cap?
A: When the Celtics used the entirety of the Non-Taxpayer Midlevel Exception to sign Tristan Thompson, they became hard capped. Teams become hard capped by doing any one of three things: using an amount of the Non-Taxpayer MLE that is equal to or greater than the Taxpayer MLE, using any part of the Bi-Annual Exception or acquiring a player via sign and trade.
As it stands right now, the Celtics are roughly $19.9 million under the Tax Apron, which is where a team is hard capped. If Boston sent no money out in a trade (meaning only draft picks), they’d only be able to use about $19.9 million of the Hayward TPE. If they sent a player, and some salary, out, the amount of the TPE they can use goes up accordingly.
It’s important to note that the hard cap designation is for the 2020-21 season only. Once the league year rolls over to 2021-22, everything is reset and Boston won’t be hard capped.
To sum it up: Ainge can use all of the TPE right now, but he’d have to send some salary out in a deal. That’s probably happening anyway. If he waits until the offseason, he can use the entirety of the TPE without sending any salary out.
Q: I think I got it now. So, why didn’t Ainge use it to make a trade already? Now the season is here. What happens now?
A: That’s something Danny Ainge would have to answer for himself, but the guess here is that no deals presented themselves that made sense. The TPE is good for one year from the date of trade. So, Boston has until they are in next offseason to use the TPE. That covers the trade deadline, the draft and the start of free agency next summer. Ainge has lots of time to use the TPE.
Also, if a player got waived during buyout season, and Boston really wanted them, they could use the TPE to claim them off waivers before they get to their new destination. It’s not something we often see happen, but having a $28.5 million trade exception has never happened before either.
Q: Fine. So, who are we getting with this trade exception?
A: Because the TPE is worth $28.5 million, it’s a pretty big list. Taking out players who have trade restrictions because they just signed extensions, Gordon Hayward himself, and Kemba Walker (who is already a Celtic) there are only 32 players who make a salary too large to fit inside the trade exception. That leaves a pool of over 400 players Boston can acquire.
Q: That’s a lot of guys Danny Ainge can almost trade for!
A: That’s not a question. And that’s a good place to end this.