Sign and trades grew in popularity over the years. It is one of the legal loopholes that NBA teams can use when they are over the salary cap. Teams go this route so they can get something in return, rather than letting their own player walk away for nothing in free agency.
NBA sign and trades explained
It’s not easy to pull off a sign-and-trade deal due to its complexity. It also needs cooperation between teams and players which may take a longer time than outright free agency signing. However, when pulled off, it’s clearly a win-win situation.
In this article, we’ll explain how the NBA sign and trades work…
How do sign and trades work?
Sign and trades work just like the way you see it. The team signs a player and immediately trades him to another team.
Teams who are over the salary cap cannot sign new free agents to upgrade their roster. However, per the league’s Collective Bargaining Agreement (CBA), they can go over the cap when they re-sign their own player. Then, they trade their newly-signed player to another team in exchange for assets such as players, draft picks, cash, etc.
In addition, re-signing allows a player to get a bigger contract than what he can usually pursue in free agency. This is simply because the original team holds the player’s expiring contract. Thus, per league’s rules, they can offer more money and a longer contract to the said player.
As you can see, sign and trades are utilized so that teams can legally go around the NBA’s salary cap rules. It also benefits the player since he can get more money.
What is the impact of a team completing a sign and trade?
Usually, sign and trades happen for teams who have their star player leaving in free agency.
To get something in return, teams undergo a sign and trade agreement to re-sign their star, then trade him to another team. Once completed, this can benefit the team in a lot of ways such as freeing cap space, getting players and draft picks. It is also important to note that any teams involved in a sign and trade are then hard capped.
To give you an example, check out the three-team deal between the Warriors, Nets, and Timberwolves in 2019. In this deal, Golden State acquired D’Angelo Russell on a four-year, $117 maximum contract. The Warriors also received Shabazz Napier and Treveon Graham (but then offloaded after to Minnesota for cash considerations).
Meanwhile, the Nets received a protected future first-round pick from the Warriors. As you can see, Brooklyn did this to clear cap space for Kyrie Irving and Kevin Durant, and to acquire a future first-round pick.
Can multiple players be included in a sign and trade?
Yes, multiple players can be included in a sign a trade as long as it’s legal. An example of multiple players included in a sign and trade deal was the Pistons-Magic trade in 2000.
In this deal, the Pistons signed Grant Hill and traded him to the Magic for Ben Wallace and Chucky Atkins (which were signed and traded by Orlando as well). This is one of the trades that shaped Detroit’s success in the 00s.
When does a sign and trade happen?
Since the 2020-2021 season is finally over, all NBA teams can start trading players, draft picks, and cash. However, signing free agents can only take place at the start of free agency.
This means that sign and trades can officially happen at the start of free agency on August 6, 2021. Negotiations can start as early as August 2.