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Why The Raptors Might Not Want to Take Back A TPE In A Bosh Deal

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  • Why The Raptors Might Not Want to Take Back A TPE In A Bosh Deal

    The Raptors could try and do a S&T with Bosh.

    In return for Bosh the Raptors could receive players and/or draft pick(s), cash and what is called a Traded Player Exception or TPE

    Simply put a TPE is a way for a team that is over the Salary Cap which the Raptors are to make an unbalanced trade money wise. By using what is called the TPE the team over the cap can trade a player or players away whose current annual salary (2010-11 in this case) is greater than the total salaries that they receive back. The difference would be what is called a TPE. The team could then use the TPE in a future trade to balance out a the deal.

    So for example if Toronto gave Bosh a maximum contract that paid him say $17 million for 2010-11 though I could be slightly off and then trade Bosh to the Heat for future draft picks and a TPE, the TPE would be $17 million to balance the trade.

    Now there are two problems with this.

    1. TPEs can only be used to acquire other players and not be used to sign free agents

    2. The TPE amount counts against the teams Salary Cap Hold until it either expires, one year if the original trade was a non-simultaneous trade. This means that the Raptors could wind up paying a luxury tax for 2010-11 even though they are might wind up paying actual salaries for 2010-11 of under $60 million. The luxury tax threshold for 2010-11 is now estimated to be around $68-69 million.

    So if you take the Raptors current roster based upon Johnson getting $5.5 million for 2010-11 the 12 current players would total about

    Current 12 players est tot salaries for 2010-11----$53,925,450
    Bosh's Traded Player Exception----------------------17,000.000
    ------------------------------------------------------------------------------
    Total Cap Hold for calculating Luxury Tax----------70,925,450
    Luxury Tax est for 2010-11----------------------------69.000,000
    --------------------------------------------------------------------------
    Amt Raptors over Luxury Tax Threshold------------$1,925,450
    ================================================== ====

    Now keep in mind that this is before adding at least one more player to 12 to get to the league required minimum of 13 players. Most likely the Raptors could have 14 or 15 under contract like most teams. So you can add a minimum of probably $1 - 2 million more.

    Now of course if the Raptors could trade some of that TPE for a player say like CP3 then it would probably make sense to go take the TPE and go over the luxury tax threshold.

    The problem is that unless they know that they can absolutely make a trade for someone that can help them they wind up paying a luxury tax in 2010-11 and don't even get the benefit of having the players. On top of that if the Raptors wanted to sign someone to a full MLE for say $5.6 million it would actually cost them $11.2 million including the 100% luxury tax since they would be over the luxury tax threshold before the transaction.

    Now this is how I understand taking a TPE for Bosh would work. However I am no NBA CBA expert and far from it to say the least. If someone else has some corrections to what I have posted I am sure we would all appreciate reading them.

    I apologize in advance if I am totally wrong on this and wasted people's time reading it.


    http://members.cox.net/lmcoon/salarycap.htm#Q70

    http://raptorsrepublic.com/forums/showthread.php?t=2680
    Last edited by Buddahfan; Sat Jul 3, 2010, 04:13 PM.
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  • #2
    Good explanation for us all Buddahfan. If they're looking to acquire a trade exception they're committed to paying the tax if it places them in that territory. That's my thoughts. Colangelo said early on he saw some scenarios that could see them over the tax threshold by as much as $10M.

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    • #3
      I think you're right. I also think BC has some ideas on subsequent trades. But also a TPE would also give BC a lot more flexibility.

      I imagine he could barge in on a trade being discussed, make it a 3 way trade and get some draft picks and a player (or rights to a player overseas) etc. in return for some of the TPE.
      Two beer away from being two beers away.

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      • #4
        Also, say the Raptors hold onto the TPE for a year (which is the max I think) and pay the tax. Next year when $10M comes off their cap for Evans and Banks, they combine the 2 and they could potentially trade for a max player.

        Am I right on that?
        Two beer away from being two beers away.

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        • #5
          How about a Canada wide ban on all news related to Bosh.

          Comment


          • #6
            BomKeyzi wrote: View Post
            How about a Canada wide ban on all news related to Bosh.
            Nope, at least not until he is officially goners
            Avatar: Riverboat Coffee House 134 Yorkville Ave. billboard of upcoming entertainers - Circa 1960s

            Memories some so sweet, indeed

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            “As a captain, I played furiously. I drew a lot of fouls, but I brought everything I had to every practice and to every game. I left everything on the court because I simply wanted the team to win”
            Quote from well known personality who led their high school team to a state championship.

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            • #7
              This brings up a couple of questions. First are you sure about the cap hold? I don't think that's right, as Orlando got a trade exception for the Turkoglu trade, and they were slightly over the luxury tax, so I doubt they would have done it just to help the Raptors out.

              Also, wouldn't the trade exception be able to be used in a sign and trade? You would simply be trade the trade exception, so while they can't sign a free agent outright, they can do a sign and trade for one.
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              • #8
                Tim W. wrote: View Post
                This brings up a couple of questions. First are you sure about the cap hold? I don't think that's right, as Orlando got a trade exception for the Turkoglu trade, and they were slightly over the luxury tax, so I doubt they would have done it just to help the Raptors out.

                Also, wouldn't the trade exception be able to be used in a sign and trade? You would simply be trade the trade exception, so while they can't sign a free agent outright, they can do a sign and trade for one.
                No I am not sure about the TPE and the Cap Hold but it makes sense especially if you go to the link on NBA CBA FAQs and read #s 69-71

                The TPE can be used in another trade but not for signing free agents. However, if the TPE does count against your Cap Hold and you can't use it for a trade because you can find a trade to make you get stuck with this huge dollar amount counting against your Cap Hold and in this case it would put the Raptors into the Luxury tax and they would have nothing to show for their trouble.

                Just taking back a TPE for the sake of getting something isn't always the best way to go. Again this is how I understand it. Maybe you could ask Devlin or Eric Smith etc. and see what they say.
                Avatar: Riverboat Coffee House 134 Yorkville Ave. billboard of upcoming entertainers - Circa 1960s

                Memories some so sweet, indeed

                Larger Photo of the avatar



                “As a captain, I played furiously. I drew a lot of fouls, but I brought everything I had to every practice and to every game. I left everything on the court because I simply wanted the team to win”
                Quote from well known personality who led their high school team to a state championship.

                Comment


                • #9
                  The Hedo trade from Orlando included 4 teams total...I've been trying to find out exactly how they got that but I have no clue.
                  Two beer away from being two beers away.

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                  • #10
                    A traded player exception does count as a cap hold for teams who are below the cap. So when computing cap space you deduct the cap hold. For example, say the Knicks have $34 million in cap space but a TPE worth $10 million then they'd only have $24 million in cap space. A team can renounce it's rights to the TPE (same as MLE + LLE + Disable player exception) in order to free up their maximum cap space.

                    However, a TPE does not count as part of a team's end of season payroll. It does not count as a salary or towards luxury tax payments. No cap holds do.

                    Therefore, there is no downside to the Raptors having a large traded player exception.
                    Last edited by Dave; Sat Jul 3, 2010, 07:28 PM.
                    nbaroundtable

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                    • #11
                      Mess wrote: View Post
                      Also, say the Raptors hold onto the TPE for a year (which is the max I think) and pay the tax. Next year when $10M comes off their cap for Evans and Banks, they combine the 2 and they could potentially trade for a max player.

                      Am I right on that?
                      There are two types of S&T deals a simultaneous and non-simultaneous. The rules are different for each. I think if it is a non-simultaneous S&T then as I recall the TPE expires after one year. Go to NBA CBA FAQ #s 69-71 for clarification.
                      Avatar: Riverboat Coffee House 134 Yorkville Ave. billboard of upcoming entertainers - Circa 1960s

                      Memories some so sweet, indeed

                      Larger Photo of the avatar



                      “As a captain, I played furiously. I drew a lot of fouls, but I brought everything I had to every practice and to every game. I left everything on the court because I simply wanted the team to win”
                      Quote from well known personality who led their high school team to a state championship.

                      Comment


                      • #12
                        Buddahfan wrote: View Post
                        The Raptors could try and do a S&T with Bosh.

                        In return for Bosh the Raptors could receive players and/or draft pick(s), cash and what is called a Traded Player Exception or TPE

                        Simply put a TPE is a way for a team that is over the Salary Cap which the Raptors are to make an unbalanced trade money wise. By using what is called the TPE the team over the cap can trade a player or players away whose current annual salary (2010-11 in this case) is greater than the total salaries that they receive back. The difference would be what is called a TPE. The team could then use the TPE in a future trade to balance out a the deal.

                        So for example if Toronto gave Bosh a maximum contract that paid him say $17 million for 2010-11 though I could be slightly off and then trade Bosh to the Heat for future draft picks and a TPE, the TPE would be $17 million to balance the trade.

                        Now there are two problems with this.

                        1. TPEs can only be used to acquire other players and not be used to sign free agents

                        2. The TPE amount counts against the teams Salary Cap Hold until it either expires, one year if the original trade was a non-simultaneous trade. This means that the Raptors could wind up paying a luxury tax for 2010-11 even though they are might wind up paying actual salaries for 2010-11 of under $60 million. The luxury tax threshold for 2010-11 is now estimated to be around $68-69 million.

                        So if you take the Raptors current roster based upon Johnson getting $5.5 million for 2010-11 the 12 current players would total about

                        Current 12 players est tot salaries for 2010-11----$53,925,450
                        Bosh's Traded Player Exception----------------------17,000.000
                        ------------------------------------------------------------------------------
                        Total Cap Hold for calculating Luxury Tax----------70,925,450
                        Luxury Tax est for 2010-11----------------------------69.000,000
                        --------------------------------------------------------------------------
                        Amt Raptors over Luxury Tax Threshold------------$1,925,450
                        ================================================== ====

                        Now keep in mind that this is before adding at least one more player to 12 to get to the league required minimum of 13 players. Most likely the Raptors could have 14 or 15 under contract like most teams. So you can add a minimum of probably $1 - 2 million more.

                        Now of course if the Raptors could trade some of that TPE for a player say like CP3 then it would probably make sense to go take the TPE and go over the luxury tax threshold.

                        The problem is that unless they know that they can absolutely make a trade for someone that can help them they wind up paying a luxury tax in 2010-11 and don't even get the benefit of having the players. On top of that if the Raptors wanted to sign someone to a full MLE for say $5.6 million it would actually cost them $11.2 million including the 100% luxury tax since they would be over the luxury tax threshold before the transaction.

                        Now this is how I understand taking a TPE for Bosh would work. However I am no NBA CBA expert and far from it to say the least. If someone else has some corrections to what I have posted I am sure we would all appreciate reading them.

                        I apologize in advance if I am totally wrong on this and wasted people's time reading it.


                        http://members.cox.net/lmcoon/salarycap.htm#Q70

                        http://raptorsrepublic.com/forums/showthread.php?t=2680
                        Actually, you might be getting it wrong. TPE have no value in regards to the cap(it is like a credit, you get from a store for returned goods to buy from that same store), it only counts against the cap if it is used to acquire players. I have been looking at NBA team salaries and I don't see any mention of TPE or "cash considerations" in the salary log imo. I might be wrong though.

                        Comment


                        • #13
                          Dave wrote: View Post
                          A traded player exception does count as a cap hold for teams who are below the cap. So when computing cap space you deduct the cap hold. For example, say the Knicks have $34 million in cap space but a TPE worth $10 million then they'd only have $24 million in cap space. A team can renounce it's rights to the TPE (same as MLE + LLE + Disable player exception) in order to free up their maximum cap space.

                          However, a TPE does not count as part of a team's end of season payroll. It does not count as a salary or towards luxury tax payments. No cap holds do.

                          Therefore, there is no downside to the Raptors having a large traded player exception.
                          Thanks for clearing that up, Dave. That makes sense.

                          Wouldn't it be funny, though, if the Raptors get a TPE in a sign and trade for Bosh and the Raptors use it to go and sign and trade for LeBron? Okay, highly unlikely, but it would be hilarious.
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                          • #14
                            smushmush wrote: View Post
                            Actually, you might be getting it wrong. TPE have no value in regards to the cap(it is like a credit, you get from a store for returned goods to buy from that same store), it only counts against the cap if it is used to acquire players. I have been looking at NBA team salaries and I don't see any mention of TPE or "cash considerations" in the salary log imo. I might be wrong though.
                            In addition, Buddhafan, click salaries on the homepage, check Orlando's salaries for more explanation. I saw the Trade Exception there, my bad.. It does have a cap hold but if you checked the cap was above $100m, yet Orlando did not pay the approx. $30m in luxury tax difference($60m in CBA terms). Rather, Orlando paid approx. $11m in luxury tax and checking the salaries shows that the luxury tax was only paid for players committed to the team financially, so I was right about the TPE only having a value when it is used to buy players.. draft picks have no value according to cba and TPEs have a cap hold but do not affect luxury tax payments, only salaries to committed players are used to calculate the luxury tax. A trade exception and draft picks might just be the best deal for the Bosh trade. Hope, the Orlando analogy helped..

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                            • #15
                              Buddahfan wrote: View Post
                              Simply put a TPE is a way for a team that is over the Salary Cap which the Raptors are to make an unbalanced trade money wise. By using what is called the TPE the team over the cap can trade a player or players away whose current annual salary (2010-11 in this case) is greater than the total salaries that they receive back. The difference would be what is called a TPE. The team could then use the TPE in a future trade to balance out a the deal.
                              I need to make a long-winded clarification on this (not just for you but anyone else who may still be confused), and hopefully it won't make it even more convoluted. =)

                              TPE, or traded player exception, is used to refer to two different things. Usually, when we say "let's S&T Bosh for a TPE", we're referring to the trade exception credit (non-simultaneous trade aspect of TPE) that the team gets for taking back less salary in a 1-for-N trade (N being any number of players). TPE is actually the mechanism that oversees any and all trades by teams over the cap. Any time a cap team makes a simultaneous trade, it can take back no more than 125% +$100k of the salaries they are trading away (there is no limit on how little you take back, however).

                              I usually call this the trade salary matching rule or simply the 125% +$100k rule so it's less confusing, but this falls under the simultaneous trade aspect of TPE. Thus, to say TPE is simply a way for a cap team to make an unbalanced trade isn't exactly correct. It's how a cap team makes ANY trade. Without this exception, no cap team can make trades, not for less, more, or even equal salary. We don't hear about it because it happens so commonly there's no reason to mention using the TPE to make the trade.

                              The goal of the non-simultaneous aspect of TPE, however, is to allow cap teams to maintain their cap flexibility when they trade ONE player away for less salary. I don't have the exact numbers off-hand (and to make the example easier I'm going to round like crazy), but let's say Toronto had a payroll/cap number of $66 mil last year and $17 mil of that is Bosh's cap hold. Let's also say the salary cap for 2010-2011 is $56 mil (won't be determined until July 7th). If Bosh walks or is traded for only draft picks (no salary), then with Bosh's $17 mil completely off the books, we are down to $49 mil, or just $7 mil in cap space (which is why, as a lot of people tend to wonder, we can't simply replace Bosh with another max FA) and no MLE. By trading Bosh by himself (you can still trade Bosh and Turkoglu together, for example, and still get a TPE but it has to be possible to divide the paperwork into two separate 1-for-N trades), the TPE allows us to essentially complete the Bosh trade on a later date as if it was one big trade and not lose the use of the amount above the salary cap. The TPE credit granted is equal to 100% +$100k of the traded player's salary (instead of 125% +$100k of a simultaneous trade).

                              Buddahfan wrote: View Post
                              Now there are two problems with this.

                              [...]

                              2. The TPE amount counts against the teams Salary Cap Hold until it either expires, one year if the original trade was a non-simultaneous trade. This means that the Raptors could wind up paying a luxury tax for 2010-11 even though they are might wind up paying actual salaries for 2010-11 of under $60 million. The luxury tax threshold for 2010-11 is now estimated to be around $68-69 million.
                              There's no need to differentiate the duration of the TPE credit between non-simultaneous and simultaneous here because you simply do not get a TPE credit in a simultaneous trade. For example, Banks and Evans for a player with 80% of their salary is a simultaneous trade because it cannot be separated into two 1-for-N trades. Also, Bosh for Amare is also necessarily a simultaneous trade (even though it fits 1-for-N) because Amare's salary exceeds the 100% +$100k limit of a non-simultaneous trade. Even if you don't intend to "complete the trade" on a later date, if you trade Bosh for less than 100% +$100k of his salary, it's still deemed a non-simultaneous trade and you WILL get a TPE credit.

                              And yes, like other people have already mentioned in this thread, while the TPE credit counts when determining whether you are above the cap (and thus, whether you will have the MLE available), it does not count as payroll for the purpose of the luxury tax. Thus, the only potential downside in a S&T are the contract obligations you receive in return, or the contract you trade for using the TPE credit, but never, ever, the TPE credit itself.

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