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What is a trade exception?

by Darnell Mayberry Modified: July 11, 2013 at 11:20 pm •  Published: July 11, 2013

The Thunder has completed a trade.

It’s one that has been in the works since the start of free agency.

It’s a three-team deal in which the Thunder signed and immediately traded Kevin Martin to Minnesota along with cash in exchange for a trade exception. As part of the deal, Minnesota sent Luke Ridnour and cash to Milwaukee, and the Bucks sent the draft rights of Szymon Szewczyk to OKC.

For Oklahoma City, the deal allowed the Thunder to get something back for Martin rather than watching him walk for nothing as an unrestricted free agent.

At this point, you’re probably wondering what is a trade exception. Here’s a quick explanation.

A trade exception is a valuable tool that offers teams that are over the salary cap an opportunity to make a future trade without having to match salaries. The value of the trade exception the Thunder received is $6.6 million and expires July 11, 2014.

Trade exceptions can be used only to acquire players via trade, not as free agent signings (although they can be used to acquire another team’s free agent in a sign-and-trade). Trade exceptions cannot be combined with other exceptions such as the mid-level exception.

So how does a trade exception work?

The most notable example of how a trade exception can be used can be seen in a pair of deals Thunder general manager Sam Presti pulled off while in Seattle in 2007.

Presti orchestrated a sign-and-trade with Orlando that sent Rashard Lewis to the Magic. In return, the then-Sonics received only a future second-round pick and a $9.3 million trade exception.

One week after Lewis joined Orlando, Presti then used much of the trade exception (you don’t have to use all of a trade exception at once) to acquire veteran center Kurt Thomas from Phoenix along with first-round picks in 2008 and 2010.

The 2008 selection turned into Serge Ibaka. The 2010 selection ultimately was packaged along with another pick and became Cole Aldrich.

-DM-

by Darnell Mayberry
OKC Thunder Senior Reporter
Darnell Mayberry grew up in Langston, Okla. and is now in his third stint in the Sooner state. After a year and a half at Bishop McGuinness High, he finished his prep years in Falls Church, Va., before graduating from Norfolk State University in...
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