What are cash considerations in the NBA?

Cash considerations are often used to complete trades in the NBA. The most recent example is that of the New Orleans Pelicans, who traded their No.53 pick in the 2021 NBA Draft to the Philadelphia 76ers for a reported $2 million in cash considerations.

Sources: The 76ers sent $2 million in cash to the Pelicans for the No. 53 pick. Begins to set the rate for purchasing a pick in tonight's NBA Draft. https://t.co/ZDBvGR1y4Q
— Shams Charania (@ShamsCharania) July 29, 2021

Cash considerations in the NBA are exactly what they sound like – actual money offered to teams as part of a deal. The only difference here is that cash considerations do not count towards the recipient team's salary cap.

What are cash considerations used for in the NBA?

Cash considerations are more commonly used by NBA teams to trade draft picks or draft rights to a particular player. But they can also be used to trade for contracted players as long as the team receiving the said player has enough cap room to absorb his entire salary for that season.

Cash considerations can also be used as sweeteners in larger deals, especially in trades where the recipient team is taking on a filler contract just to match salaries.

Let's consider an example. In the summer of 2018, the Brooklyn Nets sent Timofey Mozgov, two second-round picks and cash to the Charlotte Hornets for Dwight Howard, who had an expiring contract worth $23.8 million.

Deal includes Nets sending two future second-round picks and cash to Charlotte for Howard, who has a $23.8M expiring contract. https://t.co/v4sOImIHl2
— Adrian Wojnarowski (@wojespn) June 20, 2018

Meanwhile, the Hornets received draft picks and cash as compensation for taking on Mozgov, who had roughly $32 million and two years left on his contract.

Is there a limit to how much cash can be offered?

Since the money sent as cash does not count towards a team's salary cap, a limitation was needed to prevent franchise owners with deep pockets from buying high draft picks or superstar players from other teams with direct money.

The limit is revised each year, but for the 2020-21 season, teams can send up to $5.9 million cumulatively as cash considerations in trades. Since the Philadelphia 76ers have sent a reported $2 million for the Pelicans' 53rd pick, they can only send an additional $3.9 million as cash in trades for the rest of this season.