What does sign and trade mean in the NBA and how is it used to negotiate contracts?
With the 2021 NBA Free Agency now underway, a range of free agents are expected to make moves in the next few weeks. Multiple high-profile free agents such as Kyle Lowry, Kawhi Leonard and Chris Paul are potentially available to be signed by other teams.
However, fans might have often heard about sign-and-trade deals that NBA teams enter into with respect to various prospective free agents. This allows the old team of the players involved to financially benefit from the moves and take monetary considerations or other trade assets in exchange for their outgoing free agent.
Rather than simply leaving the team as a free agent, it also makes sense for the NBA player in question to be involved in a sign and trade deal rather than a simple move as a restricted or unrestricted free agent. In this article, we look at the importance of sign-and-trade deals from the perspective of both the outgoing player, and the team that loses him eventually.
Importance of sign and trade deals in the NBA
A player is free to negotiate contracts with other teams, and move to a team of his choice if he is an unrestricted free agent. On the other hand, the original teams can match offers for their restricted free agents to re-sign them, which is the basic difference between the two types of free agencies. Regardless, free agents often choose to be involved in a sign and trade deal rather than signing for their new team directly as part of free agency.
This is because during free agency, the NBA’s salary cap rules restrict the economic value of the contract or terms that teams can offer to free agents. A sign and trade deal, on the other hand, allows teams to offer a more competitive contract. This not only allows the NBA team to profit from the trade, but also lets the player earn substantially more than he would have on a contract obtained under free agency.
Hence, a sign and trade deal in this way benefits both the player and the NBA team that initially owned him. The player’s original team is able to receive trade assets or cash considerations in return for an outgoing player who would have otherwise signed a contract in free agency, thereby leaving the team for free.
Additionally, a sign and trade deal would be beneficial for the team signing the player as well. They will be required to pay a salary in accordance with the economic value of the player, and could potentially involve other teams as well, just like in any other multi-team trade deal seen in the NBA. Hence, while sign-and-trade deals are quite rare in the NBA, they end up benefitting all the parties involved, one way or another.
The recent James Harden move to the Brooklyn Nets was one such incident that involved multiple teams in a sign and trade deal. A number of other superstars have also made use of such deals to fashion moves in recent years. This includes LeBron James and Kevin Durant, among others.
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