Traded Player Exceptions Could Net Big Return at Trade Deadline for Thunder

How Oklahoma City's trade exceptions might help the Thunder make a big splash at the trade deadline.

The Oklahoma City Thunder currently possess three traded player exceptions, or TPEs. Only two are worth discussing, though. Both were created when Derrick Favors and Ty Jerome were traded to Houston this past off-season. The two TPEs generated amount to $10.18M and $4.22M, respectively.

ESPN Sources: The Oklahoma City Thunder are trading Derrick Favors, Ty Jerome, Moe Harkless, Theo Maledon and a 2025 second-round pick via Atlanta to the Houston Rockets for David Nwaba, Sterling Brown, Trey Burke and Marquese Chriss.

— Adrian Wojnarowski (@wojespn) September 30, 2022

Here’s why those numbers matter.

A traded player exception can allow teams with payrolls exceeding the salary cap to acquire a salary without necessarily having to send salary in return. 

Oklahoma City is currently operating above the salary cap, but below the luxury tax threshold.

So, according to the NBA’s Collective Bargaining Agreement, or CBA, the Thunder could potentially acquire players making as much as $10.18M, and $4.22M this season, respectively, while sending nothing, or very little, in return.

But there’s just one problem. The Thunder have a fully loaded roster and don’t have any openings to bring anyone in, let alone two players, to make that theory a reality.

This is where things get a bit complicated. Since the Thunder need a roster spot to acquire a player, someone would have to be traded away, or waived, to make room to fully utilize their TPE(s) at the deadline. And that’s not easy because the Thunder really like a lot of their players.

But, if the right opportunity presents itself, such as a juicy James Wiseman deal or another high-potential draft asset, the Thunder could be persuaded to part ways with one or two of their guys.

In their current position, the Thunder are far from the worst team in the league, but they also aren’t contenders. They are patiently rebuilding their franchise from the ground up and waiting for just the right moment to push their chips all in. Now does not appear to be that time.

So, in the meantime, the Thunder can take advantage of their TPEs by offering relief to teams looking to reduce their luxury tax bill. Some teams are willing to pay in the form of picks and/or prospects to do just that.

There are 10 franchises that are currently spending above the luxury tax threshold this season, too. And for every dollar spent above the threshold, owners have to pay a multiplier. For example, they might have to pay two dollars for every one dollar spent. And the more teams spend, the higher the multiplier.

Things can get really expensive and quick, too.

For example, the Golden State Warriors’ payroll is about $39.2M above the threshold. But their estimated bill is a whopping $170M - a league high. If you do the math, they are being taxed approximately $4.34 for every dollar spent over the luxury tax threshold.

Even billionaires don’t want to get taxed that hard.

Warriors GM uncertain about potential tax bill: We'll 'take it year-to-year.' https://t.co/wvcHXL8qcS pic.twitter.com/VkvxReogpH

— theScore (@theScore) October 17, 2022

But, let’s say the Warriors were to trade away $6.0 million in salary. That would save them approximately $26.4M in taxes. A worthwhile move for a team if it doesn’t significantly hurt their chances at a title, or if they just want to reduce their spending.

The Thunder have few trade candidates this season, but anything can happen if the right opportunity presents itself. One player that might find himself on the trade block soon is fourth-year forward Darius Bazley.

Bazley is in the final year of his rookie deal and hasn’t been getting much playing time. And when he does, his play has been the epitome of up-and-down.

Another candidate is Mike Muscala.

While the 31-year-old veteran has been the ultimate professional and a great locker room presence, by all accounts, and has helped a young Thunder team with his floor-spacing ability, it’s difficult to see him as a long-term fixture given the timeline of the rebuild.

Bazley’s salary alone would give the Thunder just $7,563,100 in salary-matching power. And Muscala’s would give just $6,225,000. That doesn’t generate a whole lot of room for taxpayers to cut their payrolls, since after acquiring one or the other, they’d only be saving about $3M-to-$4M.

But due to the TPE generated in the Favors-to-Houston deal, the Thunder just might find an opportunity worth cutting, or trading, one or the other and using their $10.183M trade exception to leverage a tax-laden franchise into giving up a valuable asset or two.

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