NBA Sign-and-Trade: How It Works, the Rules and the Limits
How an NBA sign-and-trade works: the three- or four-year contract, the first-apron hard cap on the receiving team, and why the move is rarer than it was.
By CricketTaken EditorialPublished NBA Season, Playoffs & Draft26 min read
- Contract length
- 3 or 4 seasons
- Maximum annual raise
- 5%
- Hard cap on the receiving team
- First apron
- Window closes
- Start of the regular season
Kevin Durant had the right to walk out of Golden State in July 2019 and sign with Brooklyn, and the Nets had the cap room to take him without asking anyone's permission. The Warriors ended up with D'Angelo Russell anyway. Durant signed his new contract with Golden State on paper, was traded to Brooklyn in the same transaction, and Russell came back the other way by the identical route. Two free agents changed teams and neither was ever really a free-agent signing.
That is an NBA sign-and-trade. A free agent signs a new contract with the team he just finished the season with and is traded immediately, so a club with no cap room can still land him and the club losing him gets something back. The collective bargaining agreement between the National Basketball Association and the players' union allows it only under tight conditions. The contract must run three or four seasons with the first year guaranteed. Raises are held to 5 percent. The deal has to be done in the offseason. And the team receiving the player is hard-capped at the first apron for the rest of that league year, which also means a team already above that line cannot use the move at all.
What an NBA sign-and-trade is, in one move
The phrase describes the order of events exactly. First the signing, then the trade, with no gap between them.
On the league's books it is a single transaction with two parts that depend on each other. The player's old team signs him to a new contract, using whatever rights it holds to exceed the cap for its own free agents. The same paperwork sends that contract to another team. If the trade half falls through, the signing half does not stand: the contract is conditional on the trade and never exists apart from it. A team cannot be left holding a deal it only wrote for someone else.
Three parties have to say yes. The player must sign. The old team must agree to sign him and send him on. The new team must agree to what it gives up. Any one of them can stop it, and the destination team cannot simply be chosen by the two clubs, because the player's signature comes first.
- Free agency opensThe player and the team he wants to join agree on a contract the new team cannot fit under the cap by signing him directly.
- The old team is brought inThe new team and the player's previous team negotiate what comes back: players, draft picks, a trade exception or some mix.
- Salary checkThe league's trade rules are applied to both sides. The receiving team must finish below the first apron.
- Moratorium endsOnce the July moratorium lifts, the player signs a three- or four-year contract with his old team.
- Trade executedIn the same transaction the new contract is traded. The league approves both halves together.
- Hard cap beginsFrom that moment the receiving team cannot exceed the first apron until the league year ends on June 30.
The sequence under the NBA collective bargaining agreement. The signing and the trade are one transaction and each is conditional on the other.
The move is easy to confuse with something simpler. A player who re-signs with his team in July and is traded the following February has not been signed-and-traded. He was signed, and later he was traded, and a different set of waiting periods applied in between. The distinction matters because only the true sign-and-trade carries the contract limits and the hard cap described below.
Why the sign-and-trade exists: rights a new team does not hold
Start with the problem it solves. The NBA has a soft cap, and the softest part of it is the set of exceptions that let a team go over the cap to keep its own players. Hold a player for three seasons and his team acquires full Bird rights, which allow it to re-sign him for anything up to his maximum salary no matter how far over the cap it already is. A rival has no such right. To sign another team's free agent, a club needs cap room or one of the mid-level exceptions, and the mid-level is worth a small part of a star's salary.
So every July there are players whose market value is far above the mid-level exception, and teams that want them and can legally offer no more than the mid-level. The sign-and-trade borrows the old team's rights to close the gap. The old team does the signing, which only it can do at that price, and the new team takes the contract by trade, which the trade rules allow as long as enough salary goes back or is absorbed some other way.
Each side wants something different out of it.
| Party | What it gets | What it gives |
|---|---|---|
| The player | A bigger contract than his new team could offer with an exception, at the destination he chose | A fifth year and larger raises he could have had by staying |
| The old team | Players, draft picks or a trade exception in place of nothing | Its cooperation, and sometimes a pick of its own to make the numbers work |
| The new team | A free agent it had no cap room to sign | Assets, matching salary and a hard cap for the rest of the year |
| A third or fourth team | Draft picks or cash for absorbing a contract nobody else can fit | Cap room or a trade exception |
The old team's position is the one fans find hardest to accept. Why help a player leave? Because he is leaving regardless. If he is good enough that some club with cap room will sign him outright, refusing to cooperate means watching him go for no return. A trade exception and a second-round pick are not much. They are more than nothing, and front offices that let a star walk for nothing tend not to keep their jobs.
There is leverage on the other side too. When the destination has no cap room, the old team knows the player cannot get there without it, and it can ask a real price. The whole negotiation turns on that one question, and our explainer on how NBA free agency works sets out which teams hold which rights when the market opens.
The contract conditions: three or four seasons and a guaranteed first year
The agreement lists what a sign-and-trade contract must look like, and every item has to be satisfied at once.
- 3Minimum seasons
- 4Maximum seasons
- 5Maximum annual raise, percent of first-year salary
- 1Seasons that must be fully guaranteed
Fixed conditions under the 2023 collective bargaining agreement. Salary amounts are not shown because they change with the cap each season.
Length. At least three seasons and no more than four. The floor is there to stop a one-year contract being used as a disposable trade chip; the ceiling keeps the fifth year as a privilege of staying put.
Guarantee. The first season must be fully guaranteed. The later ones need not be. That gap is used constantly. A team that wants a role player's salary mainly as ballast in a larger trade can sign him to a three-year deal in which only the first year is protected, and the receiving team can waive him after one season at no cost. Technically it is a three-year contract. In practice it is one year with a pair of team-friendly decisions attached.
Raises. No more than 5 percent of the first-year salary per season, the same limit that applies to any player signing with a new team. The 8 percent raises available to a player re-signing with full Bird rights do not travel with him.
Starting salary. Anything up to the player's ordinary maximum. What he cannot receive through a sign-and-trade is a designated veteran contract, the higher-tier "supermax" reserved for stars who stay with the team that developed them.
The players who do not qualify
The player must have finished the previous season on the roster of the team signing him. That sentence was added in 2011 to end a farce. In February 2008 Dallas needed outgoing salary to complete a trade for Jason Kidd, so it signed Keith Van Horn, who had not played an NBA game in nearly two years, and sent the contract to New Jersey. Van Horn was paid several million dollars to be an accounting entry. The Lakers had done something similar with Aaron McKie weeks earlier in the Pau Gasol trade. Both were legal then. Neither would be now.
A restricted free agent who has already signed an offer sheet with another team cannot be signed-and-traded, because the offer sheet starts a matching process with rules of its own. Before any offer sheet is signed, a restricted free agent is eligible, and both Russell in 2019 and Lonzo Ball in 2021 moved that way.
The contract also cannot be signed using the non-taxpayer mid-level exception or the mid-level exception reserved for teams with cap room.
The hard cap a sign-and-trade triggers
Most NBA spending limits bend. A hard cap does not.
A team that acquires a player by sign-and-trade may not have a payroll above the first apron at any moment from the completion of the trade until June 30. The first apron is a line set each summer several million dollars above the luxury-tax threshold. For a hard-capped team it stops being a threshold with penalties and becomes a wall. No signing, no trade, no waiver claim can take the team over it, and there is no exception for injuries, no matter how many.
The 2019 Warriors learned how literal that is. Taking Russell by sign-and-trade hard-capped them the instant the deal went through, and their payroll with Russell on it was over the line. Something had to go before the transaction could be completed. It was Andre Iguodala, the Finals MVP of four years earlier, traded to Memphis with a first-round pick attached as payment for taking his salary. Golden State then spent the season with little room left beneath the apron.
Miami took on the same ceiling that summer when it acquired Jimmy Butler by sign-and-trade, and every later move the Heat made that season had to fit beneath it.
What the ceiling does to the rest of the league year
The effects are easy to underestimate in July.
A hard-capped team cannot take back more salary in a February trade than its room under the apron allows, whatever the ordinary matching rules would permit. It may be unable to sign a 15th player. It may have to pass on a veteran released in February, a market described in our guide to NBA buyouts. If three players are hurt in January and the payroll is $200,000 under the line, the replacement has to cost less than $200,000 for what is left of the season.
Bonuses count as well. Incentives in player contracts that are judged unlikely to be earned are still included for hard-cap purposes, since the team must be under the apron even if every one of them is paid.
One protection exists for teams. The trigger applies to the club that receives the signed-and-traded player. The club that signs him and sends him away has not acquired anybody by sign-and-trade and is not capped by that half of the deal. In a double swap like the Durant and Russell exchange, each team is a receiver and each is capped.
Why teams already above the first apron are shut out
The hard cap has an obvious corollary. If acquiring a player by sign-and-trade means a team cannot be above the first apron afterward, then a team that would still be above it once the deal is done cannot make the deal.
That is the rule. A club over the first apron is not forbidden from talking, but it has to finish the transaction below the line, counting the incoming contract. For a team a few million over, that means sending out more salary than it takes in. For a team $20 million over, it is close to impossible without gutting the roster.
The restriction is older than the word "apron" in its current sense. The 2011 collective bargaining agreement introduced it, with the line then set $4 million above the tax threshold. The 2023 agreement kept the rule, renamed the line the first apron and added a second, harsher tier above it.
Consider which teams this removes from the market. The clubs above the first apron are almost always the ones with two or three maximum contracts already on the books. They were the teams that used the sign-and-trade in its early years to add one more star. They are now the teams that cannot. The move has become a tool for the middle of the league: clubs over the cap, so unable to sign a free agent outright, but far enough below the apron to absorb him and live with the ceiling.
The second apron reaches the other side of the transaction. A team that uses a departing sign-and-trade player's salary to take back another contract is hard-capped at the second apron for the rest of the league year, so a team above that higher line cannot do it. It can still sign its departing free agent and trade him for draft picks, but it cannot use him to bring in another contract. Before 2023 an expensive team losing a free agent could at least convert him into a different player. For the most expensive teams that option has gone, and our explainer on the second apron covers the remaining restrictions at that level.
Base-year compensation: why so many sign-and-trades needed a third team
For most of the sign-and-trade's history the arithmetic was strange, and the strangeness was deliberate. The rule responsible no longer exists, but it explains why the transaction reports of the 2010s list so many teams.
In an ordinary trade a player's salary counts the same for both teams. Send out a $20 million contract and it is $20 million leaving one cap sheet and $20 million arriving on another. The trade rules then limit how much more a team over the cap can take back than it sends out.
Under the agreements in force before 2023, a rule called base-year compensation broke that symmetry whenever a re-signed player got a big raise. If the old team was over the cap, re-signed him using Bird or early Bird rights and gave him a raise of more than 20 percent, then for a period after the signing his outgoing salary counted, for the old team, as the greater of two numbers: his previous salary, or half of his new one. For the receiving team the incoming salary was the full new figure. A sign-and-trade fell inside that period by definition.
The purpose was to block a trick. Without the rule, a team could hand a departing role player an inflated contract purely so that his salary would match a star coming back, creating trade capacity out of nothing. Counting him at half removed the incentive.
The side effect was a mismatch that two teams often could not solve alone. In the example, the new team is taking in $24 million and, being over the cap, has to send out enough salary to make that legal. The old team is sending out only $12 million in the eyes of the rules, so the amount it is allowed to take back is based on the smaller figure. The package that satisfied the buyer was frequently too large for the seller to accept.
Enter the third team. A club with cap room or a large trade exception absorbed the surplus contract, and was paid for the service with a second-round pick or cash. Butler's move to Miami in 2019, which needed four teams, is the standard example of a deal shaped this way.
The 2023 agreement dropped base-year compensation. A sign-and-trade contract now counts at its full first-year salary on both sides of the trade. Third and fourth teams still appear, for other reasons: the receiving team has to finish below the first apron, both sides still have to satisfy the ordinary matching bands, and a sending team that takes back salary for the player is held under the second apron, as the previous section described. Each extra participant is there to make a number fit. The ordinary matching bands are explained in our guide to NBA trade rules.
The old team can still come away with something even when it takes back no player. If it receives less salary than it sends out, the difference becomes a trade exception it can use for up to a year, although using an exception created by a sign-and-trade also brings the second-apron ceiling with it.
What the player gives up: four years instead of five, 5 percent instead of 8
A player who could have re-signed with full Bird rights and chooses a sign-and-trade is accepting a shorter, flatter contract. The cost is easy to work through.
Take an invented player whose first-year salary will be $30 million either way. Re-signing, he can have five seasons with raises of 8 percent of that first-year figure, which is $2.4 million a year. In a sign-and-trade he can have four seasons with raises of 5 percent, or $1.5 million a year.
Add the columns. The five-year deal totals $174 million. The four-year sign-and-trade totals $129 million. Over the four seasons both contracts cover, the gap is $5.4 million, which is the price of the smaller raises. The other $39.6 million is the fifth year.
How much that fifth year is really worth depends on the player. A 27-year-old expects to sign another large contract when the four years are up, so for him the missing season is deferred, not lost, and he may even do better if the cap has risen. A 32-year-old is giving up a guaranteed season at an age when nobody else will guarantee it. That is why sign-and-trades skew toward players in their prime and toward role players for whom a fifth year was never on offer.
One comparison deserves a plain statement, because it is often misreported. The sign-and-trade contract is no better than what a team with cap room could give the same player by signing him directly: four years, 5 percent raises. Since 2011 the move has not let a player take his old team's richer terms with him. Its only advantage over an outright signing is that it works when the new team has no room.
The timing window: after the July moratorium, before opening night
Sign-and-trades live in a window of about three and a half months, and nearly all of them happen in the first week of it.
The league year turns over on July 1. Teams and free agents are allowed to negotiate from the evening before, and since 2024 a team has been able to talk to its own free agents earlier still, from the day after the Finals. For the first several days of July a moratorium is in force, during which deals can be agreed but most cannot be signed. The agreement fixes its end at noon Eastern on July 6. A sign-and-trade needs both a signature and a trade call, so it becomes official only after that.
The other end of the window is the first day of the regular season. A sign-and-trade must be completed before it. Once the season starts, an unsigned free agent can still sign with his old team, but he cannot be traded in the same breath. He would be subject to the usual waiting period for newly signed players, which for most summer signings runs to December 15 and for some who re-signed for large raises to January 15. Those dates, and what they do to the winter market, are covered in our guide to how the NBA trade deadline works.
The in-season ban is another product of the Van Horn episode. Before 2011, a team could sign-and-trade its own long-dormant free agents in February to manufacture matching salary at the deadline. Restricting the move to the offseason, and to players who finished the last season on the roster, closed both halves of that loophole.
Why the rush on July 6? Because cap room and exceptions are used up in the first days of free agency, and a sign-and-trade usually has to be fitted together with a team's other moves. The order in which a club completes its transactions can decide whether they are all legal. Front offices sequence them deliberately: use the cap room first, then execute the sign-and-trade as an over-the-cap team, or the reverse.
A player acquired this way generally cannot be traded again right away. The new contract carries the standard restriction on recently signed free agents, so the receiving team is committed to him until at least mid-December. Golden State held Russell under that restriction, then sent him to Minnesota at the 2020 deadline.
Sign-and-trade vs. extend-and-trade vs. opt-in-and-trade
A team that wants another club's player on a long contract has three routes. They reach the same place under different limits.
The sign-and-trade applies to a player who is a free agent. It is what this page has described.
The extend-and-trade applies to a player still under contract. He signs an extension with his current team and is traded together with it, or signs the extension with his new team shortly after arriving. The agreement limits such extensions more tightly than ordinary ones, in total years and in the size of the raises, for the same reason it limits sign-and-trades: the richest terms are meant to reward staying. The 2023 agreement loosened the length limit: from the 2024-25 league year an extension signed as part of a trade can cover up to four seasons from the day it is signed, up from three, against the five a standard veteran extension can now cover. A player who wants the full extension can have it by waiting six months after the trade. Jrue Holiday did exactly that in Boston, traded there shortly before the 2023-24 season and extended the following April.
The opt-in-and-trade applies to a player holding an option on the final year of his contract. He exercises it, which keeps him under contract for one more season, and is traded as an ordinary player on an ordinary deal. No new contract is signed, so none of the sign-and-trade conditions apply, and his Bird rights travel with him to the new team, which can then offer him five years the next summer. The difference between option types is explained in our guide to player options and team options.
| Question | Sign-and-trade | Extend-and-trade | Opt-in-and-trade |
|---|---|---|---|
| Player's status | Free agent | Under contract | Under contract with an option year |
| New contract signed | Yes, three or four seasons | An extension, with tighter limits than usual | None; the option year is exercised |
| Hard cap on the receiving team | Yes, at the first apron | No | No |
| Open to teams above the first apron | No | Yes, if salaries match | Yes, if salaries match |
| When it can happen | July to the start of the season | Whenever trades are allowed | Option exercised by its deadline, then traded whenever trades are allowed |
| Longest future commitment | Four seasons | Four seasons from the extension date | One season, then full Bird rights |
The third column is the one that has grown since 2023. Chris Paul used it in 2017, opting in with the Clippers so that Houston could trade for him, at a cost of seven players and a first-round pick. James Harden opted in with Philadelphia in 2023 for the same purpose and was eventually moved to the Clippers. Kristaps Porzingis picked up his option that summer to make a trade to Boston possible, then signed an extension there.
The appeal to a team near the apron is plain from the table. No hard cap. The catch is that the player has to hold an option in the first place, and he has to accept one more year at his old salary before he gets paid.
The deals that defined the sign-and-trade
| Year | Player | From | To | Why it mattered |
|---|---|---|---|---|
| 2010 | LeBron James | Cleveland | Miami | Six-year contract under the old rules; Cleveland received draft picks and a trade exception |
| 2010 | Chris Bosh | Toronto | Miami | Same structure, same week |
| 2012 | Steve Nash | Phoenix | L.A. Lakers | Four draft picks went to a division rival |
| 2019 | Kevin Durant | Golden State | Brooklyn | One half of a double sign-and-trade |
| 2019 | D'Angelo Russell | Brooklyn | Golden State | Hard-capped the Warriors and cost them Iguodala |
| 2019 | Jimmy Butler | Philadelphia | Miami | Four teams needed to make the salaries fit |
| 2021 | Kyle Lowry | Toronto | Miami | The league later took a second-round pick from Miami over the timing of talks |
| 2024 | Klay Thompson | Golden State | Dallas | Part of the league's first six-team trade |
Miami, July 2010
Miami had cleared enough cap room to sign James and Bosh outright. It did not need Cleveland or Toronto. The sign-and-trades happened because, under the agreement then in force, a signed-and-traded player could receive the full contract his old team was entitled to offer: six seasons with raises above 10 percent, against five seasons and smaller raises on the open market. Each player took a little less than the maximum in the first year so that the roster would fit, and got the sixth year in exchange.
Cleveland and Toronto each received first-round picks and a large trade exception for players who were leaving anyway. Miami gave up draft capital it did not expect to need. Everyone in the transaction came out ahead of the alternative, which is the definition of a sign-and-trade that works, and the rest of the league decided it never wanted to see one like it again.
The 2019 double
Durant's move to Brooklyn did not require Golden State. The Warriors made themselves part of it by offering the Nets a protected first-round pick to do the deal as a sign-and-trade, which allowed Russell, a restricted free agent Brooklyn was letting go, to come back the same way. Golden State had no cap room and could not have signed Russell otherwise.
The Warriors did not especially want Russell as a player. They wanted a $27 million contract in place of an empty roster slot, because a contract can be traded and an empty slot cannot. Seven months later Russell went to Minnesota for Andrew Wiggins and a first-round pick that became Jonathan Kuminga. Wiggins started on the 2022 championship team. A departing star had been converted, in two steps, into pieces of the next title.
The multi-team era
Since then the typical sign-and-trade has been smaller in talent and larger in participants. Butler's move to Miami took four teams. Thompson's to Dallas in 2024 took six, a league record at the time. A seven-team trade built around Durant's move to Houston in July 2025 then broke that record. The star power has gone down and the team count has gone up, for reasons the old base-year rule and the aprons explain between them.
The 2021 offseason added a different kind of footnote. Lowry's deal to Miami and Ball's to Chicago were both announced so soon after free agency opened that the league investigated when the talks had begun, and each acquiring team was docked a second-round pick. A sign-and-trade has more moving parts than a signing, and it is harder to pretend one was assembled in an hour.
How the 2011 and 2023 labor agreements narrowed the tool
Each round of collective bargaining since Miami has taken something away.
| Agreement | Longest sign-and-trade contract | Raises allowed | What else changed |
|---|---|---|---|
| 2005 | Six seasons | Same as a player re-signing with Bird rights | In-season sign-and-trades of long-inactive free agents were legal |
| 2011 | Four seasons | 4.5 percent, the rate for a player changing teams | Player must have finished last season on the roster; offseason only; teams that would finish above the apron barred |
| 2017 | Four seasons | 5 percent | Limits carried forward; the apron moved to $6 million above the tax line |
| 2023 | Four seasons | 5 percent | First apron confirmed as the hard cap; taking back salary for a player signed-and-traded away brings a second-apron hard cap; base-year compensation removed |
The 2011 changes were the decisive ones. Before them the sign-and-trade let a star leave and keep his old team's contract terms, which removed most of the home team's advantage in free agency. After them, the departing player gets the same four years and the same raises that any outside team could offer. The league's owners had spent the 2011 lockout arguing that stars were collecting on a single roster too easily, and this was one of the concrete results.
The 2023 agreement did less to the sign-and-trade itself and more to the teams around it. By loading restrictions onto both aprons, it shrank the number of clubs that can afford to trigger a hard cap, and it removed the outgoing half of the move from the most expensive teams. Its one direct change to the contract arithmetic, dropping base-year compensation, made the deals simpler to balance.
What is left is a narrower tool with four regular uses. A team losing a free agent uses it to recover a pick or a trade exception. A team over the cap but under the apron uses it to add a free agent priced above the mid-level, as Sacramento did with DeMar DeRozan in 2024. A team assembling a bigger trade uses a lightly guaranteed sign-and-trade contract as matching salary. And a restricted free agent's team uses it to get a return for a player it has decided not to pay.
Football offers a rough parallel in the tag-and-trade, in which an NFL club applies the franchise tag to a player it means to deal. The mechanics differ in almost every respect, and our guide to how NFL free agency works covers them. The instinct is the same one: do not lose a player for nothing.
How to read a transaction report for a sign-and-trade
The official announcement usually says it outright, in a phrase such as "acquired via sign-and-trade." When it does not, the contract gives it away.
Check the length. A free agent who arrives by trade on the day he signs, on a deal of exactly three or four seasons, was signed-and-traded. No other route produces that combination.
Check the guarantees. Three years with only the first protected is the signature of a contract written to be salary ballast. Four fully guaranteed years means the player was the point of the trade.
Count the teams. Three or more usually signals a salary-matching or apron problem being solved, and the extra club will have received a second-round pick or cash for its trouble. Draft picks are the standard payment, and how they are valued is covered in our guide to how the NBA draft works.
Look for a trade exception on the old team's side. If the departing player's club took back little or no salary, it now holds an exception good for a year. That is often what it wanted from the deal.
Then turn to the receiving team and read the next year of its calendar from the transaction.
It is hard-capped at the first apron until June 30. Every later report about that team, a trade rumor in January or a free agent linked to it in February, has to be tested against the room it has left under that line. A club reported to be "$1.2 million below the apron" can add exactly that much and no more.
It probably cannot trade the player before mid-December.
And it has used the move to commit three or four seasons of salary to one player without having had cap room, which tells you where it stands. Teams with room sign free agents. Teams above the apron cannot do this at all. A club that completes a sign-and-trade is announcing that it sits in the band between the two, good enough to spend and not yet too expensive to maneuver, and that it was willing to accept a hard ceiling for a year to add one more player. More guides to the rules behind American leagues are collected on our United States hub.