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joec32033
Posts: 30632
Alba Posts: 37
Joined: 2/3/2004
Member: #583
USA
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Found it:
76. Can a free agent be signed and immediately traded?
Under no circumstances can a team sign and then trade another team's free agent. But there is a rule that allows teams to re-sign their own free agents for trading purposes, called the sign-and-trade rule. Under the sign-and-trade rule, the player is re-signed and immediately traded to another team. This is done by adding a clause to the contract which stipulates that the contract is invalid if the player's rights are not traded to the specific team within 48 hours.
A sign-and-trade deal can be made even with players who have been renounced, but cannot be made when the player is signed using the Mid-Level, Bi-Annual or Disabled Player exceptions. Sign-and-trade contracts must be for three years or longer, but only the first season of the contract must be guaranteed. The three year minimum (even though the last two seasons may be non-guaranteed) ensures that the new team will not acquire Bird rights to the player any sooner than if they had signed him directly, because if they want to give him a new contract using Bird rights then they have to waive him first, which resets the Bird clock.
One complication with sign-and-trade deals is that the signed player can immediately become a BYC player (see question number 73 for more information on BYC), so the player's BYC value must be used when determining whether the trade is allowed.
If a sign-and-trade contract contains a signing bonus, then either team can pay it. By default the team that signs the player pays the signing bonus (as with any other contract), but since a sign-and-trade is in essence a contract with the receiving team, the teams can agree that the receiving team will pay it. However, any portion that is paid by the signing team counts toward the $3 million limit for cash included in a trade (which in effect limits the portion of a signing bonus that can be paid by the signing team to $3 million).
If a sign-and-trade contract contains a trade bonus, then the bonus is not earned upon the trade that accompanies the signing, but rather on the first subsequent trade.
See question number 80 for more information on how long a team must wait after signing a contract before they can trade a player.
77. Can a team sign a player using the sign-and-trade rule and then say, "Ha ha, we fooled you. We're not trading you!"?
No. A sign-and-trade is treated like a single, atomic transaction, not two separate transactions between which one party can change its mind. The sign-and-trade clause makes the contract invalid if a trade to the specified team does not take place within 48 hours.
78. Why would teams or players want to do a sign-and-trade?
Teams benefit because it allows them to get something in return for players they would otherwise lose to free agency. Players benefit because they can get a richer contract, and/or play for a team that is over the salary cap and otherwise wouldn't be able to afford them. Unlike the new team, the player's original team can use the various Bird exceptions (as long as the player qualifies) to sign the player without regard to the cap. Also, if the player's original team has full Bird rights, they can offer the player larger raises (10.5%, as opposed to 8%) and more seasons (six, as opposed to five -- see question number 46 for more information).
So sign-and-trade is a useful tool for teams that are capped-out and unable to offer players large contracts.
http://members.cox.net/lmcoon/salarycap.htm#67
~You can't run from who you are.~
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7/18/2006 10:11 AM