How do trades work in sports?

Dear Sports Fan,

I was watching Moneyball with my husband. We were curious how trading works in various sports. Can you explain the rules and how they are implemented. For example why do trades happen in the middle of the season for some sports, but not others?


Dear Sarah,

At it’s heart, Moneyball is a story about how careful analytical thought can provide an organization an advantage over its competitors. The team at the center of the story, the Oakland Athletics baseball team, exploited its competition mostly by making unexpectedly smart personnel decisions. In any sports league, teams have three main ways of acquiring players: by drafting players not yet in the league, by signing players who are free agents, and by trading for players. As you pointed out in your question, trades work a little differently in each major sports league in the United States. While an explanation of the exact rules in each league could easily give even the most long-winded Russian novelist a run for her money, I’ll try to lay out a few of the major differences in a few mercifully brief paragraphs below.

Hard Cap, Soft Cap, or No Cap?

One of the biggest factors affecting how players are traded in a sports league is the salary cap structure. A salary cap is a value, set before the season, against which the aggregated salaries of all the players on a team are compared to. In leagues with a hard salary cap, like the National Football League (NFL) and National Hockey League (NHL), teams are (with very, very few exceptions) not allowed to exceed this value. In leagues with a soft salary cap, like the National Basketball League (NBA) there are a host of ways that teams can exceed the value set by the salary cap. Depending on how a team manages to exceed it, they may be assigned a financial penalty but not one that hurts them on the court. Some leagues, primarily Major League Baseball (MLB), have no salary cap. In baseball, teams can pay their players as much or as little as they choose and the market will bear.

These rules have a deep impact on the trading culture of the leagues. Having a hard cap restricts the possible trades teams can make. Any potential trade that would put a team over the salary cap is a non-starter. Having no cap, like in the MLB, means that teams are free to trade players pretty much however they want. The in between world of the soft capped NBA is perhaps the most interesting. NBA trades are often more about finances than they are about basketball players. Because teams are constantly in the process of manipulating their payroll in order to position themselves best within the complicated world of soft-cap exceptions, you’ll often see basketball trades that, if you don’t understand the financial and cap implications of them, seem totally crazy. For instance, one team might seem to give a player to another team for virtually (and sometimes literally) nothing. Or a team might send a good player to a team for a player who has had a career ending injury. In those cases, what the team is getting back is not the injured player or nothing, but some element of financial flexibility.

To trade a draft pick or not?

In all four major U.S. sports leagues, there are entry drafts each year where teams get to take turns choosing players who aren’t in the league yet. In all but one, teams can and often do trade their right to choose in a future year’s draft to another team. The one league where that is (again, basically) not allowed is the MLB. Teams in the other three leagues often get themselves in trouble by mortgaging their future for their present by trading a lot of their future draft picks away. One entertaining aspect of trading draft picks is that the order during drafts is set (more or less) by how teams did in the previous season. The worse a team does, the more likely they are to have a high pick in the upcoming draft. If the team you root for has another team’s draft pick, it’s order is still set by how that team performs, so a good fan will root against that team all year to optimize the chance of its draft pick being a good one.

Do the players get a say?

This all seems fine and dandy until you stop and think about players and their families who can get uprooted at any moment and forced to move to another city. This is definitely part of the business of sports and most players don’t have much control over their careers in this way. There are a couple major exceptions. When a player negotiates his or her contract, they can negotiate a full or partial no-trade clause. A no-trade clause, sometimes abbreviated as a NTR means that a player does have some say over whether and where they get traded. A partial no-trade clause means a player has to maintain a list of some number of teams they would be willing to be traded to. A full no-trade clause means they have complete veto power over any trade. Usually only veteran or star players have the clout to negotiate these clauses into their contracts. In the MLB, players who have played for 10 years and have been with their current team for five consecutive years are automatically given no-trade clauses. This is called the 5/10 rule.

How does the sport itself affect trading?

The final major factor that goes into defining the trading culture of a league is how easy it is for players to switch teams mid-season. You mentioned in your question that some leagues don’t seem to have mid-season trades. That’s only partially true. All leagues allow for mid-season trades (at least before a trade deadline) but there is one league where they rarely ever happen. That league is the NFL. This is mostly because football is so complicated and so reliant on the close-to-perfect collaboration of lots of interconnected parts. It’s really difficult for a player from one team to move over to another team in the middle of the season, learn their plays and their terminology, and make a difference to the team’s fortunes that season. Compare that to the NBA where teams often run similar plays and the individual talent of one player (of the five on the court at one time compared to the 11 in football) can make an enormous and immediate impact. NFL trades are rare. NBA trades are quite common.

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Like I said, trading is such a complicated business in sports that a post about how it works from league to league could easily morph into an unreadably long essay. I think this is a good stopping point for today. These four factors probably account for the majority of the trading differences within the four major U.S. sports leagues.

Thanks for reading and questioning,
Ezra Fischer

What is a trade deadline?

Dear Sports Fan,

I’ve seen a lot of articles over the last day or two about the NBA trade deadline. What is a trade deadline? Why do sports leagues have them?


Dear Anne,

It’s hard to define what a trade deadline is without using the words trade or deadline! The trade deadline is a particular date and time after which teams in a professional sports league cannot agree to exchange players or draft picks with other teams. It’s exact date varies by league and by year but each sport has a standard for when it falls in their calendar — half-way through, three-quarters of the way through, etc. It’s an exciting time for sports fans, because, like the day of the draft, it’s a time when fans of every team in the league can be feel hope.

The NBA trade deadline in 2015 is on February 19 at 3 p.m. ET. By this date, most teams will have played between 52 and 55 of their 82 game seasons. They are around two-thirds of the way through the season. The NHL trade deadline this year is on March 2, also at 3 p.m. ET. By then, teams will have played 63 to 67 of their 82 game season. That’s a little farther along — more like 77-82% of the way through the season. On the other end of the spectrum is the NFL, which places its trade deadline right after week eight of 17 or 47% of the way through. What’s the impact of this choice? Well, teams usually decide to be more of a “buyer” meaning they are willing to sacrifice future prospects for players that would be of use this season, or “sellers” meaning they are willing to trade the present for the future, based on how well they’re doing each year. The later a trade deadline falls within a league calendar, the more sure teams will be of their chances to win a championship this season and therefore which role they should play in trades. A later trade deadline creates more and more impactful trades.

Aside from tradition, it’s not entirely clear why teams are not allowed to trade players year-round. I think there is a sense that should be cohesive units before the playoffs begin. During the playoffs, the intensity of emotion and physicality of sports increases. Team allegiance starts to feel more like a matter of identity than choice. Having unfamiliar players on your team at the start of the playoffs or even seeing players move from team to team during the playoffs would break the spell. There’s also the question of competitive balance. Teams might be willing to sacrifice a lot of their future assets on the last day of the season if they were in a position to acquire a player they think could help them make the playoffs or qualify for the next round. Sports leagues understandably may want to protect rash team owners from hurting themselves and their fans for the next five or ten years for a short-term gain.

The day of the trade deadline and the day or two before it are among the most exciting days in sports. If the team a fan roots for is terrible, by halfway to four fifths of the way through the season, its fans are probably a little sick of watching it play. At trade deadline time, the team can interest them again by making moves to get better next season. For fans of teams that seem like they have a chance to win a championship, it’s even more exciting to speculate and then witness what the team does to make itself better for its playoff run. Every fan likes to think of themselves not only as an athlete on their favorite team, the coach of their favorite team, but also the general manager too! Speculating about trades before the trade deadline is an exercise in imagination. What player from an opposing team would fit best with your favorite team? Who could your team part with without losing their essence?

Trade deadline day is covered obsessively online, primarily on Twitter, and also live on TV. Sports channels are happy to devote time during a week-day to a panel of “experts” who blab and blab all day about the trades as they are reported to the league office and the media. The excitement (I know I sound a little cynical about this, but I do get really excited too) peaks right around the time of the deadline and for a few hours later as information about trades which were executed right before the deadline comes out through the media to fans.

If your colleagues are more distracted on February 19 or March 2 than they normally are, you’ll know why!

Thanks for asking,
Ezra Fischer

Cue Cards 6-28-13: NBA Draft and Trade

stk321064rknCue Cards is a series designed to assist with the common small talk about high-profile recent sporting events that is so omnipresent in the workplace, the bar, and other social settings.

Sport: Basketball
Teams: All of them
When: Thursday night, 6-27-13
Context: The NBA Draft (for more detailed context, click here or here)
Result: 60 young men now have high paying jobs
Sports Fans will be Talking About:

  • The first pick. After weeks of discussing whether the first overall player selected was going to be Nerlens Noel or Alex Len or maybe Victor Oladipo, the Clevelend Cavaliers instead picked a guy named Anthony Bennett from UNLV.
  • Things didn’t get less strange after that. Often drafts are pretty predictable — not this one, it was full of surprises all the way through.
  • Most people will be talking about the team they root for and who they picked or didn’t pick. Let them do this — no one really knows anything at this point about how well these choices will turn out although everyone will have an opinion.

What’s Next: Now that the draft is done, trades and free-agent signings will rule the NBA landscape.

Sport: Basketball
Teams: Boston Celtics and Brooklyn Nets
When: Thursday, 6-23-13
Context: A trade!
ResultThe Brooklyn Nets trade Kris Humphries, Gerald Wallace, a signed-and-traded Keith Bogans, Reggie Evans, Kris Joseph, three first-round picks (2014, 2016, 2018), and the right to swap picks in 2017 to the Boston Celtics for Kevin Garnett, Paul Pierce, and Jason Terry.
Sports Fans will be Talking About:

  • Now it’s really the end of the Big Three era in Boston. After trading their coach on Sunday, the Celtics continue to dismantle the team they’ve had for the last few years. Paul Pierce in particular had been a Celtic his entire career since being drafted in 1998!
  • Who “won” the trade. Like the draft, it really won’t be clear which team got the better side of this trade for a long time (many years considering we won’t know who the Celtics will draft with all those future draft picks) but that won’t stop any fan from having a strong opinion on one side or another.
  • The crazy Russian — Nets owner Michael Prokhorov is known to be an eccentric Russian billionaire willing to spend gobs of money to win. He just put his money where his mouth is. The NBA has a “luxury tax rule” that if the amount a team is paying in player salaries exceeds a certain figure, they have to pay the league an equal amount over that limit. That money is then distributed to all the teams whose payroll’s are under the figure (called a salary cap.) The Nets just committed to being way over the salary cap for the next couple years.