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Wizards to get $8.5 million trade exception from Rockets for Trevor Ariza, according to report

The Wizards are getting a big trade exception after agreeing to a sign-and-trade deal with the Houston Rockets in exchange for Trevor Ariza.

Win McNamee

The Wizards lost Trevor Ariza to the Rockets in free agency. But he won't be leaving for nothing in return, as they have agreed to receive a $8.5 million trade exception in a sign-and-trade deal with the Houston Rockets. Per Adrian Wojnarowski of Yahoo! Sports:

The trade exception allows Washington to acquire more salary than they give away in future trades, but it is only good for the next year. Still, considering that PAUL PIERCE just signed a short term deal to play in D.C., I'll just say that this trade exception is just gravy. The Wizards may not have made the flashiest moves in free agency, but they still have made very good moves to say the least.

UPDATE BY MIKE: Since a number of people have asked, here's a brief explanation of a trade exception.

Any time a deal is done where a player is sent to a team under the salary cap, the team trading away the player receives what's essentially a credit that can be used for up to one year after the initial transaction was made. The Wizards' new trade exception therefore expires on July 13, 2015. It can be used this summer, anytime during the season or earlier next summer.

How did the Wizards get it? Ariza was initially a straight signing by the Rockets, but the Wizards have found a way to structure it as if they signed Ariza, then immediately traded him into Houston's cap space. The Wizards will also get Melvin Ely's non-guaranteed deal from the Pelicans in the three-team transaction; he will surely be waived before August 1.

The credit can be used to acquire any single player already under contract that makes $8.5 million or less without having to match salary. You can trade for a player making less than that amount, then later trade for someone making less than whatever's left on a different team. You can't acquire two players at once with one exception. You also can't combine trade exceptions or a trade exception and another mechanism like the mid-level exception.

Trade exceptions can be exceptionally useful or they can expire. A trade exception generated from an Andre Iguodala sign and trade is what allowed the Nuggets to acquire Arron Afflalo right before the draft for just Evan Fournier and a draft pick. A trade exception generated from the big Paul Pierce/Kevin Garnett deal last year allowed the Celtics to be the third team in the Cavaliers' salary dump to create space to sign LeBron James. But the player acquired in a trade exception will also count for luxury-tax purposes, so teams close to the line often just let them expire.

The Wizards' situation is unclear because it depends on the luxury tax. Washington now has three trade exceptions -- as noted previously, they have much smaller ones for $2.016 million and $1.25 million -- that can be used to acquire more players. They may need them too, because they already used the mid-level exception on Paul Pierce and used the bi-annual exception on Eric Maynor last year.

But the Wizards may also be too close to the luxury tax to use them this season. They were at about $57 million before signing Pierce, and he then adds $5.3 million to their cap number. Keeping Trevor Booker, Garrett Temple and Drew Gooden will probably add around $6-8 million to the cap number as well. That means it'll be a tight squeeze to use the $8.5 million this year and stay under the $77 million luxury tax. Therefore, don't be surprised if Washington holds it throughout the year and instead uses it early in free agency next season, when they'll be capped out and have fewer mechanisms to improve the roster.

Nevertheless, here's a list of tantalizing names that could fit into that exception.

  • Brandon Bass (one year, $6.9 million)
  • J.J. Hickson (two years, $11 million)
  • Ian Mahinmi (two years, $8 million)
  • Zaza Pachulia (two years, $10.4 million)
  • Ersan Ilyasova (three years, $24 million, last year non-guaranteed)
  • Chase Budinger (two years, $10 million)
  • Ryan Anderson (two years, $17 million)
  • Carl Landry (three years, $19.5 million)
  • Jason Thompson (three years, $19.2 million, last year partially guaranteed)
The Wizards could also use it as a way to get assets from a team that wants to dump salary. Someone like Tayshaun Prince from Memphis or Landry Fields from Toronto are possible examples of that.

We'll see if it ends up being used, but it gives the Wizards lots of flexibility.