The Value Of A Disabled Player Exception At The NBA Trade Deadline

The December-time loss of Ricky Rubio for the remainder of the season was a significant one for a resurgent Cleveland Cavaliers team that, from the basement, has risen to being among the favourites for the Eastern Conference. Rubio had been a major contributor in what was often a sixth-man role, averaging 13.1 points, 4.1 rebounds and 6.6 assists per game, doing a vital job in filling in for the previously-injured Collin Sexton.

That said, it comes with its own upside. The NBA this week granted the Cavaliers a disabled player exception, giving the Cavaliers some spending money with which to potentially get in a short-term replacement. Similarly, the Denver Nuggets also received a DPE this week in compensation for the loss of Michael Porter Jr, this one worth approximately $2.7 million.

These exceptions can be used between now and March 10 to potentially acquire replacement players for Porter Jr and Rubio, subsequent to certain criteria. Those criteria can however be difficult to meet, and are explored below.

What is a Disabled Player Exception?

The Disabled Player Exception is not a roster exception; no extra roster spot is gained. But it is a salary cap exception, awarded to provide extra spending power in the event of significant injury. If it is determined by a league-designated physician that the player is not going to return to the court this season, a discretionary DPE can be awarded to that player’s team, in order to be able to acquire a replacement.

Uniquely, teams have to apply for DPEs – they are not simply awarded. However, if they are in fact awarded, they can be for significant amounts, as seen in the case of Rubio above. The amount of a Disabled Player Exception is for whichever is the lesser amount of half of the injured player’s salary, or the non-taxpayer mid-level exception that year. In both cases, $100,000 of wiggle room is also granted.

With Rubio earning $17.8 million dollars this season, Cleveland therefore essentially has been awarded a salary cap exception to spend $9 million more on a replacement for Rubio. Quite the mid-season salary cap boon.

They can do this through signing or dealing, a bespoke trait of the DPE. That replacement, however, must be signed only for the remainder of the season, or on the final year of a pre-existing contract if acquired by trade.

This “final year” stipulation is important, and was not always the case. In 2011, when Yao Ming was ruled out for the season, the Houston Rockets were given a DPE equivalent to the full MLE, and used it to sign Trevor Ariza to a five-year deal, a term much longer than Yao was absent for.

In the light of other team’s protests that this was not in keeping with the spirit and intended purpose of the provision, the rule was changed in the next Collective Bargaining Agreement, and a DPE can now only be used to acquire players in the final season of their contract (a caveat which further disqualifies any deals including future option seasons). Such acquisitions can nevertheless be made through signings, by trade, or via waiver claims (which, since 2012, have been clarified to be treated as trades in Collective Bargaining Agreement vernacular), expanding the options of what is possible, at least in theory.

It is not likely that the Cavaliers would need or use the DPE on a free agent signing at this point in time, as the above-the-minimum mid-season free agent signing is very rare to begin with, and any player worthy of commanding that kind of salary can surely also command future years on their deal, which the DPE does now allow. It is even less likely to come via a waiver claim. But it can be used in a trade. And, so, with the NBA’s trade deadline just a few days away, the timing could be fortuitous for a Cavaliers team wanting to keep the good vibes of this bounce-back season going.

It Can Still Be Costly

Bear in mind, however, that any player acquired with a DPE – and it can only be one player, as it is not permitted to split the amount as can be done with other exceptions – is not free. Any player acquired with a DPE is still paid their salary by the team, still counts against the salary cap, and still counts towards luxury tax calculations. And nor is the salary cap number of the injured player reduced in any way.

In the case of the Cleveland Cavaliers of today, this could be a significant factor. At this point in the season, they are only approximately $3.5 million under the luxury tax threshold, and while their resurgence has been strong, they perhaps ought to prioritise preserving any excess cash in the bank on keeping this core together for the immediate and long-term futures, rather than short-term stop-gaps.

Furthermore, it is not for nothing that the Cavaliers already had plenty to spent. They did not spend so much as a dollar on their Mid-Level exception this season, and they also have the Bi-Annual Exception untouched as well.

Even as the MLE prorates down in value as the season progresses, it is still commensurate with that of the new DPE, and if the MLE was not spent (or was not able to be spent) thus far, it is far from certain that the DPE ever will be either. They even have a $4.2 million trade exception going unused. The Cavaliers’ current proximity to the luxury tax threshold has imposed some financial inflexibility onto Wtheir season, creating a shortage of spending power, not through a shortage of spending options.

Ironically, then, this potential cap windfall may have landed with one of the few teams not well positioned to benefit from it. But if they do, a hypothetical Rubio return would not be a problem.

What Happens if the Player Returns?

The determination as to whether the injured party will indeed be out for the remainder of the season is done by an NBA-appointed physician, or, if necessary, a Fitness To Play panel. However, it can of course only ever be a matter of opinion, and it is possible for the player thought to be out for the season to return earlier than expected.

If this happens, though, the good news is that any player signed or acquired via the awarded Disabled Player Exception is unaffected. In this circumstance, if the Cavaliers were to trade for, say, Dennis Schroeder, only for Rubio to return for the postseason anyway, both he and Schroeder can play. (Also note – the use of Schroeder here is purely due to his contract’s size and duration being apt to use as an example, and not because I think the Cavaliers should or will trade for Dennis Schroeder.) Were that to happen, consider it a stroke of good luck to balance out the bad luck from the initial injury.

The fact that teams have to operate in the belief that such strokes of bad luck will not befall them, and thus assume the bulk of their salary cap position and exception-spending before the season begins, often means that DPEs awarded in-season are not nearly as fruitful as they may appear on first glance due to the proximities of the relative financial thresholds. But if nothing else, a Cleveland Cavaliers team that may be active as both buyers and sellers at the upcoming trade deadline just got one more piece to help facilitate deals.