I'm really confused as to how these work. When one is generated (say from the Rashard Lewis trade or the J-Rich trade), what happens after it is used. So Seattle sent its exception to Phoenix for Kurt Thomas and draft picks. Now does Phoenix have the ability to use this exception to get another player or did the trade exception disappear after it was used once. In other words are trade exceptions re-useable commodities or are they one-and-done when used. I've heard differing answers to this question.
Let me take a shot at this one. Technically, there's no such thing as a "Trade Exception" in the NBA CBA. There is the concept of a non-simulaneous trade and the completion of the non-simultaneous trade is what people commonly refer to as a "trade exception". Here's how it works. When you make a trade, if you are over the salary cap, then the amount of salary that you take back can't be more than 125% of the amount that you sent out. You are always allowed to take back less salary (any amount). So, let's say you make a trade with a team that is under the cap like Orlando was. Seattle resign's Rashard Lewis to a new deal (let's say $10M first year for simplicity) and trade him to Orlando for a 2nd round pick. Here's how the trade breaks down. From Orlando's side they were far enough under the cap to cover Lewis' new first year salary, so the trade is legal from their end. Seattle sent out $10M in salary and took back none (draft picks count $0 for the purpose of trades). Since you are always allowed to take back less salary, then Seattle's end of the deal is legal. Since Seattle took back less salary than required, then this makes the trade a non-simultaneous trade. What that means is that Seattle can acquire one additional player at a later date (from any team) to fill the difference in salary and to complete the non-simultaneous trade. So if Seattle sent out $10M and took back $0, then they can acquire a player with a salary up to $10M to complete the Lewis trade. This ability to acquire that additional player without matching additional salary is what's commonly refered to as a "Trade Exception". Now Seattle acquires Kurt Thomas from Phoenix. Phoenix sends out Thomas (let's say $8M, I'm too lazy to look it up) and a 2 1st round picks ($0) and takes back only a 2nd round pick $0. That's legal since you're always allowed to take back less money ($8M out and $0 in). Seattle sends out nothing (2nd round pick $0) and acquires 2 first round picks ($0) and Thomas ($8M). They use Thomas to complete the non-simulaneous Rashard Lewis trade and all that remains is a swap of draft picks which have $0 value so it's legal. The NBA CBA allows each team to break a trade up into multiple deals on their end to make a deal work. So, officially it's two separate deals from Seattle's end. Thomas was the completion of the Rashard Lewis trade and the other deal was a swap of a 2nd round pick for 2 first round picks. From Phoenix's side it's a single trade. Even though Seattle didn't technically trade the exception, the fact that they used it caused Phoenix to take back less money than required, so that makes the Thomas trade a non-simultaneous trade for Phoenix. The easy way to think of it is that Phoenix now has a $8M trade exception that they can use to acquire a player, but really they're just completing the non-simultaneous Kurt Thomas trade. Does that make sense? The exception isn't really traded, but most times it will cause the other team to take back less money than required and generate an exception for them. So, if Phoenix uses that exception, most likely they'll also generate an exception for the team that they trade with.
