Value of cap exceptions highlighted in 3-team deal

Monday's surprising, out-of-nowhere, three-team trade involved six NBA roster players and two draft picks, but it wouldn't have been possible without some creative salary-cap machinations.

Oftentimes in a trade, reports will make note of what's called a Traded Player Exception (TPE), sometimes just called a trade exception. The creation and use of trade exceptions are complicated, but they essentially allow teams to make deals with salaries that don't necessarily match under the rules of the collective bargaining agreement.

Trade exceptions are created when salaries don't match in a deal, with the difference being given to the team acquiring less money as a credit of sorts. They can then use said credit for up to a year to acquire another salary without giving up salary of their own, though exceptions can not be combined with other exceptions or with players for salary matching.

The specifics can get complicated, but Monday's trade highlights the value in knowing about and creating exceptions. As a refresher, the deal was reported as follows:

Missing from that table are four notable exceptions (and six in total), two that helped make the deal possible and two that were created as an incentive for the New York Knicks to get involved. To fully understand, it's worth looking at the deal from each team's perspective.

Oklahoma City Thunder: Remember when the Thunder sign-and-traded Thabo Sefolosha to the Atlanta Hawks this summer for a Euro-stash prospect that was selected way back in 2003? If that seemed an odd payment, that's because the Thunder were actually just interested in the trade exception created by dealing Sefolosha at a salary of $4.15 million while taking no salary back.

That allowed the Thunder to absorb Dion Waiters and his $4.1-million salary into that exception rather than sending out matching salary. It also allowed them to send out Lance Thomas separately, creating an additional $915K trade exception in the process.

RELATED: Durant, Thunder aim to make Waiters feel wanted

Cleveland Cavaliers: Separate from trade exceptions are Disabled Player Exceptions, which allow teams to acquire players to replace those who have been deemed injured for the season. Cleveland was granted a $4.9-million DPE after Anderson Varejao hit the shelf for the year, and using that exception allowed them to hang onto the $5.3-million TPE they have from the Keith Bogans trade for use in another potential deal.

The Cavaliers structured this exchange as separate deals, too, absorbing Iman Shumpert's $2.6-million salary into their DPE, matching J.R. Smith's $6.5-million salary to the $4.1 million for Waiters and $507K for Alex Kirk, and then sending out Lou Amundson's $915K salary separately to create another small exception.

RELATED: Why the Cavaliers won the 3-team trade

New York Knicks: To be clear, trade exceptions are not traded between teams. The Thunder and Cavaliers each used theirs in the deal, and they then ceased to exist. The Knicks did not acquire their new exceptions from the other teams, but rather created the exceptions for themselves, and they now have one year in which to use them.

The Knicks were able to send out Smith and his $6-million salary (before his trade-kicker) to create a $6-million exception, send out Shumpert to create a $2.6-million exception, and then absorb Amundson, Kirk and Thomas as separate pieces.

RELATED: Trade about fit, flexibility, future for Knicks

Looking at what each team created and gave up in the deal, then, tells a slightly different story:

In terms of evaluating the trade, this all moves the needle little. The use of exceptions comes with no cost beyond the opportunity cost of using them on another deal, and the TPEs created will only be of value to the Knicks if they can turn around and use them within the next year. 

Still, as the Thunder and Cavaliers just showed, they're at the very least a useful asset to have in the back pocket.

(Exception amounts courtesy of ESPN)