Jason Terry trade becomes official

Although the trade was agreed to in principle a few weeks ago, the Jason Terry trade was not official until today.

The full details of the trade see Terry going to Houston along with two future second round picks for Alonzo Gee, Scotty Hopson and a small trade exception (about $1.4 million by my calculation).

Giving up two second round picks just to get rid of Terry isn't a particularly great deal, but it does give the Kings much more flexibility this year.  The Kings aren't expected to keep Gee or Hopson, but both of their contracts are fully unguaranteed without a guarantee date, meaning the Kings could opt to bring in both to training camp before making a decision to waive them.

Jason Terry came to the Kings in last February's trade of Marcus Thornton to Brooklyn, but unlike the other piece of that trade, Reggie Evans, Terry did not join the team.  Although it was speculated that the Kings might buy him out or that they would waive him via the stretch provision, it seems clear that Terry was not interested in a buyout and that it was in both parties best interest to look for a trade.

UPDATE 1:30 PM:

Exception, I'm told, worth $5.85 million and one of largest in the NBA. Third, perhaps, behind Minny's K. Love & Rox' Jeremy Lin exceptions?

— Sam Amick (@sam_amick) September 17, 2014

So it appears that the Kings must have used the $3.6 million trade exception from the Isaiah Thomas trade (it was not $7.2 million as was first thought although I'm still confused as to why) to get Alonzo Gee and Scotty Hopson and then traded Terry to Houston for a bigger, $5.85 million exception.  That's some more value the Kings received in the deal.

UPDATE 1:47 PM:

Sam has confirmed that my scenario from the above tweet is what he's hearing happened.  Also, I got some clarification as to why Isaiah's TPE was only $3.6 million instead of $7.2 million and it's because of the old "Base Year Compensation" rules, which according to Larry Coon's CBA FAQ state:

If a team re-signs its Larry Bird or Early Bird free agent in order to trade the player in a sign-and-trade transaction, the player's new salary is greater than the minimum, he receives a raise greater than 20%, and the team is at or above the cap after the signing, then the player's outgoing salary for trade purposes is either his previous salary or 50% of his new salary, whichever is greater.

Because Isaiah was part of a sign-and-trade transaction and the other criteria was met, the Base Year Compensation kicked in and his salary only counted as 50% of his actual trade value in an outgoing trade, thus why the exception was only 50% of his new contract.

Also I've seen some people asking for clarification on how this trade went down since Exceptions can't be combined with other players.  Essentially, this was a multi-step trade.

First, the Kings sent the two second round picks to Houston for Alonzo Gee and Scotty Hopson (about $4.4 million in salary).  Because the Kings didn't have the salary cap to absorb these players, they absorbed them into trade exceptions.  Gee at $3 million went to the Isaiah exception ($3.6 million) while Hopson ($1.4 million) fit under the Thornton exception ($2.4 million).

With Gee and Hopson both off their salary cap, the Rockets now had enough space to fully absorb Terry's $5.85 million contract.  The Kings send Terry to Houston and in return, they get a $5.85 million exception that they can use for one year.  This increased TPE is the real value the Kings received in the trade and it took some clever maneuvering for the Kings to pull it off.  How the Kings use this TPE will determine whether it was worth giving up their two future 2nd round picks.