Collective Bargaining Agreement

What Is The Stepien Rule, What Are Pick Protections, And Where Do They Overlap?

by Leo Sepkowitz
Nov 27, 2013; Brooklyn, NY, USA; Brooklyn Nets small forward Paul Pierce (34) and power forward Kevin Garnett (2) looks on against the Los Angeles Lakers at Barclays Center. The Lakers won 99-94. Mandatory Credit: Joe Camporeale-USA TODAY Sport

Sam Hinkie is the master of stockpiling future draft picks. Ted Stepien was the opposite.

Stepien ran the Cavaliers for about two years in the early ‘80s, and somehow coughed up seven future first-round picks during his tenure. When Stepien sold the team in 1983, new ownership inherited a franchise with its arsenal of draft picks completely depleted.

The league decided to compensate the Cavaliers for Stepien’s misguided trades, awarding them free first-rounders in each draft from 1983-1986. The NBA also introduced the Ted Stepien Rule.

The rule established two main barriers to protect teams from themselves:

  1. Teams could no longer trade consecutive first-round picks. (Example: Memphis cannot offer its 2015 and 2016 first-round picks in a hypothetical trade for Bradley Beal. Instead, it could send any two picks that have at least one season in between them, like one in 2015 and one in 2017.)
  2. Picks can only be traded seven years into the future. (Example: Memphis cannot offer its 2015, 2017, 2019, 2021 and 2023 first-round picks in a hypothetical trade for Anthony Davis. Instead it is limited to offering its 2015, 2017 and 2019 picks in that deal.)

It should be noted that the Stepien Rule applies only to future draft picks. For example: though the New York Knicks have traded away their 2016 first-round pick, they are free to trade their 2017 first-round pick once their selection has gone by in the 2016 draft. Until that point, though, the 2018 first-round pick is the first one eligible to be traded. 

Even with the Stepien Rule in place, there are still sneaky ways for teams to sweeten deals. For instance, when the Nets acquired Paul Pierce and Kevin Garnett from Boston last summer, they forked over three first-rounders (in 2014, 2016 and 2018). They also yielded the right for Boston to swap spots with them in the first round of the 2017 draft. This is considered legal, as if Boston exercises its swapping rights, the Nets will still have a first-round draft pick in the ‘17 draft (just a lesser one).

Protections on picks can also be used as sweetener, but rarely are. When the Rockets dealt Kyle Lowry to the Raptors in 2012, Houston made Toronto protect the pick outside of the lottery. Essentially, it guaranteed that the Rockets would acquire Toronto’s first-rounder as soon as the Raptors missed the playoffs. If Toronto made the playoffs, and thus picked outside of the lottery, the pick and its protection would roll over into the following season. It was a shrewd way of Houston assuring itself a high draft pick.

More often, we see pick protections as anti-sweeteners. Currently, for instance, Chicago owns a future first-round pick of Sacramento’s with a medium-protection on it through 2017. The protection states that so long as the Kings’ pick falls within the top ten in the next three drafts, Sacramento will only have to send a second-round pick to Chicago (or possibly nothing at all) in 2017. If the Kings stay bad, they’ll keep their picks.

Pick protections and the Stepien Rule overlap in two areas.

  1. Let’s say the Magic trade two first-round picks to the Suns for Goran Dragic, and the first of those picks is top-5 protected. If the Magic win the lottery in the upcoming 2015 draft, they wouldn’t have to surrender the pick immediately, as it would fall within the protection. If Orlando then picks 14th overall in 2016, though, the pick would be forwarded to the Suns, as it would not be covered by the top-5 protection. The other first-rounder acquired by Phoenix in the Dragic deal would then be conveyed two years later, in 2018—the earliest allowable year that does not offend the Stepien Rule.
  2. Since teams cannot trade picks more than seven years into the future, protections on picks must end before then, too. For instance, the Celtics cannot simply trade a top-3 protected draft pick for Kevin Love. If Boston wound up picking in the top-three for, say, ten consecutive seasons following the trade, the pick would not have been conveyed within seven years, breaking the Stepien Rule. So trade partners must agree on when a protection is dropped, to ensure that some compensation is rewarded. Often, if a protected first-round pick is not conveyed within a few seasons, one or two second-round picks are traded instead.