July 21, 2014 at 2:59 pm

Houston Rockets Salary Cap Update

Kevin McHale and Daryl Morey

What a difference a week makes.

After being within hours of acquiring Chris Bosh and creating a top-flight title contender for the next few seasons, the Houston Rockets lost Bosh to a five-year, full max deal to stay in Miami, then elected not to match the three-year, $46 million offer sheet that Chandler Parsons signed with the Dallas Mavericks.

While it is obvious why Bosh elected to stay in Miami (he and his family love it there, and it was a LOT more money), it is less obvious to many why the Rockets allowed Parsons to take his Buffalo Jeans up I-45 to shop for tight-fitting T-shirts with Mark Cuban for the next two to three years.

The tough choice on Parsons made by Rockets owner Leslie Alexander and GM Daryl Morey was rooted in the belief that a team with Dwight Howard, James Harden and Parsons (on his new deal) — without the benefit of another star-caliber player on the roster — was less likely to win an NBA championship than a team with Howard, Harden and the flexibility to add another star and/or to fill out the roster with a superior supporting cast.

So, it’s time to once again take a look at the team’s current salary cap situation and where the Rockets can go from here.

Player Salary, Exceptions and Available Cap Room

(Salaries and contract information courtesy of ShamSports.com and some good old-fashioned guessing.)

The Houston Rockets currently have the following player salary commitments, cap holds and salary cap exceptions available for the 2014-15 season:

Player salary commitments:

Dwight Howard ($21.44 million), James Harden ($14.73 million), Trevor Ariza ($8.58 million), Alonzo Gee ($3 million, non-guaranteed), Terrence Jones ($1.62 million), Donatas Motiejunas ($1.48 million), Scotty Hopson ($1.45 million, non-guaranteed), Josh Powell ($1,310,286, non-guaranteed), Joey Dorsey ($948,163), Patrick Beverley ($915,243, non-guaranteed), Jeff Adrien ($915,243), Ish Smith ($915,243), Isaiah Canaan ($816,482), Robert Covington ($816,482, partially guaranteed for $150,000), and Troy Daniels ($816,482).  Second round pick Nick Johnson does not count against the cap until he actually signs a contract.

Cap holds:

Jordan Hamilton ($2.1 million), recent first round pick Clint Capela ($991,000), and Francisco Garcia ($915,243).

Exceptions:

(1) a trade exception from the Jeremy Lin trade that allows Houston to absorb one or more contracts totaling not more than $8.47 million (and which CANNOT be combined with other salaries for matching purposes in trades);

(2) the Non-Taxpayer Mid-level Exception (MLE), which allows them to sign one or more players to contracts with starting salaries totaling $5.305 million for up to four years in length; and

(3) the Biannual Exception (BAE), which allows Houston to sign one or more players to contracts with starting salaries totaling $2.077 million for up to two years in length.

To Be or Not To Be (Over the Cap)

By not matching the offer sheet on Parsons, Houston has the flexibility either to create some cap room or to operate above the cap.

To create cap room, the Rockets would need to waive the above-mentioned exceptions and some of the non-guaranteed player salaries and also to renounce some of its cap holds (or, in the case of Capela, to get an agreement in writing from him that he will not play in the NBA next season).  If the Rockets waived/renounced to the maximum extent possible (while still keeping Beverley) without making any trades, they could create up to around $9.23 million in cap room.

However, given the dearth of remaining free agents worthy of such a salary (Phoenix PG Eric Bledsoe and Detroit PF Greg Monroe — both restricted free agents — either would not take such a low salary or would have such an offer quickly matched by their incumbent teams) and the ability to exceed the cap with the exceptions and cap holds, it is much more favorable to the Rockets at this point to operate over the cap.

The recently announced signing of Dorsey, Adrien and Smith is an indication that Houston does not intend to use its cap room any time soon.  As veteran’s minimum signings, the Rockets could have used all of their available cap room and then exceeded the cap to sign each of them.  Instead, they signed all three, cutting the team’s maximum available cap room by $1.26 million.

Therefore, expect to the see Houston operating over the cap . . . unless the right trade or free agent opportunity presents itself that can only be accomplished by using the cap room the Rockets could create.

Trade Tools

Because the Rockets do not have quite enough cap room available to simply trade for most star players, look for Houston to take advantage of its other tools to make trades while operating over the cap, taking advantage of the league’s salary-matching rules.

Non-Guaranteed Salaries:

Between Gee, Hopson, Powell and Covington, the Rockets have enough non-guaranteed salaries to take back nearly $10 million in incoming salary.  That is before even factoring in additional (guaranteed) salaries, such as those of Jones, Motiejunas or Canaan.

However, because they were acquired in trade while Houston was over the cap, the Rockets are unable to aggregate the salaries of Gee or Hopson with other player salaries for two months, essentially until mid-September.  It is quite possible that trades could be lined up between now and September using Gee and Hopson; but they could not be consummated until September.  (Also, as recent free agent signings, none of Ariza, Dorsey, Adrien, Smith or Daniels can be traded until December 15.)

As the Rockets hunt for more salary to match for a star player in trade, they could even make trades in multiple stages, where a first trade is made in September using Gee and Hopson, with the resulting larger salary received in that trade later aggregated with still more salary in November or December for an even larger contract.

The Lin Trade Exception:

The Lin trade exception not only allows the Rockets to acquire their primary target — with players such as Goran Dragic ($7.5 million) and Ersan Ilyasova ($7.9 million) fitting perfectly into it –it could also be used as a supplemental piece to a larger trade.  A team that otherwise might not trade its player for the draft picks, players and non-guaranteed salary that Houston was otherwise offering might be more willing to make a trade if they could also unload an additional contract or two into the Lin trade exception.  Expect the Rockets to use that trade exception as a selling point in their search for a star player.

Bird Rights:

Another overlooked trade tool for the Rockets:  the Bird rights of Hamilton and Garcia.

Because the Nuggets declined their team option on Hamilton prior to trading him to Houston, the Rockets are limited to offering Hamilton the same $2.1 million starting salary he would have been eligible for had that option been picked up.  (The Lakers re-signed Jordan Hill a couple of years ago under similar circumstances after the Rockets declined to pick up his option.)

Garcia, however, is not bound by such restrictions.  Hypothetically, the Rockets could pay Garcia a max salary in a sign-and-trade arrangement.  Such a sign-and-trade is further complicated by Garcia’s (what used to be called) Base Year Compensation (BYC) status, which basically means that Garcia is getting more than a 20% raise without his team using cap room to sign him.  Due to Garcia’s BYC status, only 50% of his new salary would count as outgoing salary for salary-matching purposes.  Still, if the Rockets come up shy by a few million dollars in matching salaries in a huge trade, Garcia could be lined up for a Keith Bogans-style huge payday for the courtesy of facilitating a match.

Conclusion

Look, I’m not going to sugarcoat it for you.  Missing out on a Bosh-Parsons combination to add to the Harden-Howard core was a big hit to the Rockets’ title hopes.  But they are not damaged nearly as badly as most believe.

Morey has gone on record as saying that the Rockets would be a better team by the start of the 2015 NBA Playoffs than they were in the 2014 NBA Playoffs.  With the numerous salary cap tools at his disposal, it is entirely possible — if not outright probable — that Morey’s prediction can become a reality.

Posted in Houston Rockets, Salary Cap Update |
July 18, 2014 at 2:47 pm

Full Audio: Trevor Ariza Conference Call with Media

It’s been a rough week for the Rockets — I know I’ve still got a lot I want to say — but the Trevor Ariza addition could be a good one for the team.

Ariza spoke with the Houston media on Friday via conference call and we’ve made the full audio of that call available. Trevor spoke of how he’s become a more mature player since his previous stint with the Rockets. He also expressed excitement to be playing with James Harden and Dwight Howard and also touched on what he can bring to the table in replacing Chandler Parsons.

Posted in Houston Rockets |
July 15, 2014 at 10:49 am

Rockets sign Joey Dorsey to a two-year deal

Joey Dorsey Houston Rockets Barcelona

“Ray Lewis with a basketball” is back.

The Rockets have signed former Rocket and current Barcelona center Joey Dorsey to a two-year, $2 million contract, according to Yahoo! Sports.

This could be a good, low-cost, low-risk move to pick up a serviceable big that fills a need. Dorsey, a 6-foot-9, 270+ pound center, could take the backup center role behind Dwight Howard.

Dorsey was largely considered a bust of a draft pick by the Rockets in 2008. The Rockets passed on big men Omer Asik and DeAndre Jordan to take the University of Memphis center with the 33rd pick. Dorsey played in just 10 games — a grand total of 60 minutes — for the Rockets over two seasons before being a throw-in to the Carl Landry-Kevin Martin trade with the Sacramento Kings.

But Dorsey left the NBA in 2011 to play overseas and he has established himself there. He won a EuroLeague title in 2012. He returns as a more experienced player. Some of his highlights last season:

The Rockets are doing some damage to the FC Barcelona roster right now. They’re taking their starting center and should be signing their starting small forward Kostas Papanikolaou soon.

One thing Dorsey did give us in his original time with the Rockets? The most entertaining Rockets press conference I’ve ever attended.

Posted in Houston Rockets |
July 13, 2014 at 4:01 pm

Chandler Parsons joins the Dallas Mavericks as Rockets elect not to match contract

Chandler Parsons Contract

The Rockets have stunningly elected not to match the 3-year, $46-million contract offered to Chandler Parsons by Dallas, allowing Parsons to become a member of the division rival Mavericks.

The news was first reported by the Houston Chronicle‘s Jonathan Feigen, who cited a team source as saying the “decision largely came down to whether the Rockets were good enough with a big three of Harden, Howard and Parsons.”

“[They] ultimately decided they would not be a championship team and would have no room to build,” the source said.

Sources previously said the Rockets planned to match Parsons’ offer if Chris Bosh had signed with the Rockets, as expected. In that scenario, Parsons would have been the team’s fourth-best player.

Trevor Ariza, who agreed to terms with Houston on Saturday, will likely replace Parsons as the team’s starting small forward.

The Rockets, of course, could have had Parsons as their starting small forward in 2014-15 at a paltry salary of near $1 million, if they picked up the final option year on his original NBA contract. But general manager Daryl Morey opted to send Parsons into restricted free agency in an effort to negotiate what they hoped would be a friendlier long-term deal.

Instead, the move seems to have backfired, as Parsons now leaves Houston for no compensation.

Posted in Houston Rockets |
July 12, 2014 at 3:36 pm

Rockets to bring back Trevor Ariza on a four-year, $32 million deal

Trevor Ariza signs back with the Houston Rockets

Look who’s back.

The Rockets have agreed to a four-year, $32 million deal with small forward Trevor Ariza, according to Sam Amick of USA Today Sports. Yahoo! Sports reports that the contract is on a declining scale to increase the team’s flexibility moving forward — $8.6 million in 2014-15, $8.2 million in 2015-16, $7.8 million in 2016-17 and $7.4 million in 2017-18.

It’s unclear what this means for Chandler Parsons, the team’s current starting small forward. The Rockets must decide by Sunday night whether to match Parsons’ offer sheet from Dallas (three years at $46 million) or let him go to the Mavericks. It does not change their ability to match.

This is Ariza’s second tour of duty with Houston. The Rockets signed Ariza in 2009 to replace Ron Artest, dealing him to New Orleans a year later in a three-team trade that brought Courtney Lee to the Rockets.

However, this is a much different situation for Ariza and the Rockets. In 2009-10, the 6-foot-8 forward was asked to be more of a primary option while he would be a complement to superstars James Harden and Dwight Howard this time around.

Ariza, who just turned 29 years old, fits the 3-and-D template the Rockets are looking for. He had a career year in Washington last season, averaging 14.4 points, 6.2 rebounds, 2.5 assists and 1.6 steals per game. He provides strong perimeter defense and three-point shooting.

The Rockets are trying to shore up their defense, particularly on the perimeter. Ariza helps here — he’s not quite a lockdown defender, but he has no problem taking the assignment to guard the opponent’s best wing player. With a 7-foot-2 wingspan, he can make it difficult on many guards and forwards in the league.

Ariza also hit a blistering 40.7% from long range on 442 attempts last season. If that success rate from downtown continues, he could be the team’s best three-point option next season — he both shot more threes and made more than Parsons last year. In particular, catch-and-shoot threes are important in Houston’s system for complementary players spreading the floor. Parsons, for example, shot the 7th most catch-and-shoot threes per game in the league last year, taking 4.3 attempts per game at 38.5%. Ariza was even higher volume from there (5th in the league at 4.5 attempts) and hit 44.9% on catch-and-shoot threes.

It was a contract year, but if that kind of success is no fluke, the Rockets picked up a terrific fit here for their system.

Here are some highlights from his career-high 40-point game in March.

  • Trevor Ariza past highlights with Rockets

  • Posted in Houston Rockets |
    July 12, 2014 at 12:01 pm

    Life after Bosh: Why matching Parsons and focusing on 2014-15 should remain a priority

    chris bosh chandler parsons 2 Life after Bosh: Why matching Parsons and focusing on 2014 15 should remain a priority

    Was Friday disappointing to the Rockets? Yes. But franchise-altering, as some suggest?

    It shouldn’t be.

    Losing out on Chris Bosh at the 11th hour was an offseason gut punch that Houston fans know all too well. But unlike the infamous “basketball reasons” saga that nixed the Pau Gasol trade in 2011 followed by the failed Dwight Howard pursuit in 2012, it must be remembered that Daryl Morey and these Rockets are no longer playing from a weak hand.

    In Howard and James Harden, the Rockets arguably have two of the NBA’s top 10 players. In the duo’s first year together, they won 54 games in a brutal Western Conference and showed significant improvement as the season went along. And after trading Jeremy Lin and Omer Asik, the team has financial flexibility to upgrade its bench and return as an even more talented group in 2014-15.

    There’s one wild card in the mix, though, and it’s that pesky 3-year, $46-million offer sheet that Chandler Parsons signed with Dallas. The Rockets have until 10:59 p.m. on Sunday night to decide whether to match, and after missing out on their expected addition of Bosh, it’s unclear what Morey will decide to do in their “Plan B” scenario.

    In short, it boils down to one root issue: Is the current Houston roster worth going all-in for? By matching Parsons and his roughly $15 million/year salary, it would all but eliminate the possibility of the Rockets having maximum cap room for foreseeable free-agency periods. It would, however, secure Howard, Harden and Parsons as the team’s core and allow the Rockets to fully commit to finding the best role players to optimize their success, starting immediately.

    It’s not as sexy as the planned All-Star roster with Bosh. But after letting the initial sting wear off, it’s time to remember that the gap between these Rockets and true contention is not “max player” wide.

    In these eyes, the Rockets are too close to turn back. Here’s why:

    Organic growth is coming

    It’s easy to forget, but the Rockets were already poised to improve in 2014-15 simply from within. They went 54-28 (65.9%) in the first year of the Howard era, a mark that included a 21-13 (61.8%) transition period of November and December as the Rockets adjusted to having the league’s best center on both ends of the floor. Their 33-15 (68.8%) pace in 2014 would extrapolate to 56 or 57 wins over a full schedule – in other words, putting them right in the standings mix with Oklahoma City and the Los Angeles Clippers and closer to the 2/3-seed range than the 4/5/6-seed level.

    Even the LeBron James-era Heat, likely the most talented free agency or trade-built team in the modern era, didn’t hit their full stride until Year 2 and Year 3. The Year 1 Heat (2010-11), even playing in the weak East, lost 24 games and weren’t a No. 1 seed. It took until 2012-13, the team that went 66-16 and reeled off 27 consecutive wins, for Miami to reach maximum efficiency.

    So the idea that the current Rockets aren’t a contender because they went 54-28 in Year 1 and lost one playoff series isn’t something I’m willing to accept. Improvements in team chemistry and individual growth from young players including Harden (24), Parsons (25), Terrence Jones (22) and Pat Beverley (26) were already going to make the 2014-15 Rockets better than the 2013-14 group, regardless of any new additions. They did lose Lin and Asik from the bench, but…

    Financial flexibility to improve depth

    Yes, losing Lin and Asik, if looked at in a vacuum, would weaken the rotation. But the roughly $17 million in cap room they have for the next 36 hours (or staying above the cap and using the trade exceptions and other exceptions beyond that), along with a probable lottery pick from New Orleans to use as trade bait, gives the Rockets ample opportunity to actually upgrade.

    Think of it this way: if Lin and Asik were on the free-agent market now, and the Rockets had $17 million to spend to upgrade their current roster, would those be your first two calls? My guess is no. Asik, for all his strengths, was limited to being a 15-to-20-minute player most nights because of the presence of Howard. Lin was an average-at-best (and wildly inconsistent) three-point shooter and turnover prone, not ideal traits for a complementary backcourt mate to Harden.

    Versatile forwards and guards with legitimate three-point range and defensive skills on the perimeter are better fits for the Houston rotation than Lin and Asik, and there are several such candidates available in free agency as well as the trade market that can fit into $17 million of space.

    Where Parsons fits in

    It all comes back to the Parsons decision, of course. Even with $17 million in space, it would be unreasonable to expect the Rockets to fully replace the contributions of Lin, Asik and Parsons. That team would take a step back, with an organizational focus of looking ahead to 2015 free agency.

    In terms of title contention, the 2014-15 season would be over before it even started, and a year of Howard’s prime would be squandered. (Think Howard would remember that in 2016 free agency?)

    To me, that scenario is unacceptable, unless the Rockets believe the only realistic route to winning a championship involves acquiring a third All-Star. While it would be nice, I don’t see it as necessary. Assuming Parsons is retained, the combination of organic growth from a young core of players and bench upgrades to Lin/Asik could easily bridge the gap between the mid-50s win total the Rockets had a season ago and the upper 50s-to-60 range of legit West contenders.

    Bosh may have been the perfect fit, but he’s not the only fit. The Rockets are already playing with a strong hand, and folding for the outside shot of pocket aces down the road doesn’t seem practical.

    Posted in Houston Rockets |
    July 11, 2014 at 1:10 pm

    Rockets trade Jeremy Lin to Lakers

    jeremy lin traded Rockets trade Jeremy Lin to Lakers

    Jeremy Lin’s Houston Rocket career is over.

    The Rockets unloaded Lin and his $15 million salary for 2014-15 to the Los Angeles Lakers on Friday. To get the Lakers to absorb Lin’s contract, the Rockets sent their first round pick in 2015 plus an additional second round pick (2015 pick from the LA Clippers, only conveyed by LAC if between 51-55) to the Lakers. The Rockets also received the rights to Sergei Lishchuk.

    It’s clear that Daryl Morey and the Rockets are full steam ahead in their cap room pursuit to sign Chris Bosh and sending out Lin was always a necessary step.

    The move could be good for Lin, who was born in Los Angeles and grew up in California (Palo Alto). The Lakers, who fell short in free agency this summer, can now try their cap room plan again in 2015.

    As for the Rockets signing of Lin in 2012, it was ill-fated from nearly the beginning and one of the bigger mistakes of the Daryl Morey era. He never quite meshed with James Harden and moved to the 6th man role last season.

    The bigger goal is Bosh, who the Rockets hope to sign this weekend before having to match Chandler Parsons’ offer sheet from Dallas. The Rockets still need to execute the Omer Asik trade and it’s likely they are looking into moving Donatas Motiejunas and/or Terrence Jones as well.

    Posted in Houston Rockets |
    July 10, 2014 at 2:42 pm

    Chandler Parsons won’t be getting a free pass any longer

    Chandler Parsons

    The NBA is a business.

    That much we know and it was confirmed again on Thursday when Rocket restricted free agent Chandler Parsons agreed to a three-year, $46 million deal with the rival Dallas Mavericks. The offer sheet was signed by Parsons at an Orlando nightclub with Mavericks owner Mark Cuban grinning by his side.
    Read More

    Posted in Houston Rockets |