Houston Rockets Salary Cap Update

The trade deadline has come and gone, and the Houston Rockets once again did not let it go by without making moves. With that in mind, let’s take a look at the team’s current salary cap situation.

The Rockets’ Latest Moves

Thomas Robinson

Thomas Robinson (the #5 overall pick in 2012) was the most significant trade deadline acquisition for the Rockets

Since my last update, the Rockets have made the following roster moves:

The Rest of This Season
The trade deadline moves leave the Rockets with around $5 million in remaining available cap room ($5.17 million by my calculations, although my figures may be slightly off).

While the opportunities to use that cap room to make trades is no longer an available option, that room can still be used to sign free agents. The Rockets could sign a player out of the D-League (such as Rio Grande Valley Vipers center Tim Ohlbrecht), or they could watch the waiver wire over the next couple of weeks as some quality veterans on expiring contracts are let go from other NBA teams. If such a player makes $5 million or less, the Rockets will be in a prime position to claim him off waivers before he can sign with another team.

Rockets GM Daryl Morey has stated that Houston is currently pursuing some overseas free agents (10:10 mark of video), with the Rockets able to use some of their available cap room to help cover any buyout issues. Under the CBA, teams can pay no more than $550,000 this year against international buyouts without it counting against the cap (the amount adjusts upward each year). Unfortunately, it is unlikely that a top European player–such as the Rockets’ own 2009 draftee Sergio Llull–joins the Rockets this year. A player of that caliber would require a multi-year commitment, which would cost the Rockets more 2013-14 cap room than they wish to use. It is still possible that a second- or third-tier overseas player (like Beverley) could be acquired without hurting the Rockets’ cap situation this summer.

Salary Commitments and Available Cap Room

Daryl Morey

Rockets GM Daryl Morey feels pretty good about his trade deadline moves

(All salaries courtesy of ShamSports.com.)

Barring any further roster moves, the Houston Rockets now have just over $46 million in team salary committed for the 2013-14 season: James Harden ($13.67 million . . . for now – more on that later), Jeremy Lin ($8.37 million), Omer Asik ($8.37 million), Garcia ($6.4 million team option), Robinson ($3.53 million), Carlos Delfino ($3 million, non-guaranteed if waived by June 30, 2013), Royce White ($1.72 million), Terrence Jones ($1.55 million), Donatas Motiejunas ($1.42 million), Chandler Parsons ($926,250), Honeycutt ($884,293, partially-guaranteed for $100,000), Greg Smith ($884,293, non-guaranteed), Anderson ($884,293, non-guaranteed) and Beverley ($788,872, non-guaranteed). That amount could increase if the Rockets miss the playoffs and, thus, retain their first round pick. (For purposes of this calculation, I am assuming–fairly safely, I might add–that the Rockets will decline Garcia’s $6.4 million team option.)

Based on this season’s maximum salary cap of $58.044 million, the Rockets have approximately $12.04 million in salary cap room entering the season.

However, if the Rockets waive all non-guaranteed contracts (and after adding back roster charges of $490,180 for each roster spot below 12 occupied by a player), the Rockets’ available cap room jumps to as high as $16.42 million.

Of course, the Rockets will gain additional cap room if/when the salary cap goes up this July, although it will not go up on a dollar-for-dollar basis. Because Harden’s contract extension does not officially kick in until next season, the first year salary is tied to the salary cap in 2013-14. For every dollar that the salary cap increases, the Rockets’ cap room will only increase by about 76.5 cents, with the other 23.5 cents going to Harden.

So, if the salary cap increases to $60 million (as has been widely speculated), the Rockets would only enjoy a $1,496,340 increase in cap room out of the $1,956,000 total increase, while Harden’s 2013-14 salary would increase to $14,129,367. (For what it’s worth, if Harden somehow wins the MVP award this season, his salary would increase to $16,402,500, plus 28.2 cents for every dollar that the cap increases next season. Here’s hoping for a close second-place finish!)

Assuming the estimated increase to a $60 million cap and no further moves, the Rockets should have anywhere from $13.53 million to $17.91 million. Almost enough to pay the “super-max” to a premier free agent like Dwight Howard (eligible for a maximum starting salary of $20.51 million) or Chris Paul (eligible for up to $18.67 million). Almost.

But as we all know, the Rockets under Morey are always looking to make moves, so don’t expect a lack of cap space to be the reason a guy like Howard or Paul doesn’t sign with Houston. Moves can be made to create that extra room; but given the relatively small chance that the Rockets can successfully add one of those two players, don’t expect too many further cap-clearing maneuvers to take place before an agreement can actually be reached with the marquee free agent.

Decisions Loom This June

Carlos Delfino

Even Carlos Delfino himself wonders what the Rockets will do this summer with him and his non-guaranteed contract

Deciding which player(s) to take in the 2013 NBA Draft will not be the only key decision the Rockets have to make this June. As mentioned above, they have until June 30 to waive Delfino before his $3 million salary for next season becomes fully guaranteed.

The non-guaranteed nature of Delfino’s salary makes him an attractive trade asset on draft day for teams looking to dump salary. The acquiring team could immediately waive Delfino and avoid paying him anything, making him sort of like a “super expiring” contract. However, given the Rockets’ desire to maximize cap room, it would take a fairly significant offer for Houston to pull the trigger on a salary dump trade at this point.

There are certainly reasons for the Rockets not to waive Delfino. He has been a valuable contributor to the Rockets this season and has outplayed his salary. Seemingly, even if the Rockets wanted to clear cap space this summer, they could find a taker for Delfino (and his affordable expiring contract), perhaps even being able to extract a future draft pick for him. The potential destinations for Delfino would also increase greatly in July, when several teams will gain cap room and will not have to send back salary to Houston to make a deal.

The ideal scenario for the Rockets with Delfino seemingly would be to line up potential destinations for him this summer in the event that Houston is able to acquire a “super-max” player like Howard or Paul but, failing that, to keep him around for next season, where he could continue to be a (rare) veteran presence on one of the league’s youngest teams.

Conclusion
The Houston Rockets have set themselves up beautifully for this summer. They are in position to have enough cap room to offer a max salary contract, with the flexibility to even offer a “super-max” deal with some minor additional moves. The Rockets also control every single player on the roster, either via team option (Garcia) or via non-guaranteed salary (Delfino, Honeycutt, Smith, Anderson, Beverley). While the addition of a superstar like Howard or Paul is far from likely, the Rockets have positioned themselves as one of the most attractive situations for free agents over the next several years. And with significant cap flexibility, Houston is positioned nicely to improve via trades as well.

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