Shifting Perspectives on 2015-16 Salary Cap May Impact Rockets’ Immediate Plans

Houston Rockets Salary Cap Projections

Updated: November 24, 2014

Much has been made recently about the NBA’s new national television contracts and their massive impact on the NBA’s salary cap in future years.

This season’s maximum team salary cap is $63.065 million. Several months ago (before the new TV deal was signed), the league released a projected $66.5 million salary cap for the 2015-16 season. The new deal, which does not kick in until the 2016-17 season, could increase the salary cap that year to as high as $85-90 million!

In order to address what could be a problematic one-year spike in the salary cap, the league has proposed one or more proposals to the player’s union in order to “smooth” the salary cap increase over several seasons. This issue must be collectively bargained with the player’s union, so any failure to agree by those two sides would likely result in that one-year spike.

Changing Cap Projections

For several months (both before and after the size of the TV deals was known), many league executives have been preparing as if the 2015-16 salary cap would be artificially increased in order to reduce the year-to-year increase caused by the new TV revenues.

However, whether based on perceived resistance from the player’s union on the league’s “smoothing” proposals (one or more of which allegedly call for the salary cap to only increase at around the rate at which Basketball Related Income (BRI) has increased over the past several seasons) or on an inability for the league to come up with a “smoothing” proposal that objectively makes sense for all parties, things don’t seem to be looking very good for teams (like the Houston Rockets) hoping for a big jump in the salary cap for the 2015-16 season.

Zach Lowe, Grantland’s lead NBA writer (and, in my opinion, the best national NBA writer in the business), wrote in a November 5 article about the increasing likelihood that the new TV deal would not lead to an increase in the salary cap for next season:

“No one knows what will happen to the cap in 2015-16 and 2016-17, the first year of the league’s mammoth new national TV contract, but the league’s most recent projections for 2015-16 remain in the range of $66 million to $68 million, per several league sources. It appears unlikely the league bakes any of the anticipated TV money into the cap figure a year early, meaning the 2015-16 cap will sit right around where the NBA had projected it.”

In a subsequent piece from November 17, Lowe reiterated this assumption:

“There is some opportunity cost in forfeited cap space this summer, assuming that the 2015-16 cap sticks around the projected $66 million–to–$68 million range. That is what almost all team executives anticipate now.”

Potential Impact on Rockets’ Plans

The Rockets currently have about $55.9 million in guaranteed salary committed for next season (not including cap holds, incomplete roster charges and other cap considerations). However, with a beefed-up 2015-16 salary cap that includes some early incorporation of new TV money, Houston would be in position–with only a couple of minor trades–to create enough cap space to either offer a max (or at least near-max) contract to a major free agent or be able to trade for almost any player under contract (perhaps dangling that New Orleans pick on or after draft night as bait).

Unfortunately, if the cap stays at the currently-projected $66.5 million, things do not look nearly as rosy for the Rockets in 2015 free agency.

Assuming that the Rockets waive all non-guaranteed salary for next season (namely, Kostas Papanikolaou and Tarik Black), renounce their rights to Jason Terry and Francisco Garcia, keep Patrick Beverley‘s cap hold on the books (which cap hold assumes that Beverley meets the “starter criteria” enabling him to get a higher qualifying offer from Houston) and otherwise do not make any trades (I know, unlikely, but still), Houston would be in line to have less than $7.2 million in cap room next summer.

That’s a nice amount of cap room, but it’s not enough to add that third star that Rockets GM Daryl Morey has been after since landing Dwight Howard in July 2013. The Rockets would need to clear out Trevor Ariza‘s salary (taking little to no salary back) to even approach the type of room they could create if a “smoothing” proposal were adopted. While Ariza is by no means completely “off-limits” in trade, he is an integral part of the team Houston is trying to build and is an ideal fit starting next to James Harden.

This relatively recent shift in perspective by many league executives on the projected 2015-16 salary cap may be a large factor in the Rockets’ apparent willingness to trade for Corey Brewer, whose contract includes a $4.9 million player option for next season. It could also be a reason why Houston might be trying to exert additional pressure on other teams to cough up a star (or near-star) player sooner rather than later (see Dragic, Goran).

Conclusion

Whether Morey is among those league executives starting to lose hope that a “smoothing” proposal can be swept through league and player’s union approval in time for next summer’s free agency/trade season is anyone’s guess. But if he is, then this shift could ultimately be the deciding factor in whether the Rockets choose to bite the bullet and make potentially cap-clogging moves in the next few months.

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