[ClutchFans] The Chandler Parsons Contract: Salary Cap Implications of Exercising or Declining the T

One thing to point out is that the cap may experience a sizable jump in 2-3 years, raising the tax to a level that will push the luxury tax so high the Rockets may get out of it after a couple of years. I think in general the luxury tax angle is overblown. The Rockets will go over the tax if they S&T for Melo this year and use their MLE fully for sure. But repeater tax doesn't become a factor for at least 3 more years. Who knows, if we haven't done jack squat by then, Howard probably would be skipping town anyway and we'd be back under the tax again.

 

Why does this rumor bring the Timberwolves to the table? Sending out Asik and Lin for capspace means almost nothing to the T-Wolves, we can't sign Love this off-season. Are you saying that the T-Wolves would rather a big TPE than players with larger contracts?

 

S&T Melo for Asik/Lin, resigning Parsons to something around 10mil then signing someone to the MLE is unlikely to put us in the luxury tax.

 

Let's hope that Woj is right and the team declines the team option and makes him a restricted Free Agent.

DD

 

It will.

Melo+Parsons($10)+Harden+Howard+MLE($5.5mil)= ~$74mil. $3mil short of luxury tax. Beverley, Daniels, Canaan combine at ~$2.5. 4 more roster spots will push the total over, especially if you're looking at veteran players, which the minimum is $1+mil each.

And I don't believe Parsons will sign for $10mil. More like $12mil starting salary.

 

Makes no difference from a tax paying standpoint though. If the Rockets trade for Melo and retain Parsons, hard to see them staying below $77mil. Any other scenario like Love or Rondo the Rockets should be able to stay under even if Parsons get the max.

I personally think that if we strike out on Melo, then we'll give Parsons a decreasing contract to help with future flexibility.

 

Parsons shouldn't get max salary. The NBA as a whole give away max money to easily

 

I for on don't want melo. Melo and harden is a disaster in progress. Id rather pay parson 10m,upgrade the pg and add depth. Melo isn't about winning.

 

I know the market is what it is, but Parsons might not really be worth what we think he is. 12mil???? I think he is yet to show what he can really do -- meaning he might be above or below our expectations in the long term. That's a gamble you have to take sometimes.

I suppose in that way he's kind of the James Harden (OKC era) of our team. Big difference being that James was a bench player and he had Kevin Durant by his side. Chandler gets his chances but still hasn't necessarily shown that we should be making him our prime SF option. OKC has so many weapons, I guess James was expendable in their minds. Hope we don't end up on the wrong side of that deal with Chandler...

 

If we can get an all star level point guard then I don't care either way. If we get Melo all he would need to do is score and by into playing TEAM DEFENSE like everybody else outside of Beverley and Dwight needs to do.

 

What has Chandler been worth the first 3 years?

He's been paid a total of: $$2,664,750

Meanwhile Klay Thompson, picked 11th in the 2011 draft, has made $6,730,440 and after next season Klay will have made $$9,806,320

And if Parsons had signed a 2-year deal at the minimum instead of this 4-year deal, he would have most likely received the Asik/Lin/Arenas contract offer as a restricted free agent. That could have been 4/40. But let's assume it would have been 4/32. So, that means if Parsons had signed for 2 years and then gotten his contract his salary this last season would have been $5,150,000 and this upcoming season would have been $5,381,750 followed by two season at $10.7 million.

So, to summarize, the 2 year deal going through restricted free agency would have paid Parson a total of $6,888,250 after 3 seasons, $12,270,000 after 4 seasons, $23,004,125 after 5 seasons, and $33,738,250 after 6 seasons. And that's probably a low estimate on season 5 and 6.


Now, if Parsons actually goes through restricted free agency and is offered 4/51 ($12 mil first season w/4.5% raises) that means he will have been paid a total of $14,664,750 for his first 4 seasons. Tristan Thompson, the #4 pick in the 2011 draft, will have made $16,993,110 over the first 4 seasons and will be staring at restricted free agency next year, which will yield him a deal in a similar range to Parsons.

So, we should understand that IF we gave Parsons an extra $1 million to $2 million per season above what the market value would be in restricted free agency OR if we wait until after next season and give him an extra $1 million to $2 million per season above whatever the top offer is...and if the top offer is a max deal...we go ahead and pay Parsons the 5-year max with 7.5% raises....that we are really not "overpaying" Parsons over the long haul. We are simply making up for him being "underpaid" his first 3 or 4 years in the league.

I believe this is somewhat important because it establishes a precedent and reputation for Morey. What it says is...if you are undrafted or a second rounder and Morey drafts you or signs you and you agree to the longer 4-year deal that allows the club to control you for 4 years and you perform and become a quality starter on this team...that Morey will make you whole for doing the club a favor and letting the club control you for 4 years. In contrast to that, if Morey simply uses Parsons for the first 3 or 4 years and then flips him to another team like he's throwing away an old rag doll then that pretty much ends any future possibilities of getting another Chandler Parsons contract on the books. That's why I keep saying...we're not trading Chandler Parsons. He won't yield up a good enough first rounder to make a difference in a trade for a superstar. AND trading away Parsons at this stage after the boy has given his heart and soul to this team, risked limb and injury for minimum salary and busted his a.. to help us win would simply be the wrong thing to do from a PR standpoint. Parsons has performed. Parsons has significantly outperformed his contract, and the vast majority of his draft class. He should've been a top 5 pick in the 2011 draft.

So, watch it happen. The Rox are going to keep Parsons here for the foreseeable and WHEN Parsons signs his new deal..whether it be this off season or next off season...you're going to hear it over and over from Morey himself about how special Parsons is for letting the club control him for 4 years and they are rewarding Parsons for signing that 4-year deal when he could've signed a 2-year deal and been making big money already.

It's good business, guys.


Now....where's the next Chandler Parsons?

 

good point
a decreasing contract can help a lot in the future
at least must be consider if it is possible

 

I get what you're saying here from a PR and player perspective but I don't think its good business sense at all from an owner/GM perspective. There's a reason why most 2nd rounders don't get deals like that. Because the market deems them as having limited upside. Parsons gladly took that deal for 4 years because it was guaranteed money and though he might have believed in his own potential the market doesn't always view players the way players view themselves. Morey took multiple risks like this on second rounders and he's been successful and finding gems but it's not like the other 29 teams are competing to throw 4 year deals at 2nd rounders.

Personally I think it'd be classy for morey to do parsons a solid in his next contract given what he's been paid. But I don't think Morey is obligated or that the league would view it as a wrong to not give him market value for his next deal. DM took the risk with Parsons so DM should reap the rewards. If you bought in on a startup company and it sky rockets do you give back a portion of the value to the company of your increased equity value? Regardless of how much that company believed in its value at startup, an investor doesn't "pay it back" to them after the investor took the risk.

 

Howard
Melo
Parsons
Harden
Bev

Will be awesome if they can find and implement a decent team defense.

 

Good points. And it is normally "bad" business to overpay. Unless you consider unique situations. This is one of them.

Companies reward start-up investors and start-up employees all the time with...extra stock and stock bought at a discount. Those employees took the risk of being underpaid and the company going broke. Most of them get rewarded big time on the back end IF the company succeeds. But unfortunately MOST start-up companies fail and those same employees are left holding the bag and not getting what they would've gotten paid if they were first round draft picks of Microsoft or Google.

At some point Parsons is going to be on the market. Either in restricted free agency now or in unrestricted free agency in the future. And the TV show was a hit so all the actors deserve significant raises, don't they? If a team offers Parsons 4/50 then that's his market, plain and simple. If Morey pays him 4/58 then it shouldn't be that big of a deal, should it?

 

Shouldn't we assume a 4-year deal? I didn't think Parsons was eligible for a 5-year from us.

 

If that's the case, you'd think that extra year gives the Rockets another bit of leverage in negotiations. Between the 5th year and him being a restricted free agent, I could see a 5 year $50-55 million contract.

 

Apples and oranges. This is a different analogy. What you're referring to here would be liken to Melo coming here on a discounted contract. He'd be giving up value on his contract as an "employee" because he believes he could get more value out of what could potentially be built.

Parsons on the other had is like the intern who was unproven. I was an intern for a startup actually and unproven workers are compensated by their measly wage and the opportunity to learn and grow in the company by gaining experience and exposure. If an intern becomes a rockstar in the company then he can renegotiate after his "contract" is up.

DM took a chance on Parsons by offering him an extended deal. It'd be like a startup offering an intern a contract for a slightly higher wage for a longer period than most other interns get. When you're a poor college kid you'll take guaranteed money regardless of how special you think you can be down the line.