[Iko/Hollinger] Projecting the Rockets’ future

[Iko/Leroux] Rockets free agency preview, part 1: Discussing internal decisions

Rockets GM Daryl Morey is an avid fan of chess and when you understand Houston’s aggressiveness in accordance with the rest of the league’s movement, it’s easy to understand why.

The game of chess is centered around advantages. Opportunities to strike. Chances to progress at the expense of your opponent’s. It’s the exact same in the NBA, except without the board, the pieces, and 29 opponents. Okay, maybe it’s not exactly like chess.

Nevertheless, regardless of whether the 2019-20 NBA season returns or not, one thing that will surely return will be the offseason. Thirty teams will be tasked with important decisions surrounding the draft, roster continuation, additions and coaching staff selections.

As long as the Rockets have James Harden and Russell Westbrook suiting up every night, we won’t have too many discussions about actual cap space. But that doesn’t mean there aren’t avenues to explore and ways to improve a roster.

Morey will have to find ways to keep a contender competitive amidst a growing number of similar hungry franchises. The recent change to small ball presents the front office with the challenge of deciding whether to stick with it or pivot, all dependent on how the next few weeks play out. It’s unknown at this moment in time just how the market will play out and what trades or free agency decisions players make. But this summer is extremely crucial.

With that being said, I couldn’t think of anyone better to explore all the options, scenarios, and routes the Rockets could take other than The Athletic’s very own salary cap wizard, Danny Leroux. This is the first of a two-part conversation that will focus on the team, the decisions they need to make internally, and the external moves that could potentially on the table.

So without further ado….

Kelly Iko: Danny, thanks again for doing this. Your expertise is in one of the more confusing aspects of the NBA, the ‘money stuff’. The understanding and application of the CBA and teams’ individual cap scenarios is something even the smartest basketball minds don’t completely understand. With that being said, break down the Rockets’ salary cap situation heading into the summer like we’re five years old. How much space could they have? How much flexibility is there?

Danny Leroux: I will stick with the estimates of a $115 million salary cap and $139 million luxury tax since that is the most recent official ones available, though it is good to note that they could end up being lower than that. The Rockets have $123 million in fully guaranteed salary owed to six players (Harden, Westbrook, Gordon, Covington, Tucker, and House). Assuming they keep at least Ben McLemore and Isaiah Hartenstein, push that to $127.3 million for eight.

That means the Rockets will almost definitely function as an over the cap team this offseason. The Non-Taxpayer Mid-Level exception would be worth $9.8 million while the Taxpayer MLE would be $6 million. It would be hard to use either of those in full and stay under the tax, so the biggest question is how much Tillman Fertitta is willing to spend. Being aggressive would involve using the full MLE, re-signing Austin Rivers with Bird rights and possibly adding talent using some of their small trade exceptions. If the tax is a hard line either in the offseason or by the trade deadline, Daryl Morey’s job gets even tougher since filling out the roster gets them close to the tax even before using the MLE.

Iko: This will be an offseason unlike any other given the global impact of COVID-19. From a financial standpoint, how does that impact ownership across the league? Do you expect conservative approaches? Could Houston, an aggressive team by nature, stand to benefit by striking while others stand pat or is that unrealistic in these times?

Leroux: Considering the likely lost revenue which may or may not be fully reflected in the salary cap, I fully expect most but definitely not all teams to be more conservative than they would otherwise. That lowers salaries and creates opportunities for aggressive management groups to maximize. That said, I am a little skeptical of the classification of the Rockets as “aggressive” in the specific context of spending, especially when it comes to the luxury tax. Morey will be ambitious as always but may have constraints on how far he can go, which would align pretty clearly with the Fertitta era.

Iko: Looking at the roster, what do you make of the Eric Gordon situation? Factoring in his contract, age, injury history, and of course his skillset. If you’re Houston, are you entertaining the idea of trading him for a different type of player? Or are they better served with him moving forward?

Leroux: It is really tough. Gordon is such a wonderful fit for what the Rockets want to do on both ends of the floor but health and age (31) are both working against him. Gordon’s story also changes because of the extension he and the Rockets agreed to before this season- instead of his contract expiring this summer, Houston now owes him $16.9 million in 2020-21, $18.2 million in 2021-22 and $19.6 million in 2022-23 before a non-guaranteed final season.

If other general managers trusted that Gordon would be even mostly healthy moving forward, someone would likely jump on that as a reasonable gamble considering his talent. Of course, in that case, the Rockets would not be looking to move him. Instead, moving him for someone who can actually help the team now will be extremely difficult, especially if management does not want to take on a worse contract or attach assets. I would just keep Gordon around and see if a bounce-back year returns him to the fold unless a stronger-than-expected offer happens this offseason.

 

Iko: From talking with the front office and even hearing D’Antoni on multiple occasions, it’s clear that Gordon is a huge part of their group and with the application of small ball. Not having his services readily available isn’t optimal when you’re trying something like this. But in hindsight, would you have given him the same max extension?

Leroux: I broadly supported the deal then but with the benefit of hindsight, the answer would be no. Remember the market that Gordon would have entered as a free agent: very few teams have the capacity to offer more than $10 million per season and most of that small group are younger squads looking for players in their twenties. Gordon still has value for the Rockets and other good teams but my instinct is that a 4 year, $75.6 million offer would not have been in the cards for him from the Rockets or anyone else.

Iko: Since we’re on the matter of extensions, there’s another person on the roster that needs addressing. I’m of course talking about P.J. Tucker’s extension talks. What does a max extension look like for him, how does that affect Houston’s cap, and what’s the most realistic outcome?

Leroux: Extensions can only run for five seasons and that includes any years remaining on the contract, so the Rockets and Tucker could add four new seasons to the agreement. In an extension, the maximum salary for the first new season (2021-22) would be 120 percent of the estimated average salary. We do not know that yet for a future season but $12 million works as a rough estimate.

That would mean the most an extension could add would be four new seasons and $53.8 million in new money. Now, it feels unlikely Morey and the Rockets would offer that to someone who will turn 36 before playing his first game on that new extension but those are the terms. At the moment, my most likely scenario is that Houston learns from the Eric Gordon example and plays out this season before making a significant commitment. They will have full Bird rights in 2021 and Tucker will be 36 years old, making it hard to find a market even in a summer where lots of teams will have space.

Iko: What about Mike D’Antoni’s free agency? What does his market look like? Are the Rockets better served hanging onto him, or do you think they look elsewhere?

Leroux: Despite being close to his seventies, D’Antoni will have a head coaching job for 2020-21 if he wants one. We are in an unusual place because with the season in flux, we do not know all of the jobs that will be available, though some like the Nets and Knicks are already on the board.

My personal favorite new destination for D’Antoni is one that is not currently open: the New Orleans Pelicans. They need a creative offensive mind to maximize their unusual collection of talent and turn Zion Williamson into an even more devastating force. D’Antoni also has connections with David Griffin from their time in Phoenix and even though former D’Antoni assistant Alvin Gentry currently has the job, it seems plausible that those machinations could happen.

While the groundwork is already pretty set for the Rockets in terms of personnel or scheme, they would be wise to keep D’Antoni. Remember that he renovated the team’s offense and rotation on the fly during the season as a reaction to their early struggles so it would be thrilling to see what he and his staff can do with a more actualized roster to execute that approach. Considering his age, it would be surprising to see anyone offer D’Antoni a really long contract so the Rockets should be able to stay in the bidding unless there is more friction in their relationship than has been publicly reported so far.

Iko: Lastly, do you anticipate Austin Rivers picking up his option? If he declines in lieu of more money, Houston has his Bird Rights so that would be possible but if he decides to walk, how could they replace him? Is there anyone on the roster capable of filling the hole?

Leroux: I do not. It would be shocking if Rivers could not get a fully guaranteed minimum contract on a competitive team on the open market so he might as well get more control by opting out. Also, the Rockets have Early Bird rights on Rivers, meaning they can pay him up to about $10 million without having to use another exception like the MLE. While that is more than the 27-year old will get as a free agent, it does give him some leverage in negotiations since the Rockets can sign him without diminishing their ability to bring in new talent. Furthermore, as the question alluded to, Houston does not have many capable replacements for his 23 minutes per game on roster, especially for the times when someone in the rotation is injured.