Can The Rockets Afford a 3rd Superstar and Chandler Parsons?

Absolutely they can and will if they can pull of a trade for LMA or a 3rd superstar. Les has shown a willingness to exceed the salary cap on an almost annual basis. He was generally right around the Luxury Tax Threshold during the Yao / TMac era and even exceeding the LT a few years ago, so I don't get where all of the Les stereotype of "not going over the cap comes from".

Certainly Les is not going to let Daryl Morey go all Mikhail Prokhorov with the salary cap but he has commented that he has no issue paying the Luxury tax for the right player. This year the Luxury Tax Threshold is 71.7 million dollars so at the very least Daryl Morey can spend that much. That is an increase of 1.4 million from the previous year so I think we can safely assume that it will increase at least a minimum of 1.4 in 2014 as well. That would make the Luxury Tax Threshold in 2014 (when Chandler Parsons is likely to get his raise) an estimated 73.1 million dollars.

The Tax Apron, which is 4 million dollars past the Tax Threshold, is a realistic budget for Daryl Morey to spend on the cap IMO. That would give Daryl Morey 77.1 million dollars to spend on the Rockets salary in 2014. Why a budget at the Tax Apron? Because once you exceede the budget the team does not just pay the additional tax, the team also becomes handcuffed with what type of moves the team can make.

- the team would loose the bi-annual exception
- the mid level exception would be greatly reduced
- the team can only send out a sign and trade player they can not recieve a sign and trade player. (They can receive a player currently under contract).

For this scenario I am using LaMarcus Aldridge since he is the player most commonly talked about as the 3rd superstar. Here are the salaries in millions of D12, LMA, Harden and CP12 (assuming his raise starts at 10 mil a season) in 2014:

D12 - 21.4
Harden - 14.7
LMA - 16.0
CP25 - 10 est.

Total of the four equals 62.1 million dollars in 2014. Assuming the Tax Apron of 77.1 million dollars is Daryl Morey's budget, that leaves him 15 million dollars on the rest of the roster. Assuming both Lin and Asik are casualties of any trade for a 3rd superstar, the remaining roster looks like this in 2014:

TJone - 1.6
DMo - 1.5
PBeverley - .9
Cisco - 1.3
Canaan - .8
BJ Young - .5 est.
Covington - .5 est
Casspi - .9
Williams - .9
GSmith - 1.2 est.
Brooks - 1.1 est.

That is 11.3 million in salary plus the 62.1 million for D12, LMA, Harden & CP25 leaves you with a payroll of 73.4 million dollars. If Daryl Morey's budget is the Tax Apron of 77.1 est then the Rockets would have an extra 3.7 million to upgrade the Roster, give players like Cisco an increase or possibly retain someone like Greg Smith as a restricted free agent. The Rockets could also use that money to sign one of their overseas players like Papanikolaou or Sergio Llull to a contract if they are ready to come over.

With a team payroll budget at the Tax Apron, Les will have to pay an additional 1.5 dollars for every dollar over the Tax Threshold. Assuming Daryl Morey uses every dollar of the estimated team budget, that is an extra 6 million in taxes. That would mean Les has to pay 83.1 million dollars for a payroll budget of 77.1 million dollars.

So I guess it comes down to, do you believe Les when he said he is willing to go into the Luxury Tax for a championship contending team? I absolutely believe him. It is also good to remember that frequently during the Yao / TMac era, the Rockets started the season in Luxury Tax territory but Daryl Morey was always able to make some trade deadline deal to get the Rockets below the threshold and saving the Rockets from having to pay the tax. why is that important? Because it gives Les the confidence to allow Daryl Morey the ability to use tools like the MLE to exceede the apron in the summer since he has shown the ability to make moves to get back below it at the trade deadline.

Another thing to remember is that DM is willing to use Europe and the D-league to find good roll players like Beverley and Smith which goes a long way towards keeping the cap down and preventing the team from getting locked into to a bad salary on a player that can no longer contribute.

 

I'm not going to argue that point but for the purpose of discussing if the Rockets can afford 3 superstars and Parsons, I thinks it's more valuable to estimate his salary on the high side.