Lewis: Rockets Go Way Beyond 'Moneyball' A's In Terms Of IP

My recollection of that offseason was that we had something like 17-18 guaranteed contracts -- we had to eat the money from Justin Reed and Jackie Butler (and Sura). This limited their ability offer a multi-year guaranteed deal to a guy they weren't sure was healthy. We know from last offseason that his agent isn't the easiest guy to work with.

Not doing a multi-year deal (which we did with Novak and Dorsey) was probably a mistake, but we may have come out ahead -- Landry probably would have earned a bigger/longer contract if he were a free agent now that he's proven he's not a fluke.

 

those 7 players that morey's referring to, we'll never know. only him and his team of number crunchers know. that's why they get paid what they get.

 

Landry wasn't taking a crappy deal, he held out from signing a bad first contract... how can you forget that?

http://www.chron.com/disp/story.mpl/sports/5130595.html

Basically we tried to sign him on the cheap and he said no, instead he opted for the contract he got.

 

It says there that the signing of Steve Francis prevented them from offering a deal similar to Novak's. And they otherwise had 17 players signed to fully guaranteed contracts that year. How much money could they have offered in a multi-year deal to Landry, given the Francis signing and all the other players on the books? Anyone know?

 

Not to get off topic but the A's always lost to better teams and as a result of losing big name players they started doing more with less. And eventually that caught up with them by them not making the postseason since 2006. To an extent I don't think Morey works that way in finding the cheaper guy to fill an role and get more than what they bargained for


I would say they operate more like the Red Sox in filling needs and splurge when opportunity presents its self.



But the Sox of course win more

 

Yeah, I'm just saying that the 31st pick is like a 1st rd pick. Chalmers got 3,milsap and a guy like bass got basically 3yrs. By not putting landry on a dorsey type rookie deal has also elevated scola's future contract. I think morey is still figuring the nba thing out.

 

Dorsey was signed with part of the MLE left over last summer. As pointed out in the previous link, the MLE was completely used up with the Steve Francis signing (big mistake) two summers ago, so there was none left when we were trying to negotiate with Landry (otherwise, it looks like he would have gotten a similar deal). I'm no cap expert, so maybe you or someone else can explain how much money the Rockets had available to spend on Landry in a multi-year deal. Apparently they offered a skimpy 2-year deal that was rejected.

 

Right on.

One of the big differences between Beane and Morey is the amount of money the team owner allows them to play with. The A's have historically spent less money trying to squeeze more out of the players they valued "statistically". Those players disappeared after a few years when Beane was unable to re-sign his players to larger contracts. Let's also not forget that the AL in baseball is much like the Western conference in terms of fielding highly competitive teams making it a tougher division to climb to the top of.

 

Uh, how so? The market for a player is what it is -- to me, it's preferable to have Landry locked in for 1 more year at $3m vs. having both as free agents.

As I said before, since we kept him for a reasonable deal this past offseason, it probably saved us money in the long term.

 

As I said earlier the Sox are a better example than the A's of how stat analysis gave an organization an edge when it comes to winning championships over a team like the Yanks because their payroll is in the upper tier of the league - but this also means they have a big spending advantage over the average MLB team, an advantage the Rockets do not have over the average NBA team. In the MLB there are also more ways to go about building a championship team, and more ways in which financial muscle can be flexed than the NBA. Barring getting a really good draft pick or getting a lucky trade for a star, it's hard to build a championship contender by simply plucking diamonds in the rough. What I"m trying to say is, there is a limit to the Red Sox analogy, because the Sox have other advantages over other teams besides stat analysis that the Rockets don't (expensive free agents, big signing bonuses to overseas prospects who do not go through the draft, high posting fees for Japanese stars, paying over slot price for draftees that fell in the draft due to contract issues etc).

The good news is that the rockets aren't competing with a financial Goliath like the Yanks (Red Sox payroll in 2004 when they won was only 69% of the Yanks in value), and the increased difficulty of harnessing basketball stats (when compared to baseball) means it will take other teams a longer time to catch up in this area, than it did for other teams to catch up to the A's. (The damn blazers are pretty annoying though!)

 

Since the MLE was completely used up on Steve Francis, the most the Rockets could have offered Landry was a two-year, fully guaranteed deal for the league minimum. I think THAT was the sticking point with Landry's agent. He wanted the fully guaranteed two years, while Morey was only offering a team option (or partial guarantee) on the second year. The sides finally came to terms on the one-year (presumably fully guaranteed) deal.

Again, with 19-20 guaranteed contracts on the books, the Rockets were dangerously close to to the luxury tax threshold. Les Alexander most likely wanted Morey to do whatever necessary to avoid the tax, even if it meant playing hardball with Landry. If Landry's contract guarantees caused the team to dip even $1 over the luxury tax threshold, it would have cost Les Alexander several millions of dollars in taxes and lost shared revenues from the league.

Morey and the Rockets have played their cards well with Landry. His current three-year deal has a team option for 2010-11. The Rockets will have the option to either (a) keep Landry bargain-basement $3M salary for 2010-11 and maximize available cap room to sign free agents (in which case Landry will become an unrestricted free agent in 2011) or (b) NOT exercise the team option, in which case Landry will once again be a RESTRICTED free agent in the summer of 2010, allowing the Rockets to hold all the cards on Landry's next long-term contract.

 

Bima, u seem pretty versed in this, what kind of 2yr plus option contract the rox couldve gotten landry for?

 

you cant really compare morey's system to the A's. yeah the system is similar in that stats are important, but at the end of the day, given the NBA structure, the rox can keep any superstar they develop or draft, given he wants to stay here. in baseball, small market teams like the A's, the twins, the marlins, etc. have to give these players up . the A's and twins have given up santana, hunter, giambi, tejada, etc etc etc this decade because they went to NY or other big market teams with rich owners. so those teams have limited chances to win while their prize guys are young and cheap.

 

I assume you are asking about what sort of contract the Rockets could have signed Landry to as a rookie.

The basic rule is that second rounders can be signed for any amount, assuming the team that drafts him is under the cap, in which case the second rounder is treated just like any other free agent signing. Hence, some larger contracts being offered to guys like Ginobili, Scola and Marc Gasol (to name a few).

However, since most teams are over the salary cap (and also unwilling to break the bank for a mere second round pick), the only available options to such teams is either to (a) sign him to the league minimum, in which case his contract cannot be for more than two years; or (b) use a salary cap exception (i.e., the MLE or LLE) to sign him, in which case his contract can be up to five years (in the case of the MLE) or two years (in the case of the LLE).

The Rockets used a portion of their MLE to sign Steve Novak to a three-year deal back in 2006. The deal was presumably for an amount out of the MLE approximately equal to the league minimum salary, with the first two years guaranteed and the third year a team option. (The Rockets ended up exercising the team option on Novak and then subsequently traded him to the Clippers in exchange for the right to swap 2011 second round picks with the Clippers.)

The Rockets also used a portion of the MLE to sign Joey Dorsey to a four-year deal last summer. The deal was actually set at an amount of the MLE equal to approximately the value of a late first round pick (~$816,500). It was also uniquely structured to make the first two years guaranteed, have a partial guarantee for the third year, and then have a team option for the fourth year. It amounted to a late first round rookie scale contract (in salary amount only), except that the Rockets can decide on the partial guarantee and the Year 4 team option immediately before each such season, instead of having to exercise a full season in advance like under first round rookie scale contracts.

In Carl Landry's case, the Rockets did not have the MLE available at all. Not one penny was left of the MLE after using most of it to sign Luis Scola (see my point above) and the remainder to sign Steve Francis. Therefore, the Rockets only had the LLE or the league minimum to offer him, each of which had a two-year maximum. Hence, the Rockets could not possibly have offered Carl Landry more than two years. Again, Morey and Landry's agent quabbled over guarantees for the second year (or at least I can only assume), resulting in the sides finally agreeing on a one-year deal.

I hope this explains second round rookie contracts to your satisfaction.

 

I should clarify that Scola was signed using a portion of the MLE. Marc Gasol, however, was signed using the Grizzlies' cap space.

 

In retrospect, do you agree with Leebigez that the Rockets would have been better off giving him the guaranteed 2-year deal? They ended up signing him for 3 million in his second year and were still able to get under the LT. Was that an unlikely prospect in 2007?

 

I agree Morey did a good job. But as some people here already pointed out, he also signed Steve Francis, Brent Barry, Dorsey with not so successful results. Overall, I agree he's pretty good at his job.

But Morey didn't lose the Best GM trophy only by those small mistakes, it's the things he didn't do cost us a lot more. He didn't do the Tmac for Billups trade for example.

I think the so called 'Moneyball' is similar to value investing. There are 2 kinds of value investing: You can buy ok to good value cheap, or you can buy great value fair. Morey is only good at the 'buy cheap' part up to this point. GM's of LA, Denver, Portland(bought pick to land Roy) did a great job at the latter part.

With Morey, we can consistently be a solid team but may not be a contender year in and year out.

 

Hindsight is 20/20. Of course, given how good Carl Landry turned out to be, it probably would have been better to have given him a two-year, fully guaranteed deal at the league minimum, making Landry a restricted free agent THIS summer. However, Daryl Morey has publicly stated on multiple occasions that the Rockets actually WANTED to sign Landry to a one-year deal because they thought Landry would be resigned in 2008 to a multi-year deal at a lower salary than if Landry hit free agency in 2009. Obviously, no one thought Landry would be THAT good his rookie year. But that may have just been posturing on Morey's part.

As far as the luxury tax concerns go, if you recall, the Rockets had to make the Bonzi Wells-Bobby Jackson trade AND had to pay the T-Wolves (plus give up their 2010 2nd rounder) to take Kirk Snyder off their hands (in exchange for Gerald Green, who in retrospect appeared to have never been in the Rockets' plans) just to BARELY sneak back below the luxury tax threshold. That took a lot of work by the Rockets' front office (and perhaps even a little luck) to accomplish that feat. The luxury tax danger was very real at the time.

 

Thanks. Very informative, as always.

 

I think you have a point, but I disagree slightly. I think it is not that Morey would not buy great value fair. I think (just speculating) Morey tends to be conservative. If he was sure that Billups's value was greater than T-Mac's at that time, he would have pulled the trigger. But at that time, T-Mac's value was still pretty high. (People tend to forget how well he played just a year ago.) Trading T-Mac away would be extremely high risk and getting Billups did not guarantee success.

In hindsight, that was a big missed opportunity. But any good investor has slapped himself more than a few times how many great opportunities he has missed.