Ringer article on DM operating under luxury tax

This was posted in another thread, but I thought the article was good enough to warrant its own post.

https://www.theringer.com/nba/2020/10/16/21519593/daryl-morey-houston-rockets-luxury-tax-resign

Daryl Morey did everything but win an NBA title in 13 seasons as the Rockets GM. Houston came this close in 2018, and made the playoffs 10 times without ever bottoming out during Morey’s tenure, which ended with his resignation on Thursday. Maybe more impressive: that he did this while the Rockets were as frugal as they were successful, going into the luxury tax only once in the past decade.

Morey, one of the pioneers of the NBA analytics movement, is the basketball version of Billy Beane, the longtime GM of the Oakland A’s made famous by his portrayal in Moneyball. But Beane didn’t become the star of a best-selling book and movie solely because of the way his teams played. It was because they succeeded with one of the lowest payrolls in Major League Baseball. The same is true for Morey. He innovated because he worked for owners (Les Alexander and Tilman Fertitta) who gave him no other choice.

Unlike his former lieutenant Sam Hinkie in Philadelphia, Morey was never allowed to rebuild through the draft. He took over a title contender with two future Hall of Famers (Yao Ming and Tracy McGrady) in 2007, but both suffered career-ending injuries during the next few seasons, devastating blows that should have forced the Rockets to start over. But Alexander never agreed to let Morey try his hand at the Process, instead forcing a rebuild from the middle of the standings. Morey’s only goal from 2010 to 2012 was to stay above water; he won 34 to 43 games those seasons and then pounced when the Thunder made James Harden available.

Harden and Morey didn’t just change the NBA in eight seasons together. They did it with one hand tied behind their backs. Harden went from being part of a Big Three with two other top-five picks in Oklahoma City (Kevin Durant and Russell Westbrook) to one with Chandler Parsons (a second-rounder) and Jeremy Lin (an undrafted free agent). Houston never drafted in the lottery during Harden’s time there. They won on the margins, constantly churning their roster and winning enough that other stars (Dwight Howard and Chris Paul) wanted to play for them.

But there was always something missing. The Rockets never paired Harden with a frontcourt player who could be the focal point of the offense. Houston was forced to make do with fairly limited personnel for much of the Harden era. Just compare his supporting casts with Steph Curry’s. Harden never had his version of Draymond Green, much less Durant. He had no pick-and-roll partner who could make the correct reads in four-on-three situations, or draw a double-team and kick the ball out to him. He mostly played with 3-and-D players who needed him to spoon-feed them open shots.

That’s why Morey had to reinvent the wheel when it came to designing an offense to hunt for the most efficient shots. He was running a shell game, using smoke and mirrors to overcome a lack of elite personnel. No team has won an NBA title since the turn of the millennium without at least one player 6-foot-7 or taller who averaged more than either 18 points or three assists per game. A team starting Clint Capela and P.J. Tucker up front shouldn’t have been able to win 65 games. Conventional wisdom about the Rockets confuses causation with correlation. They didn’t come up short in the playoffs because they were running gimmicks; those gimmicks are the reason they were deep in the playoffs in the first place.

But getting 90 percent of the production for 50 percent of the price ended up backfiring once they got there. The Warriors exposed Houston’s lack of versatility, most famously when the Rockets missed 27 straight 3s in Game 7 of the Western Conference finals in 2018. Morey was criticized for not having a Plan B when his team went cold from the perimeter, but he couldn’t have asked limited offensive players like Ariza and Tucker to take pull-up jumpers, break down defenses off the dribble, or hit cutters out of the high post. Building a team with established veterans who play fundamentally sound basketball on both ends of the floor costs a lot of money.

And that was the one thing that Morey never really had. According to the cap numbers at Spotrac, which go back to the 2010-11 season, the Rockets barely went over the luxury tax (just $3.65 million over) in their one season (2015-16) as a taxpayer. The Warriors spent $49.63 million in penalties over the last five seasons, while even the small-market Thunder spent $33.73 million. There was no excuse for Houston to not open up the checkbook. This is a franchise located in the fourth-biggest metro area in the U.S. that has had a superstar in the prime of his career. Alexander sat on his hands while Houston’s rivals went all in, counting on Morey’s ability to use advanced statistics to turn water into wine.

This refusal to spend money became farcical once Alexander sold the team to Tilman Fertitta in 2017. Fertitta spent so much money ($2.2 billion) to purchase the Rockets that he may not have had the liquidity to go into the red to build a title contender. Houston was a laughingstock around the league for the amount of juggling it had to do to stay under the tax. The best example came at the trade deadline last season, when Morey used a future first-round pick to shed the salaries of Brandon Knight and Marquese Chriss. There was no basketball reason for the move. It was just done to cut costs. It’s not that Knight and Chriss would have helped the Rockets. But there were certainly a lot of better things that Morey could have used that pick for.

Houston also spent that season in a bizarre staring contest with Danuel House Jr. House is the kind of diamond in the rough that Morey routinely uncovered in Houston, an undrafted free agent on a two-way contract who would become a starting-caliber wing. The problem was that players on those deals can spend only 45 days with the NBA team during the season before their contracts have to be converted. Money in Houston was so tight that Morey had to send House back to the G League when he wouldn’t sign a below-market long-term deal. He replaced House with two players he signed off the street (Gerald Green and Kenneth Faried) before bringing him back right before the playoffs. It’s not like House was asking for the world. He signed a three-year, $11 million contract in the offseason. But even that was more than Morey could offer at the time.

Houston’s limited financial flexibility became an even bigger issue last season after the trade for Westbrook. With the team’s two best players costing a combined $76.7 million, it became almost impossible for Morey to fill out the roster while staying under the luxury tax. Morey and head coach Mike D’Antoni had to conjure up production from players other teams didn’t want. Jeff Green went from being cut by the Jazz to being a crucial piece of the Rockets’ small-ball attack in the playoffs. It was the same story with Austin Rivers, who had been on three teams in five seasons before landing in Houston, and Ben McLemore, who had one foot out of the NBA before the Rockets turned him into a 3-point sniper. All were more valuable in Houston than anywhere else in the league because Morey identified what they could do well and put them in roles that didn’t ask them to do much else.

It’s unclear why he stepped down when he did. He was almost fired last October for his tweet supporting the pro-democracy protests in Hong Kong, which fractured the NBA’s relationship with China. But Morey told ESPN’s Tim MacMahon that he left for “personal reasons” and was interested in pursuing alternative careers, even though Zach Lowe later reported that Morey still wants another job in the NBA.

 

Either way, his time in Houston had evidently run its course. Two of his lieutenants—Gersson Rosas and Monte McNair—left to run teams of their own in the past year, while D’Antoni walked away from the team when his contract expired at the end of the season. The Rockets won’t have much future flexibility after emptying the cupboard of future assets to acquire Westbrook, and time is running out for them to build around Harden, who turned 31 in August.

It’s hard to believe that Morey’s departure was Fertitta’s decision simply because so few GMs can run a team as well as Morey on such a tight budget. Morey’s ability to sustain winning over such a long period without dipping into the tax may never be surpassed.

That’s the appeal of analytics in the first place. Owners began looking for people with nontraditional backgrounds to run their franchises at the turn of the century for the same reason that Fortune 500 companies hire management consultants without much experience in their respective industries. They need a few smart people to come up with a formula to justify spending less money. For all their innovation, Morey and Beane were never underdogs fighting the system. They were the public faces of a system designed to shovel more money back to the people who ran it. A GM is ultimately a glorified middle manager. Their job is to make it work with the resources they are given. And, unfortunately, there’s no greater hero in our society than a middle manager who can squeeze more production out of his workforce without raising labor costs.

Morey is a brilliant basketball mind who deserves credit for pushing the game forward. But he was also in the right place at the right time. If he hadn’t pioneered the analytics movement in the NBA, someone else would have. Conventional wisdom about team building didn’t value efficiency. And that was never going to fly for owners looking to spend their money more efficiently. After all, that’s how many of them made their fortunes in the first place.

No GM can stretch a dollar further than Morey. But he won’t win an NBA title until he works for an owner who won’t force him to.