With Lower Estimated Cap, Rockets Probably Can't Offer Max

Ready for another reality check???

With the recent memo from the league office indicating that the salary cap could drop precipitously to as low as $50.4M for 2010-11, teams that had previously counted on being able to comfortably offer a max contract to at least one free agent next summer suddenly find themselves on much shakier ground. The Rockets are among those teams. Whereas only a couple of weeks ago the Rockets had expected to have as much as $25M in cap room available (assuming several key players were renounced and options not picked up, however), now it appears increasingly unlikely that the team can get far enough under the cap to offer a max contract to a free agent like Chris Bosh or Joe Johnson.

Let's take a quick look at the absolute least amount of "total team salary" the current Rockets team would have on the books next summer heading into free agency. For purposes of this starting point, I will assume that the Rockets (1) do not sign Von Wafer to a multi-year deal this summer; (2) only sign Jermaine Taylor or Chase Budinger to one-year deals this summer; (3) renounce their rights to Tracy McGrady, Brian Cook, Brent Barry, Luis Scola, Kyle Lowry, Jermaine Taylor, Chase Budinger and (if signed to a one-year deal this summer) Von Wafer; (4) do not pick up their team options on Carl Landry and Chuck Hayes; (5) waive Joey Dorsey (assuming his partial guarantee is relatively small); and (6) trade away their first round pick. I only assume that the Rockets will pick up the 2010-11 option on Aaron Brooks for slightly over $2M, since they'd be insane not to and they must do so by October of this year. This will leave the Rockets will only FOUR (4) players under contract for 2010-11:

Yao Ming $17,686,100
Shane Battier $7,354,500
Trevor Ariza $6,322,320
Aaron Brooks $2,016,691
(SUB)TOTAL: $33,379,611

Now, add to that a "roster charge" of $473,604 for every roster spot under 12 that the Rockets do not have filled. With a total of 8 spots missing, these roster charges add up to another $3,788,832. That puts the Rockets' total team salary up to $37,168,443. Using the league-estimated $50.4M cap figure, this puts the Rockets' BEST CASE SCENARIO at $13,231,557.

Again, this is an impossibly low and ridiculous hypothetical for the Rockets' total team salary. For example, the Rockets would not trade away what is sure to be a late lottery to middle first round pick. They also have to add any partial guarantee on Dorsey's salary to its team salary figure. Also, it is unlikely that Landry's $3M team option is not picked up (that is, unless the Rockets wanted to re-sign him as a restricted free agent in 2010, in which case his cap hold would be $6M, which would only further increase the total team salary figure). Also, Taylor and Budinger will likely be signed using small portions of the MLE to multi-year "minimum equivalent" deals. And for those who want to re-sign Von Wafer, his contract would likely involve at least a player option for 2010-11, so that would further increase total team salary. When you factor all of these items into the equation (they keep the first rounder at $1.92M, let's say $200k guarantee for Dorsey, option picked up on Landry, multi-year deals for the rookies, and Wafer signed to multi-year deal paying $2.5M per year), the total team salary increases to about $43.94M, and the available cap room would shrink to a much more realistic $6,455,187.

Again, this is still assuming the Rockets renounce both Luis Scola and Kyle Lowry. Even if Shane is moved next year for an expiring contract, then you're still only looking at about $13.81M in cap room. Not enough for the Chris Boshes or Joe Johnsons of the world to come over.

So . . . what does this all mean?

Given the ever-increasing likelihood that the Rockets won't have enough cap room to make a max contract offer to a prime free agent (even with a somewhat higher salary cap, the Rockets would still have to renounce Scola and Lowry to even have a shot), combined with the fact that these max-caliber players can make significantly more by staying with their current teams, I have to think that Daryl Morey is thinking about improving the Rockets via trade and NOT via free agency.

Personally, I don't think the salary cap will end up being as low as the $50.4M estimate projected by the league office as a realistic worst case scenario. Still, it likely won't be nearly as high as this year's salary cap of $57.7M, and the Rockets seem to have very few scenarios in which they can make a straight-up pitch to the top dogs in free agency next summer. If the team has to be gutted just at a CHANCE to sign one of those guys, then I'd much rather stick with the current core and seek to improve via trade.

These developments with the salary cap make it all the more interesting to see what Morey is able to do with Tracy McGrady and his expiring contract. If they can find a player worth more to the team than the amount of cap room they would expect to have, then Morey probably has to pull the trigger on a deal. Of course, the amount of bad contracts he takes back will play a significant factor as well. Whether a major deal happens this summer or in February (by which time Morey will have had the opportunity to better gauge how league revenues are faring and to run projections on the salary cap), it is going to be VERY interesting.

 

Yao either retiring (please no!!!) or opting out of his contract (seemingly unlikely) represents about the only way to ensure that the Rockets are MAJOR players in free agency next summer. But if Yao "retires", I doubt he officially files any papers with the league office until his contract expires in 2011. Why would he leave all that money on the table for 2010-11? I think that is what Hakeem did with the Raptors, not officially retiring until about a year and half after "retiring". But the league would likely granted salary cap relief at some point during the summer of 2010, so I suppose it would still work from a salary cap standpoint.

My bad. I forgot about that thread. Plus, there have been several developments since that thread started, including the development that the Rockets had obtained the DPE to use on Ariza, opening up the possibility that the MLE could still be used, further reducing 2010 cap space.

Possibly true, but teams like the Knicks, Heat and Nets will have a LOT more cap space than the Rockets. Still enough to comfortably offer at least one player the max. Probably not two, though. And the allure of the NYC area (and the oodles of available endorsement dollars) or Miami Beach (and, like in Texas, no state income tax) would be a lot more enticing for most of these guys than playing in Houston.

(As an aside, I think Bosh ends up in Miami next summer if he doesn't stay in Toronto. The Heat would have Wade, Bosh and Beasley. They could become serious contenders after 2010. Personal opinion, that's all.)

 

I readily admit that I don't think the 2010 salary cap figure will actually end up being $50.4M. But it most likely won't be nearly as high as this year's cap. So, for the sake of your argument, let's assume a cap figure of $55M. That's a very reasonable figure. Even then, when you factor in the realistic factors in my OP, you're still only talking about $11M in cap room.

That's still not going to do it.

 

Agreed that there's a long way to go before we get to the critical point of picking a new direction for the franchise. My point, however, is that, even if the team offloads Battier, there STILL probably won't be quite enough cap room to draw a "max guy". I'm just pointing out that Morey will probably have to consider trades this offseason and February a lot more seriously than we Rockets fan had initially thought. That's all.