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The Chandler Parsons Contract: An Analysis

When Chandler Parsons suits up for the Houston Rockets against the New Orleans Hornets/Pelicans on January 2, he’ll be doing so as a richer man than he was the game before.

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Chandler Parsons

Chandler Parsons quickly became a quality starter, making his contract one of the NBA's best bargains

When Chandler Parsons suits up for the Houston Rockets against the New Orleans Hornets/Pelicans on January 2, he’ll be doing so as a richer man than he was the game before.

Why, you ask?  Well, it’s one of several aspects of Parsons’s contract that are either misunderstood or simply unknown by most Rockets fans.

Hence, the following is an analysis of one of the more interesting player contracts in the NBA today.

Clearing Up Common Misconceptions

1. Parsons is not subject to rookie scale salary rules.
The NBA has specific rules governing first round draft picks and the contracts they can sign, commonly referred to as rookie scale contracts.  Such contracts are four-year deals, fully guaranteed for the first two years, with team options for each of the third and fourth years (each of which must be exercised almost an entire season in advance) and a right of first refusal after that.

However, Parsons was not a first round pick.  He was selected in the second round (the 38th overall selection) of the 2011 NBA Draft.  Therefore, he is not subject to such rules.  Second round picks can be signed to contracts much like any other player.  Unlike first rounders, second rounders do not have any scale salary by which a team may exceed the salary cap to sign them.  Most second rounders receive either a one- or a two-year deal at the league minimum salary.  Such contracts are oftentimes non- or only partially guaranteed.  The only ways in which a team may sign a second round pick to anything more are for that team to have either cap room or a salary cap exception (such as the Mid-Level Exception) at its disposal.

2. Parsons did not sign the same contract that Budinger got.
In 2009, the Rockets signed second round draft picks Jermaine Taylor and Chase Budinger to identical four-year contracts using a portion of their Mid-Level Exception.  Those contracts were structured very similarly to rookie scale contracts, with the first two years being fully guaranteed and the team holding options for the third and fourth years.  The players agreed to such a structure in exchange for an increased first year salary and two guaranteed years.  (There are more technical details to those contracts, but I’ll spare you those for now.)  While Parsons’s contract does somewhat resemble the deals given to Taylor and Budinger, it is actually structured quite differently.

The Contract Structure

In December 2011, the Rockets signed Parsons to a four-year, $3,629,500 contract (using a sliver of remaining salary cap room they had at the time).  Like the Taylor and Budinger deals, Parsons agreed to bind himself to the team for four years in exchange for an increased salary in the first year ($850,000 instead of the league minimum of $473,604) and second year ($888,250 instead of the league minimum $762,195), both of which are fully guaranteed.

However, Parsons seems to have had a better agent than either Taylor or Budinger.

Whereas Taylor and Budinger agreed to give the Rockets team options for Years 3 and 4, Parsons and his agent negotiated for additional financial security.  If the Rockets do not waive Parsons by January 1, 2013 (a highly unlikely event at this point), then Parsons’s salary for the 2013-14 season ($926,500) becomes partially guaranteed for $600,000; and if Parsons is not waived by June 30, 2013, his 2013-14 salary becomes fully guaranteed.  Furthermore, if the Rockets do not waive Parsons by January 1, 2014, his salary for the 2014-15 season ($964,750) becomes partially guaranteed for $624,771 (don’t ask me how they got that figure); and if Parsons is not waived by June 30, 2014, his 2014-15 salary becomes fully guaranteed.

What does this all mean?

It means that there are no options on Parsons’s contract to be exercised.  It’s a straight-up four-year, partially guaranteed deal.  The substantial partial guarantees also mean that it would hardly ever make financial sense for the Rockets to waive Parsons at any point during his four-year deal.  When his contract expires in 2015, Parsons will be an unrestricted free agent.

What Happens Next?

1. Parsons is “stuck” on this contract until 2015.
The Parsons Contract was negotiated at a time when it was not certain whether he would become a legit NBA player.  At that time, this deal was quite a coup for both Parsons and his representatives.  Now, however, with Parsons playing at a very high level, the contract may seem like a long-term (financial) prison sentence.

First off, there is little incentive for the Rockets to let Parsons out of his dirt-cheap deal.  They have him locked up on a very favorable deal for this year and two more after that.  For a team trying to manage its cap situation in order to add a second (or even third) star player, giving Parsons a raise before his contract is up in 2015 would certainly jeopardize those plans.

And even if the Rockets wanted to give Parsons a raise before 2015, there really is no feasible way to do that (with one possible exception, discussed below).

Since there are no option years on Parsons’s deal, there is no way to make Parsons a free agent before 2015 without waiving him.  Unfortunately for the Rockets, Parsons is such a good player that there is no way he would clear waivers — other teams would be climbing over each other to get a chance to claim him off waivers.  So, unless the Rockets want to give Chandler away to another team without receiving anything in exchange, they need to simply hold onto him on his current deal.

2. An extension of Parsons’s contract is (likely) not a viable alternative.
Because Parsons is a veteran on a four-year deal (other than a first round draft pick on a rookie scale contract), he is technically eligible for an extension from the Rockets in 2014.  Many fans have suggested that the Rockets give Parsons an extension in order to give him a substantial raise and keep him under contract beyond 2015.  However, the rules governing contract extensions do not make this a financially feasible option for Parsons.

Under the CBA, a player may not receive an extension giving him a raise in excess of 107.5% of his salary in the last season of the contract being extended.  For Parsons, an extension would cap his 2015-16 salary at $1,037,106.  I’m guessing that Parsons (and his agent) feels that he can do better than that on the open market.

So, go ahead and cross the contract extension route off the list of possibilities, unless . . .

3. A contract renegotiation remains a possibility but is not in the team’s best interests.
While a contract extension is not economically feasible for Parsons, there remains the possibility of a contract renegotiation with a simultaneous extension.  Only teams that are under the salary cap can renegotiate player contracts.  For instance, the Oklahoma City Thunder implemented this “renegotiate-and-extend” approach with Nick Collison in 2010 (you can read more about that deal here).  While the 2011 CBA changed the rules about these deals to limit the decrease in salary a player could accept in the first year of his extension to 40% (making Collison’s particular contract impossible to do now), the Rockets could still position themselves to keep Parsons locked up via a simultaneous renegotiation and extension.

However, this approach would seriously hamper the Rockets’ overall rebuilding strategy.

First of all, the Rockets would need to be under the cap during the 2014-15 season for this to even be possible.  That would mean that the team likely failed in its attempts to acquire a second star player.  It also means that the team did not even use its cap room during the summer of 2014 or at the February 2014 trade deadline to otherwise improve the team.  Unless Parsons has developed into a bona fide perenniel All-Star caliber player by that time, there is little incentive to jeopardize the team’s cap situation — and its continued pursuit of that second star player — for the sake of locking up a good (but not great) player.

Also, even with a Collison-like contract in place, Parsons would have a relatively substantial cap figure locked in on the Rockets’ roster entering the summer of 2015, when the contracts of Jeremy Lin and Omer Asik are set to come off the books and the Rockets possibly positioned to add another significant piece to the puzzle.

4. Letting Parsons hit free agency in 2015 may help the Rockets’ cap situation.
Given the possibility of the Rockets (even with the addition of another significant piece in the next three years) having substantial salary cap room in 2015, there is potentially much to be gained by letting Parsons hit unrestricted free agency.

Because of Parsons’s miniscule 2014-15 salary, his cap hold on the Rockets’ books when he hits free agency until he is signed (either by the Rockets or another team) will be a paltry $1,833,025.

This means that the Rockets could use all of its available cap room in 2015 — except for that $1,833,025 cap hold amount — to pursue a major free agent (such as Kevin Love, who can opt out of his contract with the Minnesota Timberwolves that summer), then later exceed the salary cap to re-sign Parsons to any amount using his Bird rights.

Admittedly, this approach will involve asking Parsons and his representatives to trust in the organization to do right by Parsons once the dust settles on the team’s other summer plans.  While I imagine that Parsons’s agent will certainly market his client around the league to gauge his “fair value” as a free agent, the relationship established between player and organization to date suggests that a level of trust should still be there in 2015.

Conclusion

Barring a trade, the Houston Rockets and Chandler Parsons are stuck with each other under his current contract.  An apparent victory for the player at the time of its original execution, the contract is now one of the most team-friendly in the entire league.  The Rockets have Parsons locked up until 2015 for a mere pittance.  That low salary (and Parsons’s cap hold in the summer of 2015) will position the Rockets nicely to continue to add significant pieces over the next several years.

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Houston Rockets

Podcast: Houston Rockets options with the #3 pick of the 2024 NBA Draft

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The offseason is now underway.

The forecast looks good for the Houston Rockets, but… there’s pressure as well this offseason because there are a handful of other West teams that might have rosier futures. Ime Udoka wants to win and win big. As we are about five weeks away from the NBA Draft, what are the Rockets looking to do this summer?

David Weiner joined Dave Hardisty on the ClutchFans podcast to discuss the Rockets shockingly landing the #3 pick and their options in this draft, including Reed Sheppard, Donovan Clingan, Zaccharie Risacher, Stephon Castle, Matas Buzelis and others. They also discuss the possibility of some big game hunting in Houston.


CLUTCHFANS PODCAST: SPOTIFY | APPLE

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Podcast: Steven Adams, Mikal Bridges and Trade Possibilities for the Rockets

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Houston Rockets Trade Deadline 2024

The Houston Rockets already made one deal, acquiring center Steven Adams from Memphis for a handful of second-round picks, but we still have several days left before this Thursday’s NBA Trade Deadline.

Are more deals on the way?

Rumors of interest in Mikal Bridges have swirled, with the Rockets holding precious (and unprotected) first-round picks from Brooklyn. They also could use some help inside this season, which Adams can not provide. Shooting is always in demand.

David Weiner joined Dave Hardisty on the ClutchFans podcast to discuss the Adams trade, its impact on the Rockets in 2024-25 and beyond, the Mikal Bridges rumors, the Brooklyn picks, other trade possibilities and options for Rafael Stone moving forward. Also discussed is the play of Houston’s core 6 prospects: Amen Thompson, Cam Whitmore, Alperen Sengun, Jabari Smith Jr., Tari Eason and Jalen Green.


CLUTCHFANS PODCAST: SPOTIFY | APPLE

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Rockets trade for center Steven Adams

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Steven Adams Houston Rockets

The Rockets made a surprise trade on Thursday, sending the contract of Victor Oladipo and three second-round picks to Memphis for center Steven Adams.

The deal came together quickly and the Rockets had a small window to get it done, hence why this trade was made with a week to go until the trade deadline.

The Price

When you consider that Memphis did this for cost savings primarily and that Adams would not play for any team in the league this season, the price seemed a little high to me. The Rockets gave up the OKC second-round pick this year, which is no big loss, but they also give up the better of Brooklyn’s or Golden State’s second-round pick this season. That’s a pretty good pick (likely in the late 30’s). They also give up the better of Houston’s or OKC’s second-round pick in 2025. If things go as planned for the Rockets, that pick should be in the 45-55 range.

But they didn’t sacrifice a first-round pick, which would have been brutal, and they were not going to use all those seconds this season. So it’s just a matter of opportunity cost — who else could they have gotten for this package?

My understanding is they (particularly Ime Udoka) are very high on Adams.

The Rockets also did this move for cap purposes as well. By moving out the Oladipo contract, which was expiring, and bringing in Adams’ deal, which is signed for $12.4M next season, the window for the Rockets to put together a trade package for a star player is extended out until the 2025 trade deadline. They continue to wait to see which players, if any, shake loose here and become available. They want flexible (see: expiring) contracts that they can combine with assets and this gives them another year to be in that position.

The Trade

It’s not often that the Rockets acquire a player I had not considered beforehand but that’s the case with Steven Adams. The Rockets sorely need a big with size that provides more traditional center strengths, making Clint Capela, Robert Williams, Nick Richards or Daniel Gafford potential candidates, but Adams was overlooked for a few reasons.

First, the 30-year old big man is out for the season after knee surgery cost him the entire 2023-24 campaign, so the Rockets won’t get any benefit from this trade this season. Secondly, Adams is not your traditional center either when it comes to rim protection.

But what Adams does do, he’s really good at and he has some of the same strengths of Brook Lopez, who the Rockets tried to sign in the offseason. Adams is quite possibly the strongest guy in the league and a legitimate 6-foot-11 with a 7-foot-5 wingspan. He’s an outstanding screen-setter, something that could really benefit the likes of Fred VanVleet, Amen Thompson and Jalen Green. He was also an elite rebounder last season, finishing 6th in the league in caroms at 11.5 a game despite playing just 27.0 minutes a contest.

After watching Jonas Valanciunas absolutely bully the Rockets inside on Wednesday, it should be apparent by now to everyone that this was a pretty big need.

In 2021-22, the Memphis Grizzlies finished #2 in the West at 56-26. Their top two players in Net Rating that season were Dillon Brooks (+11.0) and Adams (+8.3), key cogs in a defense that held opponents to 108.6 points per 100 possessions. They’re both now Houston Rockets.

So this adds another trusted vet to Ime Udoka’s rotation.

The question is will the 30-year old Adams return to form after the knee injury? Adams sprained the posterior cruciate ligament in his right knee a year ago, which cost him the end of that season and the playoffs. He tried rehabbing it and it never got better, so surgery became the option just as this season was kicking off.

I like to think the Rockets did their due diligence on that, despite the short time it took for this deal to come together, but that’s unclear.

If he does bounce back, then Udoka has a big man he can turn to reliably in situational matchups or on nights when the younger bigs struggle. He wouldn’t be Boban or even Jock Landale in that scenario — he’s going to play, so the frontcourt depth in 2024-25 should be better. In the end, they got a starting-caliber center who will have no problems coming off the bench, and that’s what they were looking for.

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On the KPJ trade and future of the Rockets

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The Houston Rockets are back to being a professional NBA team once again.

The Rockets finally ended the Kevin Porter Jr. era on Tuesday, coughing up two second-round picks in order to unload his contract to the Oklahoma City Thunder, getting back the contract of Victor Oladipo and third-year forward Jeremiah Robinson-Earl. The move puts an end to a long investment and very rocky tenure with KPJ.

David Weiner joined Dave Hardisty on the ClutchFans podcast to discuss the Porter Jr. Experiment, the price paid to move him, Houston’s potential trade options moving forward, the new culture and the current state of the Rockets young core.

ClutchFans Podcast: On Apple | Spotify

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Heavy investment in Kevin Porter Jr raises serious questions about Rockets front office

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Kevin Porter Jr. Rafael Stone

Soon-to-be-ex Rockets guard Kevin Porter Jr was arrested last week for allegedly assaulting his girlfriend, resulting in a fractured neck vertebra and a deep gash above her right eye after an attack at a hotel in New York. He allegedly woke her up by punching her repeatedly, strangled her and did not stop hitting her until she ran out of the hotel room screaming for help and covered in blood.

“This is a serious domestic violence case,” said assistant Manhattan district attorney Mirah Curzer.

First and foremost, I wish the victim healing. I don’t know what to say about the nightmare she went through. She and her family will forever be impacted. As for KPJ, if this is true, he doesn’t belong on the Rockets or in the NBA at all. He belongs in jail.

Secondly, this can’t be overlooked and just swept under the rug: Why did the Houston Rockets bank on and invest so heavily in this guy?

Kevin Porter Jr. being accused of crimes of this severity should not be shocking – at all. Before he even came to the Rockets, he had a long list of serious problems. He was suspended multiple times in high school. In 2019, he had a “conduct issue” significant enough that USC suspended the 5-star recruit indefinitely. He fell to the end of the first round of the 2019 NBA Draft because of his behavior liability. He was accused of punching a woman in the face in Cleveland. He also had a gun and marijuana charge later dismissed after getting into a car crash. He went into a tirade and got into a nasty confrontation with both the Cleveland coach and GM, resulting in the Cavs severing ties immediately and dumping him to the Rockets for nothing.

You could make the argument that initially giving Porter Jr. a second chance in Houston was praiseworthy, but the Rockets experienced KPJ’s anger management and immaturity issues firsthand on several occasions.

Former Rocket Austin Rivers said this week that this isn’t the first, second or even seventh issue with Porter Jr. and that Rockets “higher-ups” confided in him that they had no idea how to handle him.

“I remember talking to guys in the Houston Rockets organization, higher-ups, [and] they were having issues then,” said Rivers. “They were like, ‘We don’t know what to do with him.’ And that’s when he just got there from Cleveland!”

Porter Jr. was routinely a nightmare for Rockets coaches to deal with. On several occasions, he confronted and cussed out members of the coaching staff, saying they didn’t have the “credentials”, per source, a reference to the fact that him playing heavy minutes at point guard was a decision they did not control.

Once at a night out, Porter Jr. had a disagreement with a DJ over music choice and he snapped, smashing the DJ’s laptop to the floor. He needed to be restrained and removed. Rockets personnel and several of Porter’s teammates witnessed the incident.

Curzer also dropped a bombshell at the arraignment in saying that Porter Jr. has a history of abusing his girlfriend, who he had only been dating since early last year, his second season with the Rockets. Curzer specifically cited an incident in which KPJ allegedly rammed his car into hers.

There were dozens of maturity issues visible on the court to anyone paying attention. He refused to check out of games. He got into an argument on the bench with assistant Lionel Hollins. On numerous occasions, he would visibly shut down when he wasn’t passed the ball. I invite you to watch this video from a game against Memphis on March 20, 2022. Just listen to the Grizzlies broadcasters, particularly starting at the 1:40 mark, talk about what they are witnessing here:



Privately, people around the league would say they were baffled by the Rockets continued fascination with Porter Jr. Nobody could understand it.

That fascination starts with Rockets general manager Rafael Stone, who by every account over the last two years was the driving force behind the investment in Porter Jr. It has been no secret. Trading for him in January 2021 was seen by some with the team as his “Harden acquisition”, code for a signature move that makes an executive’s career, much in the way landing James Harden did for Daryl Morey in 2012.

For example, former Rockets head coach Stephen Silas never considered Porter Jr. to be a point guard, per sources — playing him there was a Stone mandate because the GM believed that is where his future lied.

John Wall also told us as much publicly when he explained the phone call he got from Silas about coming off the bench. He said Silas told him “This is what the GM wants,” adding again that Silas said, “Man, you don’t deserve that. You should be the starter. This is just what they want to do.” Wall was upset because he believed KPJ should have to earn the spot.

“I have a hard time finding anybody outside of the Rockets front office that believes that Kevin Porter Jr. is a starting point guard in the NBA,” said ESPN reporter Tim MacMahon in December.

There were plenty of warning signs about KPJ to the public too.

After Porter Jr. got into a heated argument in which KPJ “physically shoved” Rockets assistant coach John Lucas and quit on the team in the middle of a game against Denver in January of 2022, leaving the arena at halftime, Sports Illustrated’s Chris Mannix famously wrote that the Rockets should “Cut Porter Jr. Waive him. Release him. Whatever. Eat what’s left of the $1.8 million he’s owed this season and the $3.2 million he’s got next and move on.” It became a source of mockery for Porter Jr’s fans, a line they would bring up after each game he hit a few threes or handed out some assists.

In February of this year, ESPN’s Jonathan Givony, one of the most connected reporters in the league, flat out warned us that he was hearing awful things about the Rockets culture and locker room. He was blunt in what the Rockets needed to do — waive Kevin Porter Jr. outright and bring in a new coach and GM.

“Just cut him. That’s it,” said Givony of Porter Jr. “And you’re sending a signal to the league that we’re going to do things differently from here on out.”

“When you talk to people around the NBA about Houston, you just don’t hear good things about their culture, about that locker room. You talk to people that are on that team, and they are like, ‘We are a mess’,” said Givony. “Do people want to work with this organization? But you can change that fairly quickly if you come in, get rid of the bad apples and you change the coaching staff, and all of a sudden, you’re Houston. It’s the third-biggest city in America. There’s a history here of you actually being good.”

Porter came to the Rockets for “free” (in exchange for a top-55 protected second-round pick, which was designed not to convey), but he proved far from it as the Rockets continued to pour investment into him. Over the last 2-3 seasons, no Rockets player got more developmental capital than Porter Jr. – not Jalen Green, not Alperen Sengun, not Jabari Smith Jr. The Fertittas paid John Wall $85+ million over two years to sit at home so the team could groom Porter Jr. to be their future point guard.

Then they doubled down. With restricted free agency on the horizon and a seemingly non-existent market for KPJ’s services, the Rockets gave Porter Jr. an extension a year sooner – a contract that was presented as a four-year, $82.5 million deal. The deal was more team-friendly than that, putting team options in it after years 1 and 3. Going from the potential disaster that was initially reported to a deal they could escape after one season felt like a “win”, but the biggest question was why they wanted him long-term at all. The unprecedented nature of a contract that size with that kind of club control clearly showed the Rockets knew there was unique and significant risk here.

After KPJ signed the extension, The Athletic’s Kelly Iko summarized the Rockets view of Porter Jr. – “As has been [their] stance for months, the Rockets have maintained the notion that Porter is a priority and is considered a huge part of their core, along with Green and Jabari Smith Jr.”

The Rockets actions to kick off the 2022-23 season showed exactly that – that he was a priority. They benched Sengun to start the season, in large part to give KPJ a “lob threat” and defender in the starting lineup. They gave him the superstar “Harden Locker”. They introduced him last in the starting lineups. They treated him as the star and empowered him to be the self-proclaimed “Head Honcho” of Clutch City.

But the extension proved unwise and foolish. Porter Jr. never even made it to the first year of it. With over $80 million on the line, he snapped again. The Rockets signed him to one of the team-friendliest deals ever and still managed to both overcommit and overpay as Stone now scrambles to attach real assets to it to get another team to take it off his books.

Is it fair to question the judgment of the Rockets front office? Absolutely and without question. Whether you look at their ability to value character, evaluate risk, scout basketball, build culture, manage assets or allocate development resources, they failed at every level here. Why didn’t they act sooner? Why did they double down? Why didn’t they hold him accountable? Why did everybody in the league see it but them?

“We value the player and the person that [Kevin Porter Jr.] is becoming and are eager to invest in him and his journey,” said Stone after rewarding him with the extension less than a year ago.

The question you have to ask yourself now is, with all they knew and witnessed about Porter Jr. both on and off the court — why were they eager at all?

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