The presence of Jeremy Lin and Omer Asik on the Houston payroll could impact the timing of Chandler Parsons’ eventual contract extension with the Rockets.

Five months ago, I touted the merits of giving Chandler Parsons a long-term contract in July 2014. He’s certainly made his case for it on the floor this year, with his points, field-goal percentage, 3-point percentage, free-throw percentage, rebounds, assists and overall efficiency (PER) all rising relative to last season.

But with the trade deadline passing without a major move, it’s time to contradict myself and explain why that scenario no longer makes sense for the Rockets, who now seem likely to delay Parsons’ extension until July 2015.

With Parsons playing at a low annual salary of just over $900,000, the Rockets have room for three max or near-max salaries around him. Right now, those slots are for James Harden, Dwight Howard and a combination of Omer Asik and Jeremy Lin, who between them take up $16.7 million per year in cap space.

The first two slots, of course, are ideal. But in a league that values quality over quantity, general manager Daryl Morey and the Rockets would prefer to use that remaining $16.7 million on a third “star” player, rather than divided up between two good players. Morey recently expressed his belief that the Rockets “don’t have our third-best player on a championship team yet”.

When I wrote my initial Parsons story in September, the top bullet point was “the Rockets should acquire more key players before mid-2015”. Suddenly, that no longer appears likely. Morey tried desperately to move Asik in December, but couldn’t find an acceptable deal. Respected NBA reporters including Marc Spears and Zach Lowe reported last week that the Rockets also tried to move Lin before the February 20 trade deadline, ultimately to no avail.

Will both Asik and Lin play out their contracts in Houston, which expire after the 2015 season? It remains to be seen. But after the recent failed attempts at trading each, one thing appears clear: a package involving one or both of those players does not carry enough value on the NBA marketplace to net a third “star” in return. Without that, the Rockets appear best suited to hold off on any long-term commitments for the time being – including with Parsons.

The two contract scenarios

David Weiner has done a great job breaking down the math for us. Here’s a quick rundown. The 2014 scenario, which means declining the option for 2014-15 and allowing Parsons to hit restricted free agency this summer, would give the Rockets the right to match any outside offers and likely result in a more team-friendly deal.

Meanwhile, the 2015 route would give Houston one more season of cheap labor ($964,750) from Parsons along with a miniscule July 2015 cap hold of approximately $1.8 million. The downside to this scenario, of course, is that Parsons would be an unrestricted free agent, and other teams would be more likely to offer a higher overall dollar amount.

For his part, Morey played it coy when asked in a recent Q&A with season-ticket holders.

“With Chandler, we have an interesting decision,” said Morey. “At the end of this year, we can turn down his option. People wonder why, because it’s so cheap, but then he’d be a restricted free agent. Or he can go through his fourth year and be an unrestricted free agent. There are advantages to each, so it’s something we’ll continue to talk about.

“He’s going to make a lot of money on his next contract,” Morey added. “We don’t know how much. But we’re committed to keeping him.”

Kevin Love is probably the most attractive option for the Rockets in the July 2015 free agency scenario.

Star search

We’ve long heard that 2015 free agency is important to the Rockets, with a class headlined by Kevin Love and LaMarcus Aldridge — two power forwards with range and potential dream fits. To put it simply, if Parsons is extended this summer, signing a top free agent in 2015 is no longer an option.

The Rockets already have over $38 million in guaranteed 2015-16 salaries, just between Harden and Howard. Add in a base salary of around $9 million for Parsons and minimum cap holds ($500K each) for the remainder of the roster, and the Rockets would already have over $50 million in committed salary. To put it in perspective, the salary cap is at $58.6 million this season. Even if Asik and Lin are allowed to expire, there would not be room to make a major 2015 free agent signing if Parsons has already been extended.

To be fair, there are two ways in which the Rockets could extend Parsons this summer and eventually still acquire a third star. But upon exploring both options, it’s clear that both are unlikely.

Route 1 is 2014 free agency. The Rockets aren’t currently projected to have cap space this summer, when free agents could include LeBron James, Carmelo Anthony and Chris Bosh. But it doesn’t mean Morey won’t try. If Asik and Lin were traded to a team with cap space in June or July of this year, the Rockets could come close to affording a top 2014 free agent while simultaneously pushing Parsons into restricted free agency and locking him up long-term at a cheaper rate.

That said, this plan seems improbable for two reasons. First and foremost is the “balloon payment” issue. Despite the fact that Lin and Asik would each take up just $8.3 million/year in cap space, they are due $15 million/year in 2014-15 in real dollars, all owing to the contract structure Morey used to pry them away from the Knicks and Bulls as restricted free agents in 2012. Reports earlier this season said the high 2014-15 price tags were a stumbling block for rival owners in potential deals, even when offset by smaller current salaries ($5.2 million). As such, it would seem even less likely to find homes for Lin and Asik when they lack a “cheap year” to offset the balloon payment year.

It’s worth noting that the circumstances wouldn’t be identical to Morey’s trade proposals during the season, in which the Rockets likely asked for at least some rotation value in return. After all, the team as currently constructed is a legitimate championship contender, and losing Asik and Lin for nothing but future cap space would’ve been a crippling short-term blow. Morey would seem more likely to make a “cap space” deal in the summer, when he could more immediately reap the benefits.

The problem, however, is that the timing of such a move may not make sense for the other team. If a team theoretically has the cap space for Asik or Lin, they would also likely have room to go after the LeBron/Carmelo/Bosh tier. So why would they use cap space on Asik and/or Lin before even trying for bigger fish? And if they wait until after, the value of a “cap space” trade goes away for the Rockets, since the big free agents would be off the board. It’s not impossible, as evidenced by Golden State’s salary-shedding deal with Utah last July to make room for Andre Igoudala, but the odds are long.

Carmelo Anthony’s departure from Denver in February 2011 could become a road map for future free agency-driven trades.

Route 2 would be to trade for a third star, either this summer or during next season. It’s possible that if Minnesota and Portland feel uncomfortable with their chances of keeping Love and Aldridge, they could trade them before the 2015 deadline. That would allow those teams to avoid potentially losing their franchise players for nothing, as the Lakers did with Howard last summer.

But for the Rockets to make the salary math work in a potential trade, both Asik and Lin would have to be involved. After failed attempts at trading each this season, I don’t see how Morey could be confident that an Asik/Lin-centered deal would ultimately be the preferred offer by one of those teams. In fact, one of the only plausible ways the Rockets could make a “star trade” next season would seem to be if Love or Aldridge used the Rockets’ cap room as leverage against other teams in negotiations, thus scaring away other suitors on the logic that the player is bound for Houston regardless (think back to Carmelo and the Nuggets/Knicks deal in 2011).

If Parsons is extended this summer, that option would essentially be off the table.

2015 carries minimal risk for all parties

On the surface, unrestricted free agency sounds scary. For Parsons, it means having to wait one more year to finally get his deserved payday. For the Rockets, it means exposing Parsons to the rest of the league as an unrestricted free agent and potentially having to pay a huge amount to retain him.

But when you actually go through the logistics, it makes at least some sense for all involved.

For Parsons, whatever value he loses by playing one more “cheap year” could be recouped (and perhaps even more so) by the higher market price he could command as an unrestricted free agent in July 2015. He’s also proven quite durable throughout his young career, so injury risk isn’t significant.

For the Rockets, the team in place now would mitigate any risk that Parsons would actually want to leave. Parsons is loved in Houston and is seen as the leader of a cohesive, young and contending team. If money is equal, why would he want to go elsewhere? Sure, Parsons and his agent would likely shop around the league for the best offer – before ultimately going back to Houston and giving them the opportunity to match (much like Goran Dragic’s free agency in July 2012).

But unlike when the Rockets decided to let Dragic go, they wouldn’t still be in the process of building a contender and needing to retain flexibility. Here, they already have one. So if Houston must overpay to keep Parsons, so be it. With Harden, Howard and a hypothetical third star in place, it’s not as if the Rockets would need to save that cap space. They’d already be capped out regardless.

If Les Alexander is willing to spend to keep a contender together – and by all accounts, he is – a potential “overpay” of Parsons in 2015 isn’t something the Rockets should be overly concerned with.

In fact, if the cards are played right, it could be the cherry on top of a potential Houston dynasty.