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Houston Rockets Salary Cap Update

David Weiner breaks down the Houston Rockets salary cap situation as they head towards the NBA Trade Deadline next month and explains why keeping Josh Smith beyond this season will be tough.

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Josh Smith Corey Brewer Houston Rockets

Back in October, I wrote that (a) the Houston Rockets had enough room to use the Jeremy Lin trade exception, possibly the Bi-Annual Exception (BAE) and still use salary matching rules to take on additional salary and (b) the luxury tax would not be a significant deterrent for Rockets owner Leslie Alexander.

Well, Rockets GM Daryl Morey has been busy following this very plan.

On December 19, Houston acquired Corey Brewer and Alexey Shved in a three-team trade with the Minnesota Timberwolves and Philadelphia 76ers, with the Rockets surrendering Troy Daniels and three second round picks in the process.  This trade was made possible by utilizing the Lin trade exception to absorb both Brewer’s and Shved’s (mid-sized) salaries without having to comply with the league’s normal salary-matching rules.  By consummating this trade as they did, Brewer and Shved will each be eligible to have their salaries aggregated with those of other Rockets players in trade packages on the NBA’s February trade deadline.

Then, just one week later, the Rockets signed Josh Smith to a one-year deal for the BAE after Smith was bizarrely waived by the Detroit Pistons.  A talented but troubled player was acquired for a song compared to his market value, thanks in no small part to Smith’s large guaranteed salary still being paid by Detroit.  Houston was able to outbid other contending teams because it did not spend its BAE during the offseason.  (As a free agent signing who will have been with his new team for less than 3 months as of the February trade deadline, Smith is ineligible to be traded during this season.)

To make room for Smith, Houston waived Tarik Black.  Black, who had done an admirable job manning the middle for the Rockets while Dwight Howard was out with injury, was the obvious (financial) choice to be cut, since his salary was mostly non-guaranteed.  When the Los Angeles Lakers claimed Black on waivers, the roughly $180,000 of his salary that would have otherwise remained on Houston’s books was cleared.

With these transactions completed, it’s time to once again take a look at the team’s current salary cap situation and where the Rockets can go from here.

Player Salary, Exceptions and Available Cap Room

(Salaries and contract information courtesy of ShamSports.com and some good old-fashioned digging.)

The Houston Rockets currently have the following player salary commitments, cap holds and salary cap exceptions available for the 2014-15 season:

Player salary commitments:

Howard ($21.44 million), James Harden ($14.73 million), Trevor Ariza ($8.58 million), Jason Terry ($5.85 million), Kostas Papanikolaou ($4.8 million), Brewer ($4.7 million), Shved ($3.28 million), Josh Smith ($2.08 million), Terrence Jones ($1.62 million), Donatas Motiejunas ($1.48 million), Clint Capela ($1.19 million), Joey Dorsey ($948,163), Patrick Beverley ($915,243, non-guaranteed), Isaiah Canaan ($816,482) and Nick Johnson ($507,336), along with guaranteed money owed to Jeff Adrien ($915,243), Francisco Garcia ($915,243), Ish Smith ($915,243*), Robert Covington ($150,000*) and Akil Mitchell ($150,000).

* Ish Smith (Oklahoma City) and Covington (Philadelphia) each signed deals with new teams and are eligible to have their salaries partially set off once their respective new deals become guaranteed on January 10.  This will result in some minor savings on both payroll and team salary, the latter of which should provide some welcome additional breathing room under the luxury tax threshold.  (Adrien’s new deal with Minnesota is not large enough to make his Rockets salary eligible for set off.)

Cap holds:  None.

Exceptions:  With the Jeremy Lin trade exception amount whittled down to a practically unusable amount, the Rockets’ lone viable trade exception is a small, $816,482 one generated in the trade of Daniels to Minnesota.  This trade exception could be used to acquire a player making the equivalent of the one-year veteran’s minimum but who is on a three- or four-year deal (meaning that he is ineligible to be acquired using the Minimum Player Salary Exception).

The Rockets are a little less than $1 million shy of the luxury tax threshold and nearly $5 million shy of the “apron” level that also acts as a hard cap for Houston this season.

Trade Season: Opportunities and Constraints

The Rockets have developed a sizable “middle class” (from a salary standpoint), which now consists of Ariza, Terry, Papanikolaou, Brewer, Shved and Smith.

While each of these players may end up as a key rotation piece for Houston, expect one, two or even three of these players (minus the ineligible Smith) to be shopped at the trade deadline as part of a package for a third star.  (While Ariza is far less likely to be traded — both due to his integral impact on the Rockets’ defense and the size of his contract — the fantastic early play of Brewer may make moving Ariza at least a little more plausible.)

Although the Lin trade exception possessed value at the February trade deadline (as a more appealing avenue for another team to dump salary than to take on an expiring contract) or next July (either in trade or as a mechanism to facilitate certain sign-and-trade deals to acquire free agents from other teams), Morey and the Rockets elected to utilize that exception sooner rather than later.  The chief benefit in doing so — aside from getting good players now — is that splitting it into two mid-sized contracts allows for more trade flexibility.  A trade exception cannot be combined with other player salaries for salary-matching purposes; but come February 19, the salaries of Brewer and/or Shved can be.

While the Rockets have great flexibility in how they can structure trades over the next two months, there are new constraints facing them as well.

One such constraint is the more stringent salary-matching rules imposed against tax-paying teams.  Teams whose total team salary would exceed the luxury tax threshold following completion of a given trade may only acquire a maximum of 125% of outgoing salary, plus $100,000.  Teams who would fall below the tax threshold may acquire up to 150% of outgoing salary, plus $100,000 under many trade scenarios.  But with Houston so close to the tax threshold already, and with the Rockets looking to acquire a high-caliber player whose team would not want to take on more salary than it is trading out, any notable trade would likely result in the Rockets venturing into luxury tax territory.

An even bigger constraint to the Rockets this trade season will be the hard cap itself.  Houston cannot exceed the $80.829 million “apron” level at any point this season.  There is no salary cap exception, 10-day contract or other veteran’s minimum signing of which the Rockets could avail themselves to exceed this cap.  For example, if Houston sought to trade four players for one star player, with the Rockets taking on $4-5 million in additional salary in the process, there would be little (if any) room left under the hard cap for Houston to add a 13th player.  If the prorated two-year veteran’s minimum salary at that point in the season is greater than the Rockets’ remaining room under the hard cap, this hypothetical trade would be prohibited by the league office.

2015 Cap Room

Assuming the currently projected 2015-16 cap figure of $66.5 million ends up being accurate (more on that here), and assuming that no further trades are made, the Rockets could have about $7.6 million in available cap room next summer.

To get to this figure, Houston would need to renounce its rights to all free agents except for Beverley (who is inching closer to being due a $2.725 million qualifying offer for meeting the league’s “starter criteria”) and either trade away its 2015 first round pick(s) or have any such player(s) playing overseas next year.  (Since the original publication of this article, I have learned that Brewer officially declined his 2015-16 player option.)

While the Rockets could always open up some additional room by trading away salary, it is unlikely that — barring a trade of Ariza for little to no salary in return — they could generate enough cap room to make a legit run at a star free agent this summer.  Again, that assumes that the current projections remain intact.

This may explain why the Rockets seem to be going “all in” this season.

What To Do With Josh Smith After This Season?

Because the Rockets only signed Smith to a one-year deal, they will not have (full) Bird rights to re-sign him next summer.  Houston will hold “Non-Bird rights” to Smith, which would allow the Rockets to exceed the salary cap to re-sign Smith to a starting salary of up to 120% of his prior salary (in this case, about $2.49 million).  If Smith — who is due to receive about $5.4 million annually from the Pistons through 2019-20 — would be willing to accept this amount, that would be the most ideal scenario for the Rockets (short of Smith taking the veteran’s minimum salary).  But don’t expect Smith to be overly charitable in this regard.

Another option is to use the Mid-Level Exception (MLE) on Smith.  The Taxpayer MLE amount next year is $3.376 million, which the Rockets could pay without having to face many other cap restrictions.  The Non-Taxpayer MLE amount next year is $5.464 million.  Houston could pay this larger amount but would then once again become subject to a hard cap at the “apron” level.

The only way for the Rockets to be able to pay Smith more than the Non-Taxpayer MLE amount would be for Houston to create enough salary cap room to do so.  But this would require renouncing rights to several of their own free agents, losing other salary cap exceptions and otherwise constraining the Rockets’ ability to (re)construct their roster.

The options for re-signing Smith seem to get less and less palatable the higher the amount becomes.  Here’s hoping Smith’s play this season will make the decision as difficult as possible for Morey and company.

Conclusion

After a series of moves, the Rockets have built themselves a nice middle class, which should help them both on the court and in mid-season trades.  Unless the league’s salary cap projections for next season change dramatically, expect Morey to be aggressive in his attempts to add another major contributor to this roster by the February trade deadline.  While the team must maneuver around and under the constraints of dealing with the luxury tax and the hard cap, do not expect Alexander to be deterred by the prospect of cutting a luxury tax check to the league after this season.

The Rockets are very much in “win now” mode.  We’ll just have to wait and see what opportunities present themselves between now and February 19 for Houston to further vault itself up another branch on the very crowded championship contender tree.

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

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Houston Rockets 2024 NBA Draft prospects Zaccharie Risacher Stephon Castle Reed Sheppard Donovan Clingan

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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