NBA Roundtable

2010 Cap Space: Houston

In Free Agency, General NBA, Trade Talk on December 12, 2009 at 7:56 am

Houston Rockets Salaries

Contracts above $5 million

  • Yao Ming – $17.69 million
  • Shane Battier – $7.43 million
  • Trevor Ariza – $6.32 million

Yao Ming and Shane Battier will both be entering the final year of their respective contracts. Ariza is on the books for four more seasons.

These three players total $31.44 million.

Rest Of Team’s Salaries

  • David Andersen – $2.5 million
  • Aaron Brooks – $2.02 million
  • Chase Budinger – $780k
  • Jermaine Taylor – $780k

David Andersen and Aaron Brooks will be entering the final season of their deals. Budinger and Taylor possibly have three more years (non-guaranteed + team option on final two seasons).

Those contracts amount to $6.08 million and take the Rockets total up to $37.52 million.

Other Costs

  • Draft Picks — The Rockets will have a late lottery pick to mid first round pick. Let’s assume late lottery (#12-#14). That comes with a cap hold of $1.47 to $1.63 million.
  • Team Option — Carl Landry and Chuck Hayes both have team options on their contracts for the 2010/11 season. Their contracts are worth $3 million and $2.33 million respectively.
  • Non-Guaranteed Contracts — Joey Dorsey has a non-guaranteed contract worth $950k.
  • Open Roster Spots — The Rockets will have a minimum roster charge of $475k and a maximum of $1.9 million should they choose to part ways with Hayes + Landry + Dorsey.

Okay, so that gives the Rockets between $3.37 to $6.92 million in additional salaries. Thus, two different projections:

  1. Minimum Team Salary — decline team options to Hayes + Landry + waive Dorsey — $40.89 to $40.15 million
  2. Keep Talent — $44.29 to $44.44 million

The Cap

The league sent out a memo at the beginning of free agency this year citing these numbers as possible cap figures for 2010

The NBA’s ballyhooed free-agent summer of 2010 might have quietly taken another hit late Tuesday night.

In a memo announcing next season’s salary cap and luxury-tax threshold, sent out shortly before the league’s annual July moratorium on signings and trades was lifted at 12:01 a.m. Wednesday, NBA teams also received tentative projections from the league warning that the cap is estimated to drop to somewhere between $50.4 million and $53.6 million for the 2010-11 season.

2010 Cap Space

So, the Rockets have … in cap space

  1. Minimum salary outlook — $10.25 to $12.7 million in cap space
  2. Keep talent — $6-to-$9.3 million in cap space

Rockets Free Agency Options

There’s two main streams of thought here for the Rockets

#1 — Maximize their cap space and enter free agency looking to acquire another elite talent to replace Tracy McGrady.

#2 — Keep their talent, consequently limit their cap space, then look to retain their key free agents + spend their MLE.

Key Free Agents

  • Luis Scola — Will command at least the MLE in the open market. Talent wise he’s worth around $10 million per annum but due to his age + low scoring ways he’s unlikely to garner that type of attention. A contract in the $7-8 million range looks possible.
  • Kyle Lowry — A contract worth around $3 million would be good business. A contract up around the MLE would be bad business.
  • Tracy McGrady — Too early to say whether he should be in the Rockets plans. Depends on what he’s capable of and that will decide how much value he has in free agency.

If the Rockets were to retain Scola + Lowry for $11-12 million that would take the Rockets payroll to $55-56 million. However, at that stage, given their trade assets + lack of cap flexibility + lack of high draft picks it’s incredibly difficult to see where Houston finds another elite talent to put alongside Yao Ming.


Maximizing Houston’s cap flexibility for this summer is a painful episode that will cost them serious talent (Scola, Lowry, Landry, Hayes + maybe Battier) but it looks like their best bet over the medium-to-long term.

Acquiring an elite talent this summer and replacing those key role players is an easier proposition than keeping those key role players and looking to acquire an elite talent down the road.

Houston has hard decisions + uncertain times ahead of them.

  1. Don’t you think it’s about time they move on without T-Mac. We all know his credibility and talent but the fact remains that the Rockets are a better team without him.

  2. Hey John,

    It’s too early to say what the Rockets should do with McGrady.

    #1 — The Rockets are not better off without McGrady
    #2 — The Rockets are better off without an injured McGrady

    Until Tracy McGrady returns, gets back on the court, until we see what level he’s now able to perform at … it’s premature to say anything about his future.

    (1) Maybe, McGrady can resume his performance level of three years ago as a top 10 player [unlikely].
    (2) Maybe, McGrady can return to All-Star form [definite possibility]
    (3) Maybe, McGrady is physically unable to play at a high level anymore [also a good possibility — how he played last season]. In which case, the Rockets need to part ways with him.

    Once the Rockets gain that information their decisions will become clearer:

    (1) Keep McGrady
    (2) Move McGrady + attempt to replace him — trade his expiring contract or get far enough under the cap in free agency to sign a max contract player … are the Rockets two best hopes here.

    It’s clearly more likely that the Rockets move McGrady than try to keep him … but it’s too early to write that into stone. The Rockets need to show some patience and use this season to find out where Tracy McGrady’s health is at + what level he can perform at.

  3. One final note on the Rockets cap situation — I fully expect Daryl Morey to go with the “keep talent” option.

    I don’t believe he’ll risk losing all that talent on a chance of signing a max contract free agent. Too many pitfalls. Too large a risk.

  4. I was thinking some more TMAC trades (I find them highly interesting) and do you think the Rockets would bite to something like this?:

    Houston recieves: Gallinari, Jefferies, Al Harrington, second round pick

    Knicks recieve: Tracy McGrady

    Would Gallinari + a second round pick be worth the 6 million dollars in lost cap space? I feel the rockets should target the 2011 offseason rather than the 2010 period becuase they would gain maximum cap flexibility. Based on that, the Rockets should make this trade to gain two pretty valuable assets from the Knicks to facilitate the Knick’s pursuit to fit two max free agents under the cap. Excluding cap holds and qualifying options, the Rockets only have Ariza’s 6 million on the cap for the 2011 season. From what I predict, they could have a roster of:

    Gallinari: around 4 million
    Ariza: around 7 million
    Brooks: 3 million
    Landry: 5 million
    First round pick: 2 million

    (assuming the release the cap holds of the other players)

    For about 20 million in cap space. How enticing would that be to two potential max free agents! Obviously, they can sign some of their other players if they are playing well, but the basic premise is still there. I feel the Rockets are extremely well positioned for the future.

  5. Hey Dino Gunners,

    Rockets Cap Strategies

    I think that would be a difficult decision for the Rockets to make. They’d need to be willing to sacrifice the 2010/11 season (partially anyway) in order to maintain their cap flexibility for 2011. Daryl Morey wasn’t willing to do that last summer when faced with the same question (Trevor Ariza + David Anderson signings + attempts to keep Houston out of the lottery) so I doubt he has any interest in it now.

    It would be an interesting strategy for the Rockets to take … but I think the only way it’s better than trying for 2010 is if they’re convinced Yao Ming is no longer a part of their future. That he isn’t capable of playing at a high level throughout the season. Otherwise, I think the Rockets are better off trying to get below the cap this summer and then trying to convince a major free agent (Wade, LeBron, JJ) to join Yao in Houston (plus a solid remaining supporting cast with Ariza or Battier + Brooks + maybe Landry) and become an instant contender overnight.

    The Knicks 2010

    I forget the Knicks cap space off hand … does the extra $6 million get them far enough below the cap to offer two max contracts? That would be $16.6 million twice, so $33.2 million total.

    I think it’s worthwhile sacrificing Gallinari if the Knicks get enough cap space to offer two max contracts. I fully believe that’s the key to getting LeBron or Wade to sign for the New York Knicks. It’s a high risk strategy but a worthwhile one.

    Edit: Just checked, the Knicks have between $20.2-to-$23.4 million in cap space according to my numbers. An extra $6 million wouldn’t be enough to guarantee them a shot at offering two max contracts. It would need to be Eddy Curry that leaves.

  6. Hey Dave,

    From what I understand, it takes 33 million in cap space to sign two max free agents. As of right now the Knicks have around 20-23 million. If the Knicks decide to trade Gallinari and Jefferies, that equals 10.18 million in added space. If you add that to the Knicks current space, it would equal 30.18-33.56, meaning they could fit two max in the best case cap. If the cap is any less, I am sure that they could easily trade Wilson Chandler to a team under the salary cap for a trade exemption or draft pick. But, do you think the Knicks would go to such lengths to gut their roster for the potential to sign two max free agents. If Walsh is serious about it, I think this could be a viable way to do it.

  7. Dino Gunners,

    Oh, Gallinari, completely forgot about his salary. My mistake. Very good point on trading Wilson Chandler should the cap end up being a bit too low to fit two max salaries. That covers that issue.

    Excellent stuff. Yes, I think that’s a trade that the Knicks should make.

    A good trade for Houston too but I’d like to see them wait and see what McGrady has to offer before making that type of deal. If Tracy isn’t at an All-Star level, which there’s a fair chance of, then it’s a trade I make.

    Knicks Intentions

    Do I think the Knicks are willing to sacrifice their young talent to create additional cap space?

    I think Donnie Walsh will be fiercely reluctant to go down that road. He’s not the type of GM that is willing to give up talented players, particularly young prospects who have a long term future at the club, for non-talent. For cap space. The idea of it doesn’t compute with how he likes to build teams. To amass talent, to keep your good players and move your bad players. Build slowly and constructively. Don’t take away from your talent base. Value what you have.

    To give up a talented young player on a maybe, on a possibility, of talking someone into joining his team. I don’t think he’ll like how high the risk involved is.

    In terms of Gallinari, I doubt Donnie will be willing to sacrifice Gallo for cap space. I think he’ll be the player that Donnie is most reluctant to give up on (and rightly so). I can imagine him being talked into sacrificing one of the other two (Chandler, Hill) but I don’t think his front office colleagues will be able to talk him into dealing Gallinari.

    As an aside — I think John Gabriel is working for the Knicks these days. He was at Portland before that but I think they signed him recently (edithe joined the Knicks last summer).

    Anyway, he was the guy who masterminded Orlando’s cap space in 2000 when the Magic tried to bring in Tim Duncan and Grant Hill. He’ll be one of the louder voices in the room trying to push the Knicks into sacrificing a young player for additional cap space.

    Gabriel is a big believer in free agency, in cap space … of having enough space to sign two max players, and using that as leverage, as a selling point, to potential free agents to help convince them to sign with his team. To convince them, by using the lure of one another, that the team has a chance to compete for a Championship … He’s also a risk-lover. He’ll take big risks. Trades, draft, free agency. Always willing to take a risk and try to make a big play. A home run style of GM. Always looking for that home run.

  8. Good Idea

    I read a good idea elsewhere on Houston’s pursuit of a max contract free agent. That they should not trade Battier or Ariza until the summer, to send one of those players to a team below the cap or in return for a trade exception, and gain enough cap space to offer a max contract to a marquee free agent then … if someone (Wade, James, JJ) is receptive to their offer.

    The Rockets would still have to decline their team options to Landry + Hayes + waive Dorsey. But they’d still hold their bird rights to Scola + Lowry + McGrady. And they wouldn’t have to trade Battier or Ariza and take a massive risk.

    Instead, they could enter free agency, approach those free agents (James, Wade, JJ) and if one of those players was interested in joining … the Rockets could then rescind their rights to those free agents + trade Battier or Ariza for enough cap flexibility to sign one of those players.

    It minimizes the risk. Only risk is losing Landry/Hayes/Dorsey and that creates an opportunity where Houston could acquire a LeBron/Wade/JJ talent.

    That is a much better plan then trading away Battier or Ariza now for expiring contracts and taking a much larger risk next summer. Excellent idea, well thought out (not mine!).

  9. I agree, that is definately the best option. They can try to entice one of the blue-chip max free agents first, then the second tiers (Joe Johnson types) without really sacrificing much of their talent base. This option also allows them to play the free agent market this year or next year (if they choose). All in all, that has to be the best mindset going forward for the Rockets.

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