NBA Roundtable

2010 Tax Concerns: Houston Rockets

In Free Agency, General NBA, Trade Talk on April 17, 2010 at 4:12 pm

Houston Rockets Salaries

Contracts Above $5 Million

  • Yao Ming – $17.69 million
  • Kevin Martin – $10.6 million
  • Shane Battier – $7.43 million
  • Jared Jeffries – $6.88 million
  • Trevor Ariza – $6.32 million

A sub-total of $48.92 million for five players. Yao Ming, Shane Battier and Jared Jeffries are entering the final seasons of their contracts while Kevin Martin and Trevor Ariza each have three and four seasons left on their respective deals.

Rest Of Team’s Salaries

  • Jordan Hill – $2.67 million
  • David Andersen – $2.5 million
  • Aaron Brooks – $2.02 million
  • Jermaine Taylor – $780k
  • Chase Budinger – $780k

A sub-total of $8.72 million spread across five players. David Andersen is entering the final year of their contracts while Aaron Brooks and Jordan Hill are on rookie scale contracts. Brooks is also an expiring contract and due for a contract extension next summer. Chase Budinger and Jermaine Taylor have two more years (team option + non-guaranteed) left on their contracts.

Other Costs

  • Draft Pick — The Rockets own the final selection of the lottery, pick #14, which comes with a cap hold of $1.47 million.
  • Team Option — Chuck Hayes — The Rockets hold a team option of $2.33 million on Hayes. They are a certainty to pick this option up and keep Hayes with the Rockets for another season.
  • Minimum Roster Size — At this point, the Rockets have only 12 players on their books so they’ll need to add at least one more player to reach the league required minimum of 13 bodies. The veteran minimum is around $850k. Let’s use that figure.

A sub-total of $4.65 million.

Which gives us a final total of $62.29 million. This figure is the minimum cost of the Rockets roster heading into the offseason.

Luxury Tax Threshold

David Stern recently announced

NBA commissioner David Stern said on Friday that the league is projecting the cap to come in at about $56.1 million. The actual number won’t be determined until early July, before teams can begin officially signing players.

Though that figure would still be lower than this season’s $57.7 million cap, it’s far better than estimates from last summer, when the league sent a memo to teams warning them of a potential sharp drop to between $50.4 million to $53.6 million.

The luxury tax threshold for a $56.1 million cap is $68 million.

Rockets vs Luxury Tax Line

The Rockets are currently under the tax threshold by $5.71 million but they have two key free agents to sign who will take them above that mark.

Summer Options

The first two priorities for the Rockets are re-signing their own players

  • Luis Scola ~~ $8 million
  • Kyle Lowry ~~ $4 million

That adds on another $12 million to the Rockets payroll bringing their total salaries up to $74.29 million for a fourteen man roster.

Daryl Morey has also said that the Rockets will look to add a veteran backup center this offseason, via free agency, in order to limit Yao Ming’s minutes while he attempts his comeback. The Rockets will have to use their MLE to acquire this player. Let’s assume a further cost of $3 million for this player.

This gives Houston a final estimate of $76.065 million. That would give them a luxury tax bill of $8.065 million which when added to their salaries would combine for a total payroll of $84.13 million.

Note: Sign and Trade

Houston is going to be aggressive in free agency and attempt to add another star player via a sign and trade.

There are so many different combinations that could occur here that it makes it difficult to give any estimates on it. Anyway, if that does happen, Houston’s salaries will remain comparable to their current numbers (since they’re over the cap and incoming salaries have to be withing 125% of outgoing salaries) but also likely to increase by a few million.

An example of a sign and trade — Chris Bosh in exchange for Luis Scola, one of Shane Battier or Trevor Ariza, possibly Aaron Brooks and either Jordan Hill or future draft pick(s).

Note: Buying Draft Picks

The Rockets have twelve players on their roster and if they sign their two free agents they’ll be up to fourteen players. They also want a new center to spell Yao Ming which takes them to a full roster of fifteen players.

Ergo, it’s hard to see Daryl Morey being active on draft day buying second round picks like he has done in the past. Houston has too many veterans to find roster spots for those picks.

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  1. Links

    #1 — Lowry will be looking in free agency for an opportunity to play as a starter

    Guard Kyle Lowry, who will be a restricted free agent, said he wanted to find a starting position, but would be happy if the Rockets match any offer he receives as general manager Daryl Morey said he plans.

    “I want to be a starter,” Lowry said. “I want to play. I want a chance to be that guy. Playing behind Aaron (Brooks) this year was great. I think we work together well. I want a chance to expand my game and experience new things. But I’d be happy to be back.”

    Judging from Morey’s words, I think it’s unlikely that Lowry leaves the Rockets. I expect Houston to match any offer below the MLE and I don’t think Lowry gets an offer above that mark. So, I fully expect Lowry, since he’s a restricted free agent, to return to Houston next season.

    #2 — Rockets intent on keeping Luis Scola

    #3 — Daryl Morey on the state of the Rockets

  2. Been looking forward to this series for a while. Thanks!

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