Houston Rockets Trade Deadline Recap/2015 Offseason Preview

In: Pablo Prigioni, K.J. McDaniels

Out: Alexey Shved, Isaiah Canaan, Three Second Round Picks

Trades from a Cap/CBA Perspective

1.Shved ($3,282,057) to New York for Prigioni ($1,652,961), satisfying incoming salary of 150% + $100,000 of outgoing salary (being under the luxury tax) trade rule.

*New York had to utilize an exception to take in Shved’s contract being a taxpayer as $1,652,961 (outgoing salary) x 1.25 +$100,000 is less than Shved’s incoming salary, thus part of J.R. Smith’s TPE was likely used.

Created $1,619,096 trade exception for Shved (difference in salaries).

2.Canaan ($816,482) to Philadelphia into cap room for McDaniels ($507,336) into Houston’s minimum salary exception.

Created $816,482 trade exception for Canaan.

Houston was also able to stay $2,778,751 under the luxury tax threshold, and remain hard-capped at $80,829,000 having acquired Ariza in a sign and trade this past summer (and utilizing their bi-annual exception on Josh Smith).

Trade Personnel Ramifications and Fit

McDaniels will have a difficult task in breaking Houston’s veteran-laden rotation, but his run and jump athleticism is tailor made for Houston’s up-tempo transition oriented attack. While the McDaniels move was made predominately for the future, he can offer high two-way energy in limited minutes for the Rockets this season. Unfortunately, McDaniels’ three-point shooting has tailed off significantly since the beginning of the season, as he’s down to 29% after hovering around 38% over the first month. Houston values volume three-point shooting, and McDaniels attempting 4 threes per 36 minutes (according to Basketball Reference) will likely remain commonplace despite the lack of efficiency.

Prigioni affords the Rockets with a veteran, pass-first backup point guard and thus some skill-set diversity at the position. The Rockets have switched between Terry and Canaan at the backup point guard spot depending on health. Terry is more of an off-ball catch and shoot floor-spacer while Canaan is a proficient pick and roll scoring point guard who can space the floor with plus three-point shooting. Prigioni is the best defender of the lot, which should give Houston an added element there, but is more passive offensively with his last recourse being his own shot attempt (though he’s a respectable three-point shooter). Prigioni and Terry will both see minutes at the backup point guard spot in the playoffs.

Overall, the moves don’t move the needle for Houston or raise them up the contender latter in the West. Dwight Howard’s health will largely determine Houston’s playoff fate.

Post-Regular Season Trade Ramifications: Ty Lawson 

Houston is well known for making “stepping-stone” moves, a transaction as little as acquiring a lesser salary contract with an eye towards facilitating the acquisition of a coveted higher-salary contract. Directly or indirectly, that’s exactly what they’ve done here.

The acquisition of Prigioni’s 2015/2016 partially guaranteed contract allows the Rockets to trade Prigioni after the last day of Houston’s season up through June 30th (or after), a time period that encompasses the draft, whereas a standard expiring contract is not permitted to be traded post trade-deadline. Prigioni’s contract can thus be aggregated with other non-expiring contracts around the draft, acquiring eligibility based on eclipsing the 60-day turnaround rule after his initial trade to Houston.

So who might be the target? Ty Lawson is a reasonable assumption, as Houston has long been in the market for a playmaking lead guard to take pressure off Harden’s extensive responsibilities in that capacity, and Lawson likely serves as one of the few available borderline elite guards who fit that mold.

Lawson’s salary is $11,595,506 this season, so Houston would have to send out $9,196,404.80 (125% outgoing salary +$100,000) to take back Lawson if the Rockets exceeded the tax threshold post trade. However, the Rockets are $2,778,751 under the tax after their two deadline trades, meaning they’d only need to send out $8,816,756 to make a trade legal by avoiding the less flexible post-trade tax trade parameters.

Aggregating Prigioni along with Papanikolaou, Jones, and Dorsey amounts to $9,027,468, rendering a swap trade legal (the same can be accomplished with Capela in Dorsey’s stead). Prigioni’s contract thus permits Houston to aggregate more non-guaranteed salary to acquire Lawson and spare the inclusion of an additional asset (such as Capela). Papanikolaou’s contract is very handy here as well for as a team option he can be traded if the option is exercised, and even if the option is invoked Papanikolaou’s salary is completely non-guaranteed until 10/4/2015, rendering him a desirable trade chip.

Denver will demand more in compensation for Lawson than largely non-guaranteed money (Prigioni is guaranteed $290,000 next year) and Jones, so Houston will surely have to include their likely to be conveyed lottery pick from the Pelicans (projected #13), as a well as potentially a conditional 2016 first round pick (which the Rockets would be permitted to trade per the Stepien rule after the 2015 draft, thus rendering the fact they traded their ’15 first to LA moot, assuming of course their ’15 pick is conveyed as expected). Having waived Victor Claver and Thomas Robinson after acquiring them from Portland in the Afflalo trade, the Nuggets have two open roster spots and a minimum contract in Erick Green that can be traded into Houston’s minimum salary exception (and thus treated as a separate component of the trade and not aggregated, so outgoing salary requirements are not enhanced), making a 4 for 2 swap viable. Any future trade is unlikely to occur from a probability standpoint, but Houston acquiring Prigioni definitely helps facilitate a potential Lawson trade, certainly more so than Schved’s untradeable salary after the season.

Early Look: 2015 Cap Sheet and Free Agency

Aggregate Guaranteed Salary (8):

Dwight Howard: $22,359,364

James Harden: $15,756,438

Trevor Ariza: $8,193,030

Terrence Jones: $2,489,530

Donatas Motiejunas: $2,288,205

Clint Capela: $1,189,200

Joey Dorsey: $1,104,421

Nick Johnson: $845,059

$54,225,247

Team Option:

Kostas Papanikolaou: $4,797,664

Free Agent Amount Cap Hold (Unrestricted):

Jason Terry: (150% x $5,850,313) $8,775,469

Corey Brewer: (130% x $4,702,500) $6,113,250

Josh Smith: (120% x $2,077,000) $2,492,400

Free Agent Amount Cap Hold/QO (Restricted):

Patrick Beverley: (QO: Min Sal 3 yr vet + $200,000) $1,181,348

*Pending Starters Criteria

K.J. McDaniels: (QO: Min Sal 1 yr vet + $200,000) $1,045,059

Aggregate Non-Guaranteed Salary:

Pablo Prigioni: ($290,000 Guaranteed) $1,734,572

100% Rookie Scale Draft Pick Cap Hold

Debits

2015 First Round Pick(Owed to Lakers: 1-14 protected) Likely to be Conveyed

Credits

2015 First Round Pick (From NO: 1-3, 20-30 protected): $1,310,300 (19th pick)

Re-signing Notes

Josh Smith

Because Smith cleared waivers and was signed to a one-year contract, Houston possesses only his non-qualifying veteran free agent rights, thus Smith can only be obtained via exception for 120% of his prior $2,077,000 salary, or $2,492,400. While Smith would still acquire extra money even with set-off, as he was entitled to $27,000,000 over the remaining two years of his deal prior to being waived by the Pistons, he will likely garner more than $2,492,400 on the open market. With the increasing cap in 2016, Smith could potentially be enticed into taking a 1 year contract at $5,464,000, with perhaps a team option in the second year of $5,709,880 (maximum 4.5% raise) to showcase himself for another year in preparation for the increased cap.   Utilizing the non-taxpayer midlevel exception would trigger the expected hard cap of $85,000,000, thus ideally Smith would fit into the more roster flexible taxpayer midlevel exception amount ($3,376,000). However, that amount is likely below his asking price.

Corey Brewer

Brewer, possessing early qualifying veteran free agent rights, can be re-signed either utilizing those rights for an amount up to $8,229,375 (175% of his prior salary), or those rights could be renounced to render Brewer a non-qualifying veteran free agent, permitting him to sign for up to $5,643,000 (120% of prior salary). The latter has an advantage in that Brewer could be offered a one-year deal and Brewer’s price range projects to be in the non-taxpayer midlevel range as it is. In contrast, re-signing Brewer using the former rights would necessitate a two-year deal under the CBA, reducing flexibility.

Potential Replacements for Brewer on the wing:

Gerald Green (UFA)

Mike Dunleavy (UFA)

Al-Farouq Aminu (Player Option)

Patrick Beverley

As for Beverley, the Rockets have full qualifying veteran free agent rights there, thus Beverley can be signed for up to his maximum allowable amount (slightly less than 25% of the cap). That obviously wont be necessary however, as Beverley projects to garner a contract in the non-taxpayer midlevel exception range.

Potential Replacements for Beverley at guard:

Jeremy Lin (UFA)

Aaron Brooks (UFA)

K.J. McDaniels

As covered extensively in an earlier post, McDaniels, being a soon-to-be free agent of 1 year accrued experience, is subject to restricted free agency and the confinements of the “Arenas” Provision. Meaning, the maximum amount McDaniels can make if signed by another team to a minimum 2 year offer sheet is $5,464,000 in year one and $5,709,880 in year two (4.5% raise). However, a team can offer more money in years three and four, and if the year 3 salary exceeds a 4.5% raise (of year one salary) over year 2, then the full parameters of the Arenas Provision are triggered, meaning the signing team must fit the average total salary of all years into cap space. For example, a team could conceivably sign McDaniels to a three year contract of $5,464,000 in year one, $5,709,880 in year 2 and $6,726,120 in year 3, and because the year 3 salary exceeds the year 1 4.5% raise over year 2, the signing team must fit the average of $6,000,000 into year 1 cap space. Given McDaniels’ regression shooting the basketball, he is less likely to receive such an offer, but the possibility remains. If he does, it will be difficult for Houston to match, given they’re unlikely to have cap space and because McDaniels only has non qualifying veteran free agent rights, and not early qualifying rights, the Rockets can only match using either cap space or the non-taxpayer midlevel exception (can’t using the early qualifying free agent exception), the latter which will likely be needed for Josh Smith.

Overall Team Salary Point: Ariza the Likely “Tell”

Houston can proceed in a multitude of ways this offseason, and how they handle Ariza will shed light on what avenue they take.

The absolute baseline for team salary with just Harden, Howard and 10 minimum roster charges is $43,366,732, affording $23,133,268 in cap room with an estimated $66,500,000 cap. Similarly, with Ariza on the roster in addition to Harden and Howard, accompanied with nine minimum roster charges of $525,093 a piece is $51,034,669, cap room depletes to $15,465,33. Neither of these scenarios are realistic projections of course, but the point is that barring a higher cap, the Rockets will need to clear cap room to offer the 7-9 year experience max level free agents rough $18,500,000 a year to start.

Thus, if the Rockets pursue the cap space route to sign a hypothetical max level free agent (though most appear to be unavailable), they’d have to move Ariza with an assortment of other low salary players. If Ariza is kept, Houston will likely look to stay over the cap and retain their own players.

 

 

 

 

 

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