Those Houston Rockets are at it again.
No, they haven't lost to the Portland Trail Blazers. They've just positioned themselves for another exciting, cap-busting offseason by throwing Chandler Parsons to the restricted free-agency wolves, according to Yahoo! Sports' Adrian Wojnarowski:
The Rockets hold a $960,000 option on the fourth and final year of Parsons' contract for the 2014-'15 season, but want to avoid letting Parsons, 25, become an unrestricted free agent next summer. As a restricted free agent in July, the Rockets can match an offer sheet and retain Parsons on a long-term contract. ...
For the Rockets, there are two distinct advantages to letting Parsons into restricted free agency now. First, Houston is determined to clear the necessary salary cap space this summer to chase a third maximum contract free agent to join Dwight Howard and James Harden, league sources tell Yahoo Sports.
Well, this certainly makes things drop-your-jaw, spill-your-cocktail, win-a-game-of-skeeball interesting.
This decision was the elephant in the Rockets' offseason war room. Now that they've reportedly made their choice, summer is alive with possibilities.
Declining Parsons' team option doesn't improve Houston's financial standing much, if at all.
The Rockets have a little over $56.8 million committed to guaranteed contracts next season, which would be any deals that don't hold an option—team or player—or cheap avenue of dismissal. Add Parsons' projected 2014-15 salary ($964,750) to the mix, and they check in around $57.8 million. The difference is negligible, especially when you consider the Rockets have fewer than 12 guaranteed pacts on the books.
Any minimum cap hold placed on an "empty" roster spot would account for more than half of what Parsons is slated to make next season. Securing that extra $500,000 or so won't do much, and it's most definitely not worth it when the player in question averaged 16.6 points, 5.5 rebounds and four assists per game last season.
Unless the team in question has something else up its sleeve.
Addition By Further Subtraction
Scouring free-agency ranks is the easiest way for the Rockets to capture another superstar.
Signing free agents is simpler: You sell prospective targets on the team and city instead of selling their incumbent clubs on your trade offer.
Free agency is even more straightforward when there are options aplenty. LeBron James, Chris Bosh, Carmelo Anthony and Luol Deng, among others, can all hit the open market this summer, leaving the Rockets with no shortage of players to chase.
Cased closed, then.
Before the Rockets can partake in free-agent festivities, they must embark on epic salary dumps. Jeremy Lin and Omer Asik combine for roughly a $16.8 million cap hit ($8.4 million apiece). Houston has to dump both of them. Not trade them in exchange for other players who are owed significant money—dump them. As in send them packing for (basically) nothing in return.
Unloading salaries can be tricky in that sense. These aren't minimum contracts the Rockets are attempting to pawn off.
Paying Lin and Asik will take serious scratch, since their cap hits aren't their actual salaries. Interested teams can blame Rockets general manager Daryl Morey and his unabashed poison-bill binge in 2012 for that.
It's also partially justified.
Unlike this past year—when both Lin and Asik were readily available—the Rockets aren't looking for anything of value, or anything at all, in return. There's a better chance teams looking to bolster their rotations pony up the cash for one or both expiring contracts if it requires sending nothing substantial back.
Say the Rockets are able to do this. That brings the $56.8 million figure from before down to $40.8 million, split between only five players—Dwight Howard, James Harden, Terrence Jones, Donatas Motiejunas and Isaiah Canaan.
Let's also throw in Francisco Garcia's $1.3 million salary here, since it's a player option. He could decline it and hit free agency, but in the interest of covering all bases it's better to just include it.
Now at this point, the Rockets have approximately $42.1 million devoted to six players. But they also have to account for minimum cap holds and their first-round pick.
Four minimum cap holds at a little over $500,000 each, per hoopshype.com (h/t Grantland) would bring the roster up to 10 players and put the Rockets at $44.1 million. Whoever they select at No. 25 would give them 11 players. Reggie Bullock was drafted 25th overall by the Los Angeles Clippers last year, and he earned about $1.1 million in 2013-14. If we roll with that number, this means Houston has $45.2 million devoted to 11 players.
According to ESPN.com's Marc Stein, the NBA's salary cap will increase to $63.2 million next season, leaving the Rockets with an estimated $18 million to offer that 12th and final player. Though that isn't enough to sign an Anthony or James outright, it's enough to get the conversation started if there's a superstar out there willing to accept a pay cut.
Allowing Parsons to hit restricted free agency doesn't make all of this happen, but removing him from the picture would be the first step to maintaining maximum financial flexibility.
Summer of Love...or Melo...You Get the Point
By now, hopefully you're realizing that the financial ramifications of letting Parsons walk are inconsequential. He alone doesn't even bring the Rockets close to affording a third star.
That is, unless they trade him.
Tossing Parsons into the semi-open market provides the Rockets with more trade possibilities. He's always been an asset, but his deflated salary makes it impossible to use him as the cornerstone for any blockbuster deal. And you better believe the Rockets are interested in making a trade.
And you better believe they now have more of a means to make said trade.
Using Parsons as the centerpiece in a deal for Love, Anthony or someone else becomes more feasible with a sign-and-trade. Parsons gets his new contract, salaries are easier to match up, and as Sports Illustrated's Ben Golliver reminded us, the other team isn't left coping with the threat of its prized acquisition leaving in unrestricted free agency one year later:
The last thing you want to do after trading a franchise player is watch the player you received in return walk out the door the very next summer. Theoretically, Houston and Minnesota could reach agreement on a sign-and-trade involving Parsons that could satisfy everyone: the Rockets would receive Love, the Timberwolves would receive Parsons on a long-term contract, and Parsons would get his pay day.
On his own, Parsons isn't enough to get a blockbuster deal done.
Pair him—and his brand-spanking-new covenant—with a future first-round pick (2015, perhaps), one or both of Lin's and Asik's expiring contracts and maybe Jones, and the Rockets have something special.
Something that can land them an Anthony. Or a Love. Or a—well, you get the point.
Offseason aggression is Houston's thing.
Morey is going to turn over every rock, squeeze every last orange and explore each and every available avenue before making a final decision or resigning to failure. His intentions, though, aren't a mystery.
One tidbit from Wojnarowski's report stands out more than anything else. Have a gander:
In one scenario, Houston could secure three max-out players – including Howard, Harden and a potential star free agent – and then re-sign Parsons to an extension below the max-level range. Parsons could command in the $12 million to $13 million annual range, league executives tell Yahoo Sports.
Come again? That's preposterous. Utterly absurd. Has Morey been spending too much time at the uncapped Sharpie factory again?
Try as we might to reject this concept, it's plausible. Not necessarily likely, but totally possible.
Like we mentioned before, Parsons' cap hold is nothing. Peanuts. Not even actual peanuts—which can get pretty pricey—but packing peanuts.
Go back to that loose salary estimation from before, where the Rockets have $45.2 million committed to 11 players/placeholders. Replace one of those minimum cap holds with Parsons', and they're not much worse off.
Dan Feldman of Pro Basketball Talk broke down the details on this one:
By Houston declining it and then extending a qualifying offer, Parsons will count against the cap at $2,875,130* until he signs either a contract or offer sheet. Then, he’ll count against the cap at his 2014-15 salary, which will surely be much higher.
*He earned a higher qualifying offer by meeting the starter criteria. That puts his qualifying offer equal to the rookie-scale amount for the No. 21 pick in the 2010 draft (not 2011, as previously noted). Though Parsons was drafted in 2011, the 2010 draft is used because players drafted in the first round in 2010 are finishing their contracts this season.
Upon accounting for Parsons' $2.9 million hold (we're rounding up), the Rockets would stand somewhere around $47.6 million. They can still offer one free agent as much as $15.6 million to start.
From there, they can hope Garcia opts out, swap his $1.1 million salary with another cheap stopgap and have more than $16 million to offer. And then from there they can try to find new homes for players like Motiejunas and even Jones in the hopes of further increasing their spending power.
After (hopefully) signing another star to a slightly discounted contract, the Rockets can then turn their attention to Parsons. They have the right to match any offer sheet he receives. Even if one spiteful team drums up his annual salary, the Rockets don't think twice. Marginally overpaying him isn't so bad when he's playing alongside three other stars.
Now, before the confetti comes out, understand this will take some cooperation of Parsons' behalf.
Once he signs another team's offer sheet, the Rockets only have a certain amount of time to match it before his cap hold changes. It's important they reach an agreement with their third star first, because as soon as Parsons' cap hold skyrockets, it obliterates whatever cap space the team has.
So What's This Mean?
Clearly, the Rockets want to keep Parsons. But they've officially placed the pursuit of landing a third star above retaining him.
Picking up his team option would have given them more immediate flexibility. His cap hold wouldn't jump to the ballooned qualifying offer, and they could have gone from there.
Keeping him while landing a third star isn't out of the question, but the Rockets need too many things to go their way. Parsons cannot set his market value too soon, and the Rockets must hope Melo or someone else is willing to accept less. And then they need to gut their roster of Garcia, Motiejunas and possibly Jones just so they're not asking those same free agents to take too much less.
Will the Rockets land a third superstar this summer?
Throwing Parsons to restricted free agency essentially means they're open for business in every way imaginable. They'll do what they can to clear space and retain Parsons while forging a Big Four, if you will. If that's not possible, they're willing to compromise.
They're willing to deal Parsons.
Not to be overlooked, though, is everything else. Making Parsons a restricted free agent is just the beginning.
No matter who the Rockets are after, and no matter how they plan on landing them, their superstar hopes are still roped to moving Lin and Asik. That hasn't changed. The circumstances under which they may move them has.
"I feel confident we can make that step forward that we need to make," Morey told Feigen.
Confident enough to guarantee the arrival of a third All-Star? Not quite. But confident enough to promise the Rockets will chase one by any means necessary.
*Salary information via ShamSports.