Over the Cap Approach
One option the Rockets can pursue is playing the offseason out as an over the cap team. If the Rockets do not feel like they have a good enough shot at any of the top tier free agents, they can keep the roster together and keep Nene’s cap hold on the books, allowing them to bring him back for 3.5 million, then trade for around $5 million in salary to be over the cap. While being over the cap may sound bad, it actually gives the Rockets access to the newly raised $8.4 million mid level exception, and the $3.3 million bi-annual exception, which would likely be partially used to give to rookies such as Cameron Oliver and Zhou Qi on three-year deals. Through this path the Rockets can keep all their core pieces while adding depth using exceptions and trades.
Under the Cap Approach
At this point, all signs point towards the Rockets taking this approach and swinging for the fences to attract a max-level free agent. First, it is important to know what the starting maximum salaries are for different players on the market. The maximum amount a player can make in the first year of a deal is determined by how many years he has spent in the league. For example, players who have spent 0-6 years in the league (Caldwell-Pope, Otto Porter) can make $24.75 million, those with 7-9 years in the league (Hayward, Blake Griffin) can make $29.7 million, and everyone with 10 years or more in the league (Chris Paul, Millsap) can make $34.65 million. In order to sign one of those players to their max, the Rockets must create that starting salary in cap space.
And that’s where it gets interesting.
By renouncing their rights to all their free agents – Bobby Brown, Troy Williams and Nene (who can all be brought back later for the minimum or part of another exception) – the Rockets can open up $8.7 million in space. In order to get to the largest maximum salary the Rockets would first have to trade Ryan Anderson ($19.6 million) and Lou Williams ($7 million) for no returning salary, this gets them to $35.28 million, but because they now have less than 12 players on the roster, they are charged an empty roster charge of $815,00 for every player less than 12 they have on the roster, leaving them at $33.65 million in space, just below where they need to be. The next step in reaching max space would be to waive the non-guaranteed contracts of Wiltjer and Taylor, who both make $1.3 million, saving an additional million after the empty roster charges and leaving them just perfectly around the $34.65 million in space needed. After signing that max player one of the empty roster charges is lifted, which opens the cap space needed to sign a rookie to a three-year minimum. After signing that minimum, another roster charge is lifted for another rookie minimum deal, and so on until the Rockets hit 12 players on the roster. After all the dust settles from the max signing and rookie signings, the Rockets will be left with the room mid level exception, worth $4.3 million, to resign Nene or sign other depth player (or some combination of the two) as the exception can be split up into smaller exceptions.
Now, what if the Rockets wanted two superstars? That’s where it gets really tricky, and potentially not worth it. There is really no path for the Rockets to open up an additional max in space, but they can use trades. The Rockets can use a sign-and-trade to sign a player for up to $5 million more than however much salary they send out. Using a sign and trade the Rockets can get up to the 29.7 million 0-7 year max, but it wont be cheap. They’d have to send Eric Gordon ($12.9), Trevor Ariza ($7.4), and Patrick Beverley ($5.5) in order to reach that salary. Trading just Gordon with Beverley allows them to sign a $23.46 million contract, and Gordon with Ariza allows them to sign a $25.36, which may be enough to get someone like Milsap if Montrezl Harrell is thrown in. And finally there is Paul George, who requires just $14.5 million in space to be sent out, which can be reached salary wise by sending just Gordon and Sam Dekker – though Indiana would likely require more incentive (such as future first-round draft picks) to accept that deal.
Now we just have to wait and see what Morey has up his sleeve, and what direction he opts to go when free agency opens on July 1st.