Trading Space: Cap Room a Commodity For Rockets as Deadline Nears

Former Rockets exec Dennis Lindsey, now Utah's GM, could be dealing Paul Millsap at the trade deadline

For three years, the plight of the Houston Rockets was that they always came up short on reeling in the big fish.

The James Harden acquisition changed all that.

The Rockets now have a young superstar and an exciting style of play, and suddenly Houston is a much more attractive NBA location. So where before there may have been some desperation, Daryl Morey and company can now afford to be patient as the primary goal in 2013 is to land, or improve their position to land, a top flight superstar to put alongside Harden.

The Rockets continue to say publicly that they’re not likely to make a major move by tomorrow’s NBA Trade Deadline. That usually means the opposite, but I’m told this time you can pretty much believe it.

Unless a major player becomes available, cap room is king in Houston right now.

The term “cap room” is used loosely to describe two different things with the Rockets, though both can be linked together. The team has just under $7 million in available cap room right now. They are also positioned to have somewhere between $12-$18 million in cap room this summer. The Rockets would like to use their current cap room without damaging their future cap room, so that’s the reason that it is likely that the Rockets make some kind of trade by tomorrow, yet it is unlikely to be a big one.

Mid-Season Cap Room

With roughly $7 million in current cap room, the Rockets are in a prime position to absorb a salary that expires at the end of the year. Having that cap room means that the Rockets don’t have to necessarily play by salary matching rules. They can take on a $7M annual contract and give almost nothing back in return.

There are teams — and the Chicago Bulls are a prime example — that have a luxury tax locomotive heading their way. Some teams, such as the Charlotte Bobcats, are simply losing money and need or want the savings. Others simply need a flexible third team trade partner to facilitate another deal.

The Rockets will be popular in all three scenarios, so this is where you cue Les Alexander for another “I want to say this without being predatory” statement. As long as they never cross the luxury tax, Les has never hesitated to spend money for picks or players to improve. This is a closing window to pick up an asset (draft picks or a young player), so it would be shocking to me if the Rockets don’t make some kind of addition this way.

In particular, Chicago’s situation seems tailor-made for the Rockets. The Bulls are almost $4M over the luxury tax line and likely need to unload Rip Hamilton, who has a partial guarantee for 2013-14, to get under the tax line. They also have a Eurostash prospect in the 6-foot-10 forward Nikola Mirotic. The Rockets have been pretty happy with their prospect bigs and Mirotic isn’t as strong a post player as Donatas Motiejunas, but he’s a much better shooter. The Rockets have gone this way a few times in the past few years — drafting Motiejunas, Sergio Llull and Furkan Aldemir, who I’m told the Rockets have been very happy with since they took him with the 53rd pick of the 2012 NBA Draft.

Offseason Cap Room

Dwight Howard and Chris Paul.

It starts with the best of the best, and the Rockets shouldn’t sacrifice a bigger opportunity for a short-term gain. Just ask the Brooklyn Nets if they now enjoy having traded Damian Lillard for Gerald Wallace.

While Paul’s name gets thrown in there, it’s really Howard that the Rockets are hoping to woo. That’s not a new trade target, but it would seem an even slimmer shot now than it was this past summer to get a superstar to leave a glamour location and iconic franchise for less money. However, with Howard’s ongoing issues in Los Angeles, his sour relationship with Kobe Bryant and the Rockets looking like they’re on the rise, the chances have gone from “LOL! Wait… you’re serious?” to “Well, maybe it’s not impossible.”

But here’s why you try: If the Rockets were able to do the incredible and sign Howard outright this summer, they would not only be a West contender with an elite scorer and two of the best post defenders on the planet, but, believe it or not, they would be in a good trade position to add a third star, which those in Oklahoma City and Miami say is all the rage these days.

This is why the Rockets can’t take themselves out of the free agent game, even if the odds are stacked against them.

Smith, Millsap and Gasol

Two interesting names that have been linked to the Rockets are Atlanta’s Josh Smith and Utah’s Paul Millsap. Both players have contracts that expire this summer, which would fit in well with Houston’s cap room plan.

But because the Hawks and Jazz are looking for a good haul for either player, it’s not likely that the Rockets would pay that price. They would lose assets and have to pony up big dough to keep that player beyond this season.

The Rockets do have a logjam at the power forward spot, and all four players — Patrick Patterson, Marcus Morris, Terrence Jones and Motiejunas — are signed beyond this season. The same applies to Royce White, though he is likely toxic on the trade market right now. That means if any of those players were traded for an expiring contract, the Rockets create cap room this summer. This is why it’s not surprising that Adrian Wojnarowski reported that the Rockets are shopping Terrence Jones for a first round pick, as such a move could create $1.5M in cap room, depending on what came back.

So I have no doubts the Rockets have made offers here, but they are likely lowball deals leveraging their cap room and the “carrot” of one of those forwards. Such a move would be a win-win for the Rockets, giving them a boost this year for a playoff run and a potential $1M-$3M savings to their summer of 2013 cap room, if they waived the incoming players’ cap holds this summer.

Would the Jazz or Hawks take one of the Rockets’ power forwards in exchange? Unlikely, as they should get better offers, and that’s why a deal here doesn’t seem the perfect fit.

As for Pau Gasol, that’s absolutely a no-go right now given his big dollar contract, but I would not be surprised to see his name surface again in Houston IF the Rockets fail to land Howard this summer or some other star in a signing or trade. Gasol would be an interesting acquisition in that he gives the Rockets a big forward alongside Omer Asik for one year, and allows them to do the cap room thing all over again in 2014, when his contract expires.

Conclusion

The two things I expect to see happen on the deadline are a move to leverage current cap room for an asset and a deal that possibly sends a power forward out, where the Rockets are a bit overstocked. It could be the same deal or multiple deals, but that’s what I think could shake out from the Rockets’ current course.

But don’t panic if Thursday comes and goes without anything significant. The Rockets are just starting to launch thanks to the Harden trade, and this trade deadline should just be a precursor to the real movement this summer.

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