History will never appreciate just how close the Houston Rockets came to winning a championship under Daryl Morey. They would have entered the 2014-15 season as championship favorites were it not for Chris Bosh's last-second change of heart. They very nearly beat the 2009 champion Lakers in a grueling seven-game series without All-Stars Tracy McGrady and Yao Ming. Chris Paul was a crescendo in a decade-long opera of disappointment. Few teams in NBA history have contended longer than Houston without ultimately tasting championship glory.
There is a price to be paid for all of that winning. The Rockets have not made a first-round pick since 2015, and they control their own in only two of the next seven drafts. They have only six players under contract and four of them are at least 31. A fourth, Robert Covington, is 29. Their roster is prohibitively expensive and, based on its demolition at the hands of the 2020 champion Lakers, is probably trending downward. The cherry on top? Morey's magic used to dig Houston out of these holes. Now he's gone. So is Mike D'Antoni, the second-most successful coach the franchise has ever known.
That level of turnover is unprecedented in NBA history. Contenders have changed coaches and they've changed general managers, but never both at the same time, and never so soon after losing most of that general manager's top lieutenants. Gersson Rosas would presumably have been Morey's heir had he not left for Minnesota in 2019. Monte McNair took the Sacramento Kings in September and did so five days after the Rockets were eliminated by the Lakers. Either Morey's resignation was so sudden that the Rockets didn't have time to create a succession plan, or Houston's future is so desolate that McNair had no interest in following that plan.
Now Houston's roster is in the hands of Rafael Stone, the team's former general counsel whose experience in basketball operations, by general manager standards, is fairly limited. While no coaching hire has been made, the presumed front-runner has the opposite problem. Jeff Van Gundy is a dinosaur in coaching terms. While his first run in Houston was somewhat successful, he hasn't led an NBA team since 2007. The game has changed quite a bit since then. His final Rockets team finished third in the NBA with 23.1 3-point attempts per game. This season, no team took fewer than 28. Presiding over all of this is a heavily-leveraged restauranter in the middle of a pandemic. Tilman Fertitta has never paid the luxury tax even in boom times. Now he wants to continue contending in a financial environment that will make doing so far more punitive.
All of this makes a very simple point: the future is bleak in Houston right now. But the future isn't necessarily at hand quite yet. The Rockets still have two All-Stars and an entirely unique playing style. The Rockets might still have one final swing at that elusive championship left in them, but it will require deft management and impeccable execution. Below is our 2020 Rockets offseason preview.
One note before beginning: we will be using 2019-20 cap numbers for this exercise. A frozen cap is the likeliest outcome of negotiations between the league and the NBPA, but these numbers could theoretically change in either direction. Under the assumption that the 2019-20 numbers will be used, these are the pertinent numbers for this exercise.
Salary cap | $109,140,000 | Non-Taxpayer Mid-Level Exception (Year 1) | $9,258,000 |
Luxury tax | $132,627,000 | Taxpayer Mid-Level Exception (Year 1) | $5,718,000 |
Luxury tax apron | $138,928,000 | Cap room Mid-Level Exception (Year 1) | $4,767,000 |
Salary floor | $98,226,000 | Bi-Annual Exception | $3,623,000 |
Cap situation and overall finances
$41,358,814 | |
$41,254,920 | |
$16,869,276 | |
$12,138,345 | |
P.J. Tucker | $7,969,537 |
Danuel House | $3,717,000 |
Troy Williams (dead cap) | $122,741 |
Total | $123,428,453 |
The Rockets have only six players under contract for next season, but those six players alone take them 93 percent of the way to the luxury tax line. In fact, if the minimum salaries from the 2019-20 season remain in place, it would be virtually impossible for the Rockets to keep those six and remain below the tax line. With only around $9.2 million left to fill nine roster spots and a veteran's minimum well above $1 million, the Rockets would have to fill out their roster with nine undrafted rookies to hit 15 and remain below the line. Obviously, they aren't going to do that. They probably won't even have the chance. The Rockets have four players with options on the books. One of them can decide to return unilaterally.
Player option | $2,369,663 | |
Non-guaranteed | $2,283,034 | |
Non-guaranteed | $1,862,250 | |
Non-guaranteed | $1,517,981 |
Rivers at his minimum is a good value for the Rockets. McLemore is as well given the season he just had, and Morey signed and stashed Nwaba, an underrated defender coming off of a torn Achilles tendon, ahead of the bubble specifically to have him in place for this season. The Rockets want to keep these players. They'd like to keep the six players they have locked in as well. All of them are integral to Houston's hopes of actually winning anything next season. But let's pretend that the Rockets keep those six along with Rivers, McLemore and Nwaba, and then sign six players for the veteran's minimum to round out their bench. That would take their team salary to just below $139.7 million, which would, in turn, generate a luxury tax bill of around $11.1 million. Fertitta just took out a $300 million loan at a 13 percent interest rate to keep his restaurant business afloat. Is he really going to pay over $150 million for a roster that probably isn't championship-caliber in a season that may not include fans in arenas?
Probably not, and while there are pennies to be pinched here (likely by eschewing a 15th player), that really means that someone from the core is going to be traded for financial reasons. We'll dive into the specifics of those sorts of trades later on, but if the goal remains winning, the ideal candidate would be Gordon. For reasons that remain unclear, the Rockets signed him to an extension in 2019 that guaranteed him around $55 million over three years. He's 31, has a lengthy history of injuries and just shot below 37 percent from the field for an entire season. He is overpaid.
The same can't be said for their other role players. Tucker, Covington and House have some of the best value contracts in basketball. Westbrook and Harden may be another story, but trading them would signal a complete organizational overhaul. That can't be ruled out, but it seems as though the goal will be to reload rather than rebuild. Sadly, that might have to mean giving away Tucker or Covington just to fill out the roster, especially if the Rockets plan to use the Taxpayer Mid-Level Exception on a real contributor. Moving Gordon just projects to be too difficult, especially given how few assets they can attach to him.
Draft capital
2020 picks: None
Owed future first-round picks: 2024 to OKC (top-four protected), 2026 to OKC (top-four protected).
Owed pick swaps: 2021 to OKC (top-four protected, Rockets get the least favorable between their pick, Miami's or Oklahoma City's), 2025 to OKC (top-10 protected).
The raw list of picks the Rockets no longer have doesn't quite do justice to how grim Houston's pick situation really is. A team in their situation would probably be best-served going all-in and continuing to add short-term talent. The Rockets can barely even use their few remaining picks to do that. The Stepien Rule prevents teams from being without first-round picks in consecutive seasons. By virtue of owing picks in 2024 and 2026, their 2023 and 2025 selections are off-limits from a trade perspective. They have only one tradeable first-round pick left: either the pick they wind up with in the 2021 swap (once the 2020 Draft passes and the Stepien Rule no longer applies), or their own in 2022. One first-round pick is not going to be enough for most teams to take on three years of Gordon's salary, especially if the Rockets plan to keep winning.
But what if they don't plan to keep winning? They'd have to thread a tiny needle. They don't control their own 2021 pick, so immediate tanking wouldn't necessarily be beneficial. They don't control their own picks in 2024, 2025 or 2026 either, so a long-term Process-like plan doesn't make sense either. The Rockets, therefore, have two years in which they could, and probably should, tank: 2021-22 and 2022-23. Those are their chances to guarantee themselves the high draft picks that could lead their next true contender.
That lays out a roadmap for what the next half-decade of Rockets basketball should look like: take one last stab at winning a championship with this group, and if that fails, scrap the entire team and start again. That includes a possible James Harden trade, at either the deadline or in the 2021 offseason, when a number of contenders will have the cap space to either partially or entirely absorb his contract. It also makes it somewhat likely that the 2021 pick, regardless of where it comes from, will be traded in the name of either enhancing the 2020-21 team or cheapening it. The 2022 and 2023 picks are too precious to surrender.
But what could these trades look like? There are three avenues worth exploring.
Trade options
Tucker, Covington and House need no introduction. If the Rockets are willing to trade any of them, they'll find a dozen eager suitors. Gordon, Harden and Westbrook are significantly more complicated, so let's look through their situations one-by-one.
Eric Gordon
A mediocre 2021 first-round pick alone is not going to be enough to dislodge Gordon from Houston's books. If the Rockets are going to trade him, they are going to have to do it with the understanding that they are taking back a similarly harmful contract. So where are they finding such a deal?
Among cheaper ones than Gordon's, the pickings are slim. A couple of candidates come to mind.
- Jeremy Lamb is owed $21 million over the next two seasons but is coming back from both a torn ACL and a torn meniscus. The odds of him contributing next season aren't great. Perhaps some draft capital and the appeal of a healthier Gordon would entice the Pacers into taking on the extra $34 million in guaranteed money, but it's unlikely. Like Fertitta, Pacers owner Herb Simon (who owns malls) has been hit hard by the pandemic.
- The Magic are in a somewhat similar situation with Al-Farouq Aminu. He is coming off of a torn meniscus and is owed around $20 million for the next two seasons. Orlando has been desperate for guard help for years, and D.J. Augustin is a free agent. Gordon could replace him, and if you factor in the cost of retaining Augustin, the short-term cost wouldn't be too different. Still, the Magic are close to the tax line as is, so their preference would probably involve a cheaper replacement in free agency should they lose Augustin.
- The Nets are in win-now mode, and D'Antoni has been rumored as a possible addition to their coaching staff. Joe Tsai is worth $13 billion, so short-term cash flow isn't a concern, and if Joe Harris leaves in free agency, Brooklyn might be in the market for another shooting guard. Taurean Prince is owed almost $29 million over the next two seasons. The Nets wouldn't mind dealing him or getting another draft pick to use in trade talks for a third star elsewhere. Still, this relies on Harris leaving, which isn't likely. Otherwise, there just aren't minutes here.
There is another path Houston could take, though. The Rockets could try to package Gordon with one of their shinier assets to get back a value that might be slightly cheaper in the aggregate.
- With McNair in Sacramento, it might be worth asking about Buddy Hield, who is apparently no longer on speaking terms with coach Luke Walton, or Harrison Barnes, who is on a similarly brutal contract. Gordon and Covington for Hield would save the Rockets around $4.5 million immediately and give them one of the best 3-point shooters in the NBA. A similar deal for Barnes would save them $6.7 million, and while he is an inferior player to Covington, he could occupy a similar role as a small-ball power forward. Both deals would make the Rockets worse defensively and create long-term obligations but would give them some immediate relief and get rid of Gordon, who may simply be a negative-value player right now.
- If we want to get truly wild, Houston could seek out one of the only worse contracts than Gordon's. Philadelphia might actually value him as a guard that create and shoot. They also have a younger facsimile of Covington in Matisse Thybulle. So what about Horford and Thybulle for Gordon, Convington and Danuel House? The Rockets abandon their small-ball dreams and add the perfect center for a shoot-and-switch scheme while also getting a long-term Covington replacement. Philly gets an immediate upgrade on Thybulle and two shooters. Houston probably says no to this, but the deal has its merits. Horford's value, limited as it may be at his age, was obscured by Joel Embiid. At center, he remains a solid player.
And that's basically it. Names like Kevin Love and Blake Griffin should show up on the bad contract radar, but both cost too much to make sense for Houston right now. If Houston is desperate to move Gordon now, something along these lines is what will likely be available.
Russell Westbrook
If you thought moving Gordon was tough, wait until you see Westbrook's contract. He is 31, coming off of his worst postseason as a professional, relies heavily on athleticism and is owed over $130 million for the next three seasons. It would take a truly desperate team to absorb that deal.
The Knicks usually fit that bill, and sure enough, they've been linked to Westbrook. Beyond them? Finding a suitor is nearly impossible. Teams like Orlando and Charlotte might be interested in him as a box office draw in a normal year, but there might not be a box office at all this season, and both have younger ball-handlers they've invested in. The bad contract brigade is out as well. Cleveland just used back-to-back lottery picks on point guards. Love for Westbrook hampers their development. The 76ers aren't bringing in another non-shooter, even if it gets them off of Horford. The Pistons don't have a long-term point guard, but might draft one in November, and Griffin's contract is a year shorter.
Westbrook's shooting makes him unappealing to contenders. His ball-dominance will turn away rebuilding teams as well, and may even knock the Knicks out of contention. Why should RJ Barrett spend his formative years watching Russ dribble? Houston's best chance at moving Westbrook, frankly, would be through the leverage of a Harden deal.
James Harden
A Harden deal, should one come at all, would be likeliest either at the 2021 deadline or during the 2021 offseason. By then, the Rockets will have a clear idea of whether or not contention with him is at all possible anymore. But by holding him that long, they risk watching his value decline. Harden is 31 and has a contract similar to Westbrook's. He's a top-10 player right now. That may not be true in six months.
Dealing Harden now would at least give the Rockets a chance to keep a top-four pick in 2021. It would also allow them to trade Covington and Tucker at the peak of their value, guilt-free, and kick off a true rebuild. With that in mind, it's worth exploring what an immediate Harden trade might look like. The Rockets would likely set a price tag somewhere in the neighborhood of what Oklahoma City got for Paul George. There are 10 teams that make any degree of sense right now:
- Philadelphia could offer Ben Simmons, Thybulle and draft picks. The Harden-Embiid combination would be one of the NBA's most potent and potentially get the 76ers back into true contention.
- Boston could build a package around Jaylen Brown, Gordon Hayward's expiring contract and picks, and could theoretically take Gordon back as well.
- Miami is always star-hunting, and while 2021 free agency makes far more sense for the Heat, an offer built around Tyler Herro and Duncan Robinson would get them to the table. Including Bam Adebayo might seal the deal, but the Heat aren't nearly desperate enough to do so at this juncture. They just made the Finals without Harden, after all.
- Toronto watched Kawhi Leonard leave because he preferred Paul George as a sidekick to Pascal Siakam. If the Raptors want a star, flipping Siakam for a better recruiter in Harden might help them do so.
- If the Knicks are interested in Westbrook, they're interested in Harden. Barrett and Mitchell Robinson may not be Harden-worthy, but the Knicks have all of their own first-round picks, two from Dallas and another from the Clippers. They could overwhelm Houston with draft assets.
- The Bulls are stuck on the hamster wheel of mediocrity. Harden could get them off of it, especially if Anthony Davis ever has any interest in returning to his hometown team.
- For whatever this is worth, the Clippers tried to trade for Harden before landing George. If there is a way for them to flip George for Harden now, they're likely exploring it.
- San Antonio, like Chicago, is trapped in mediocrity right now. They also have all of their own picks to offer as well as a deep stable of good-but-not-great youngsters. Gregg Popovich deserves one last shot with a superstar. DeMar DeRozan's expiring contract could serve as salary ballast if he opts in.
- Rosas, a former Rockets executive, now runs the Timberwolves. He already made a trade with Houston at the deadline (for Covington), and could send a young All-Star in D'Angelo Russell to the Rockets alongside D'Angelo Russell in order to pair Harden with Karl-Anthony Towns.
- The Warriors probably wouldn't break up the Splash Brothers, but just imagine what a Harden-Stephen Curry duo could do offensively. Klay Thompson could net Golden State assets to send back to Houston in addition to the No. 2 pick and the valuable Timberwolves pick they acquired in February.
Don't expect Harden to be traded this offseason. All indications suggest that Houston wants to take one more run at this. But if a deal ever comes, one of these teams will probably be at the front of the line.
What would an ideal offseason look like?
Morey has long-argued that any team with at least a five percent chance of winning the championship should go for it. The Rockets had far more than a five percent chance when Chris Paul was their point guard. They might have had a five percent chance in the bubble.
But given the state of the rest of the league, it's hard to believe that they do right now. The gap between the Rockets and the Lakers in Orlando was enormous. The Warriors and Nets are ready to jump back into the fray. The Clippers may be better. The Mavericks, Nuggets and Celtics will be better. Miami isn't going anywhere. Neither are the Bucks or Raptors. Houston could talk itself into contention if there was only a single juggernaut in their path. That was the argument that led them to Paul's acquisition. Golden State may have been unbeatable as a whole, but one injury would have made them vulnerable. The Lakers will enter next season as the favorite. If an injury ruins their title defense, there will be half-a-dozen teams ahead of Houston in the new pecking order. Barring some massively unpredictable development, the Rockets are not going to win the 2021 championship. Assuming they don't, it's hard to see them meaningfully competing in 2022 or beyond either.
In purely practical terms, that makes a rebuild the logical option. Harden is never going to be more valuable than he is right now. Houston has three meaningful chances to avoid an extremely dark decade: their 2022 first-round pick, their 2023 first-round pick, and whatever they manage to get out of a Harden trade. Dealing Harden not only increases the return on his own deal, but ensures a weaker roster ahead of those 2022 and 2023 Drafts. The longer they wait, the direr their situation grows.
But realistically, the Rockets probably aren't going to this route. Fertitta seems to want to give winning with Harden one more try. So that gives us two possible offseason paths to cover:
Scenario 1: Houston tries to win, but remain under the tax line
Houston's best-case scenario on this front would probably involve one of the Gordon trades laid out earlier, or a Westbrook deal with the Knicks that saves them a significant amount of money. But let's say those are off of the table. Houston could trade Tucker or Covington for savings, but doing so would almost certainly deprive the Rockets of whatever slim championship hopes they currently have.
There is one other option, but it is a miserable one. The Rockets could use the stretch provision to waive Gordon and spread his owed salary out over the course of several years. This would be unprecedented. Technically, Gordon's extension hasn't even kicked in yet, and as he has three guaranteed seasons remaining, that money would be paid out over seven years (twice the length of the contract, plus one additional season). In other words, the Rockets could pay Gordon the $54.7 million he is guaranteed on its original three-year schedule, or they could pay him $7.8 million per year for the next season. That would save them approximately $9 million this season, and give them approximately $18 million to fill in 10 roster spots.
Say Rivers, McLemore and Nwaba are accounted for. That's eight players. We'll factor in three more at the veteran's minimum (approximately $1.6 million) and two at the rookie minimum (just under $900,000), while also assuming Houston leaves a 15th roster spot vacant, with the idea that it could be filled by 10-day contracts when absolutely necessary. This would get the Rockets to $127.5 million, allowing them to spend most of their Taxpayer Mid-Level Exception on a meaningful free agent.
Who might that be? There are two schools of thought. Ideally, Houston would retain its small-ball identity and sign a 3-and-D player, but there just aren't that many of them available. With only around $5 million to spend, they'd probably be looking at players like Torrey Craig, Kent Bazemore, or if he's open to leaving Milwaukee, Wesley Matthews Jr. Not bad, but probably not enough to shackle yourselves to seven years of Gordon money either.
The Rockets could get far more bang for their buck on the center market. Top centers like Marc Gasol, Serge Ibaka and Aron Baynes would probably be out of their price range, but Meyers Leonard is a reasonably priced option that can shoot. If they're willing to expand their search to non-shooters, Tristan Thompson makes sense in their switching defense. Their new coach, whether it's Van Gundy or someone else, would probably at least like the option of playing a bit bigger, and Morey's absence likely removes the dogmatism against the idea that the organization had at the 2020 deadline.
Scenario 2: Houston does everything in its power to try to win
Most of that last scenario still applies here, but Gordon remains in place, and the Rockets can use the entire Taxpayer Mid-Level Exception rather than most of it. Another meaningful difference: the Rockets could go whole hog on minimums and even fill out an entire 15-man roster.
So who would their targets for the minimum be? Jeff Green is a must after his strong showing in the bubble. He's one of the few small-ball centers in their price range that can shoot. A minimum-salary center or two would almost certainly be coming as well, just for the sake of emergency usage and lineup versatility. Players that can work with Harden and Westbrook in pick-and-roll would probably be a priority. In no particular order: Bismack Biyombo, Nerlens Noel, Damian Jones and Willie Cauley-Stein (if he opts out) make some sense.
Beyond that? Shooters, veterans looking to win, and free agents trying to use Texas' lack of a state income tax to squeeze every possible dollar out of a poor market will lead the way. The Rockets wouldn't lack for choices in this free-agent class. Plenty of worthwhile players will be subjected to minimum deals given the lack of available cap space leaguewide.
How much would this roster cost Fertitta? Add up the six incumbent players with the three returning on options, five minimum-salary veterans and the full Taxpayer Mid-Level Exception and you get a total salary just below $143.8 million with luxury tax payments just under $19.1 million. An all-in 2020-21 roster would cost Fertitta nearly $163 million in total.
So what actually will happen?
The truth is going to lie somewhere in between. The Rockets probably aren't going to stretch Gordon, nor are they likely to find a trade for him. The Rockets aren't going to sign nine rookies either. If giving up Tucker or Covington knocks them out of contention anyway, there is no reason to do it without dealing Harden as well.
All of this spells out an amazingly unlikely likeliest scenario: for the first time in Fertitta's ownership, the Rockets are probably going to pay the tax. They may have cost themselves the 2019 championship by not doing so, but there just isn't a reasonable way around it if winning is the goal here. They probably aren't going to spend anything beyond the minimum on free agents. There will be an undrafted rookie or two, and they may keep only 14 players, but when it's all said and done, the Rockets should be expected to enter next season in tax territory.
Will they stay there? That depends on how the season plays out. If things go south quickly, Harden Watch officially begins, and getting out of tax territory likely becomes a deadline priority. It's a sad suggestion for a team as talented as the Rockets, but with their title window closing and almost no young talent or draft picks to fall back on saving money and preparing for the future will probably become Houston's goal at some point in the near future.
