Houston Rockets General Manager Daryl Morey Faces a Tough Road Ahead

After a disappointing ending to the 2019-20 season, the Houston Rockets will look to make some changes to its roster. James Harden and Russell Westbrook are nearing the end of their prime years thus fielding a competitive roster is a must.

Reshaping the roster is a tall task for General Manager Daryl Morey. Houston has three huge contracts (Westbrook, Harden, Eric Gordon) on its books and only four picks (one first and three seconds) to work with. Given these wounds were largely self-inflicted, it’s fascinating to examine the challenges facing Morey in the coming year.

Not only must he provide a Championship level roster, but Morey must also juggle finding a new coach and add to the front office.

Houston Rockets General Manager Daryl Morey Faces a Tough Road Ahead

Who will be the Houston Rockets’ Next Head Coach?

The hunt for the next Houston Rockets head coach is on. Morey is likely to cast his net wide to find the right coach to mesh with stars Harden and Westbrook. Early prospects are Sam Cassell, Tyronn Lue, Jason Kidd, and Jeff Van Gundy. Cassell and Lue were assistant coaches with the Los Angeles Clippers while Kidd is Frank Vogel’s assistant with the Lakers. Van Gundy is a former Rockets coach, still resides in Houston, and is familiar with the Rockets system.

According to reports, Morey is searching for a head coach who can work with assistants with opposing styles. D’Antoni worked with defensive-minded assistant Jeff Bzdelik from 2016-19 and their defense rose to the top 5 in 2017-18. Houston and D’Antoni aren’t synonymous with defense so the idea of opposing styles absolutely works.

I expect the new coach to incorporate a totally new system and the Rockets move back toward a traditional starting five. Micro-ball was fun while it lasted but now Houston must pivot back and play a legitimate big.

Other names reported to be in the mix are Alvin Gentry, Kenny Atkinson, and David Vanterpool.

Limited Assets

Houston’s affinity for trades has seen its assets diminish. Six of their next seven first-round picks cannot be traded due to future obligations.

The Rockets also have obligations on most of its second-round picks. They have access to their 2021 (own or swap), 2023 (32-33 protected), and 2024 (via Atlanta) second-round picks but their own picks from 2024-2026 are tied up. In a deal that sent Westbrook to Houston, the Thunder acquired two top-4 protected 2022 and 2024 first-round picks. However, should the Rockets keep its pick in 2022, their 2024 and 2025 seconds go to the Thunder. If their 2024 first-round pick doesn’t convey, their 2026 second-rounder also goes to Oklahoma City.

Morey will need to be savvy to swing deals using what little capital he has.

Houston Rockets Salary Cap

Houston has approximately $131.3-million worth of active contracts with Westbrook and Harden occupying 63 percent of the salary cap.

By allowing their free agents to walk, Houston’s payroll drops to approximately $106-million. The Rockets must decide if Ben McLemore, David Nwaba, and Chris Clemons are part of their team’s future. All three are under team control but I assume two of the three (McLemore and Nwaba) will return. Austin Rivers possesses a player option but rumors suggest he will opt out and test the market.

This leaves Houston with approximately $110-million in committed salary with roughly $22.6-million to fill out its roster. With the cap likely to lower due to COVID-19, this will become even less.

Tilman Fertitta and the Luxury Tax

Morey has repeatedly stated that Tilman Fertitta has not issued an order to stay under the luxury tax. Unfortunately, that is a little hard to believe. Since taking over Houston three years ago, the Rockets haven’t spent a dime on luxury tax. Even following Chris Pauls four years, $160-million extension in 2018-19, Morey made a slew of moves to duck under by roughly one million dollars.

The biggest telltale sign of tax avoidance came in 2018-19 when Fertitta claimed Houston avoided the tax by chance. Upon closer examination, the Rockets traded 11 players, one first-round pick, three second-round picks, and one pick swap for two second-round picks. Given the complexity of these transactions, these moves were certainly calculated and money motivated.

Fertitta has done a lot of talking about paying the luxury tax for a contender yet, he has avoided it like the plague. I anticipate Morey will need to make moves while ensuring the Houston Rockets remain out of the luxury tax.

How Can Morey Save Money?

Trades With Minimal or No Salary Return

The obvious way is to trade players attached with assets without absorbing returning salary. Teams like the Detroit Pistons, New York Knicks, and the Charlotte Hornets are three teams looking to rebuild for the future. By attaching the right assets, they could absorb bad deals without sending salary back. Morey is likely to survey this option but will need to tread carefully since Houston has barely any assets.

Gordon and P.J. Tucker are two names likely to be floated around the market and will garner some attention from contenders.

Stretch Provision

The Stretch Provision will be extremely important given the Houston Rockets salary cap situation. It allows a team to spread the remaining guaranteed salary over twice the remaining length of the contract plus one year. For a team like Houston who is trying to win now, it is a means of manipulating the cap.

For understanding purposes, let’s assume the Rockets trade Tucker for Tony Snell. Snell’s $12-million contract is expiring at the end of 2021 and can be stretched over three years. Therefore, the cap hit for Houston will be $4-million over the next three, producing $8-million in cap relief in the present.

If Morey is targeting a player in free agency, he could make some moves to sign them outright using the stretch provision.

Conclusion

These are some challenges facing Morey heading into the 2020-21 season. He is considered one of the smartest front office men in the league and is mentioned in the same breath as former Philadelphia GM Sam Hinkie. Number crunching, asset acquisition, and analytics are his strengths thus he must rectify his own self-inflicted wounds.

It’s not an impossible task but I wouldn’t want to be in his position.

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