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The "Flex Cap" and the Rockets Salary Situation

Discussion in 'Houston Rockets: Game Action & Roster Moves' started by Carl Herrera, Jun 26, 2011.

  1. Carl Herrera

    Carl Herrera Contributing Member

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    I don't know if everyone is following the NBA labor negotiations, but one thing that the owners offered most recently (and, as currently constituted, rejected by the players) is something they call a "flex cap." I think it's interesting to explore what it means to the Rockets salary situation

    http://articles.boston.com/2011-06-22/sports/29690762_1_salary-cap-hard-cap-nba-owners

    I. The Flex Cap

    A preliminary note: I don't think we have the full picture about what the proposed "flex cap" system is yet and some of the details seem contradictory, but there are enough info out there about some of the main elements.

    According to articles like the one above, there will be two "cap" levels.

    The first is a "soft cap" level at $62 mil, which is like the current "soft cap" level (at 51% of Basketball Related Income ("BRI") or $58 mil or so this year). Like the current "soft cap," you can exceed this amount with exceptions (like Bird-exception, Mid-Level Exception, etc.).

    The second is a "hard cap" level at some untermined about (which would be, of course, greater than $62 mil), which cannot be exceeded at all. Basically, this is sort of like the "luxury tax threshold" in the current system, except that instead of just paying a tax to exceed it (and losing a few $ mil in distributions), you simply can't go past it. The current luxury tax threshold is set at 61% of BRI or $70.3 mil or so this year.

    Anyhow, the player have rejected the proposal. However, if the "hard cap" is set high enough, it seems the players should agree to it since the CBA is really just about dividing loot.

    The part that caught my attention is that if the parties can agree on a "hard cap" level, the league may actually increase the level of the current "soft cap" by a few million dollars (to $62 mil). I'm thinking something like this, assuming the sides can agree upon how high "hard cap" level is and how it moves with increase in revenue, may be how the CBA gets settled eventually.


    II. The Rockets Salary

    So, assuming a $62 mil or so "soft cap" level. I did a bit of a "back of envelop calculation" on the Rockets player salaries.

    https://spreadsheets0.google.com/sp...ames=false&pagenum=UNDEFINED&attachment=false

    It seems the bottom-line is as follows:

    A. Under the "flex cap" the Rockets have about $12 mil to spend on one or more FAs this year.

    B. Next year, the Rockets can have up to $25.5-27.5 mil in cap room (depending on how much they pay 2012 rookie draft picks, assuming they renounce Lee and Dragic and don't pick up the team option on the 2009 Lotto Busts) to add 2 players.

    If max contract level is about where it is and if they don't add more than $9-11 mil or so in 2012/13 salary (via trade or 2011 Free Agency), they can afford a max player

    C. It's probably safe to assume that the Rockets won't be picking up the 2012/13 team option on the 2009 Lotto Busts if they want to put themselves in position to possibly have max cap room.

    D. Assuming they want max (or near max) cap room, they basically need to split $9-11 mil or so among (a) whatever FA they sign in 2011, (b) whatever 2012/13 salary they take on in a trade, (c) what it costs to resign Lee (restricted FA) and/or Dragic (unrestricted FA), and (d) 2012 draft picks.

    E. Of course they can create more room by trading Scola, Martin, Lowry, Patteron, etc. for players on expiring deals, but it's not necessary to create 2012 max cap room at this point. You might consider it after, say, you signed Marc Gasol to a 5-year $60 mil contract, or if you are trading for someone with a salary in excess of $11 mil in 2012/13l, but this is one of those "case by case basis" things. No need to be contract dumping for 2012 right now.

    F. By itself, signing Chuck Hayes to a reasonable deal (something like $3.5-4 mil a year) is probably not going to hurt your 2012 cap situation.

    G. The "2 busts for Biedrins deal" doesn't preclude the Rockets from having max room in 2012, though it does limit their ability to take on further salaries if they still want max room.
     
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  2. meh

    meh Contributing Member

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    I'm personally hoping for the 2-max scenario that Chicago/NY had last year. Mainly because if we actually do that, it would mean Morey has some idea about potential leanings of certain FAs. Trading Scola should accomplish that, and I'm sure if the Rockets don't ask for much, Scola can be unloaded very easily.

    In that regards, the new CBA is good for the Rockets, as more soft cap means more room to make for top FAs. Also, the lower hard cap may create some sort of amnesty clause for teams to cut some extra fat. Which may mean that the Rockets can get some value deals to hopefully surround our new max player(s)?

    Here's to Kevin McHale's charisma working where Morey's lack of charisma failed. :)
     
  3. DiamondDobb

    DiamondDobb Member

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    Ah, thanks for posting this, I was wondering exactly what a "flex cap" was, this helps clear it up.
     
  4. RocketsMAN!

    RocketsMAN! Member

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    Do it Morey. First you get space, then you get the star, then you are legit contender.
     
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  5. DiamondDobb

    DiamondDobb Member

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    We can only dream right? But honestly though, I think if played right we'd have a great supporting cast for a star...but which star would take the bait? (prays for Superman ;))
     
  6. krmclaughlin

    krmclaughlin Member

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    I may be a pessimist here, but I just can't envision us signing a superstar in free agency. Don't get me wrong, I love my city, but Houston just doesn't seem like a flashy enough place to attract the likes of Dwight Howard or CP3 in free agency. It seems more likely that we'd trade some of our many "assets" for one of these guys.

    That doesn't mean I'm not all for making a run at these guys and seeing what happens, but I'm not going to get my hopes up.
     
  7. Damion Laverne

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    Hmm:grin:! It seems as though this new flex cap might give the Rox a better playing field for getting better through not just trades.
     
  8. anchel

    anchel Member

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    Sign&trade will be more difficult with the new CBA, right?
     
  9. b2bizchina

    b2bizchina Member

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    Morey is a typical miser, he is only petty, the lack of strategic vision;
    Since he is in charge of Houston Team, the team has been hovering at the edge of the playoffs, flattening out, not into the rebate. there is no worse than this business strategy.
    Although I admit that Morey is very carefully and very successful at the tactical level operations , but he is a completely opportunistic at the strategic level, to seek to get lucky and turn carp.
    If he is smart enough, he should seize the opportunity in 2012, he should not hesitate to clear cap space, partly because 2012 is a rare draft year, there will be many excellent rookie; the other hand, there are superstar free agents(D.Howard, C.Paul,etc). At the same time, we can fully exercise the young .
     
  10. JoeBarelyCares

    JoeBarelyCares Contributing Member

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    Trade for Kaman's expiring deal instead of Biedrins, and they you have room for two max players. Get the first one with a mid-season trade of Lowry + other assets for CP3. Then hopefully you have the draw to lure Superman in the summer as a free agent.
     
  11. TexAg713

    TexAg713 Member

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    Carl, you have no life. But I love you for it.
     
  12. Carl Herrera

    Carl Herrera Contributing Member

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    Actually, you don't unless you are talking about using Scola or Martin or a combination of non-expiring contracts to do so.

    If you just did expiring contracts for Kaman, you end up with $25-27 mil cap space, not close to "2 max" space (assuming max = $16 mil or so like it is now).

    While the team may keep an eye on the cap situation when making deals, I don't think the team makes a move that, in their opinion, cost them talent just for the purpose of creating cap space, especially without knowing whether the "big names"-- CP, Howard, Deron W., are even going to become FAs first (they can still extend or get traded in an "extend and trade," I think) or have any interest in Houston. They'd rather get more talent first, "a bird in hand," etc.
     
  13. furyn

    furyn Member

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    Thanks for the info. Very interesting.
     
  14. Furious Jam

    Furious Jam Contributing Member

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    If you want to assume that the max salary will be about $16M, that's fine. But if you can get CP3 or Deron and Dwight Howard together, you've also got to assume that they'd be willing to play for $14M or $15M a year to make that happen. The Superfriends in Miami took a little less, so it's not without precedent.

    So, based on the assumptions above, is it possible for us to clear $30M worth of cap space for next summer? What would our cap space look like that summer if (A) we didn't sign a FA this year (other than Yao for the minimum), (B) we traded Scola for peanuts, and (C) we let Thabeet, Flynn, Hill, T-Will, and Dragic all walk?

    PG: Paul/Lowry
    SG: Martin/Lee
    SF: Budinger/Parsons
    PF: Patterson/Morris
    C: Howard/Motiejunas/Yao

    Is it possible?
     
  15. smoothie

    smoothie Jabari Jungle

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    i wouldn't get too excited about the potential cap space just yet. cap space is valuable because its rare. only a few teams each summer have money to spend, and even fewer have max money or more.

    remember, if the cap is raising for us, its raising for everyone else. there will be other teams with money to spend. its not a given that free agents will be drawn to us like we're the team that can spend... other teams will be able to spend too.
     
  16. roslolian

    roslolian Member

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    Again, how are you going to convince two guys to "collude" and play together in Houston? Miami trio only worked out because Dwade was already there and he's buddies with both LBJ and Bosh. Both would-be FAs would only consider it if we had capspace, and frankly I think its too big a gamble to clear talent just to have capspace. Not only that, you seem to be making an assumption both OrL and NO would let CP3 and DH walk for nothing, which is totally ridiculous IMHO.
     
  17. roslolian

    roslolian Member

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    That's where the lotto rejects come in though, we renounce 4 top 10 picks and voila! There's your capspace in 2012. Not everyone will be able to clean house like we do, certainly all of the "glamour teams" are already capped out: Lakers, Boston and NY among them. If we're competing against cities like NO or Cleveland then I like our chances, esp. with the "no taxes" incentive.
     
  18. sammy

    sammy Contributing Member

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    This is the light at the end of the tunnel. The new era has begun. No more contracts that crippled our franchise for years.

    All of the 09 busts will come in handy very soon. We trade them or let them expire. No to Biedrins. I would prefer a Scola for center swap.
     
  19. jopatmc

    jopatmc Contributing Member

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    We need to sign Chuck Hayes to a front loaded deal.

    And if you're gonna talk about max contracts for next year, then what are the free agents that are available then?

    At this moment, I don't see a need for 2 max guys, depending on who they are. And I'm wondering if we could pry Brook Lopez away from NJ with some combo of Scola, Thabeet, Hill, and a pick or two for Lopez, and Outlaw's and Farmer's stinky contracts. This would give us 5 very, very good starters in Lowry, Martin, Morris, Lopez, and Patterson and a very deep bench that would probably have to be thinned out a little.
     
  20. Furious Jam

    Furious Jam Contributing Member

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    You have to start with the assumption that CP3 and Howard would want to play together. Then you have to assume that they want to play in a warm weather city with no income tax. They'll also be looking for a team that wouldn't be stripped completely bare. They'll also need good ownership, so we rule out the Clippers, New Orleans, etc.. Put all of those factors together, and then look around the league to see how many teams would be a fit for them. They'll gravitate to Houston if we can give both of them $14 or $15 million deals.

    What are you risking by giving away Scola? He's not a top 10 power forward, he can't play defense, he's 31, and we have depth at his position.
     

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