LinkAssumptions
First off, we will need to make a few general assumptions before proceeding.
Preliminary estimates for next year's salary cap vary widely. Prior to this season, the league issued a memo to all 30 NBA teams, warning them that league revenues are expected to drop between five and ten percent and that, as a result, the salary cap (which is a function of league revenues) could come in as low as $50 million. With the economy modestly improving in recent months, most GMs are planning for a salary cap somewhere between $53 million and $54 million. Just to be safe, let's use a salary cap figure of $53 million.
The luxury tax threshold, like the salary cap, is also a function of league revenues. While it is very difficult to accurately predict this amount, using figures from the past several seasons, if we are assuming a salary cap of $53 million, let's go ahead and assume a luxury tax threshold of $64.7 million.
So, let's begin.
Existing Salary Commitments
The Rockets will have salary commitments next year to Yao Ming ($17.68M), Kevin Martin ($10.6M), Shane Battier ($7.43M), Jared Jeffries ($6.88M), Trevor Ariza ($6.32M), Jordan Hill ($2.67M), David Andersen ($2.5M), Aaron Brooks ($2.02M), Jermaine Taylor ($781k) and Chase Budinger ($781k). (All salaries courtesy of shamsports.com.)
That comes out to a total of about $57.67 million in guaranteed salary for the Rockets. It is well over any projected estimate for the salary cap. For those of you still entertaining the notion that the Rockets had cap room this summer, please dismiss it from your head right now. The Rockets gave that up the second they agreed to take on the salaries of Martin (to address a need) and Jeffries (to get the picks). But if it's any consolation, the Rockets likely would not have done anything with the estimated $7-9 million in cap room they could have had prior to this past week's trade, since they would have had to renounce their rights to Luis Scola and/or Kyle Lowry in order to use it.
Restricted Free Agents
If the Rockets extend qualifying offers to Luis Scola, Kyle Lowry and Hilton Armstrong by June 30, 2010, they will become restricted free agents, meaning that the Rockets will have the right to match any offer sheet to which those players are signed.
While much has been made in the past about the "cap holds" (which are the amount a player counts against team salary for salary cap purposes) for Scola and Lowry, this issue is largely moot now that the Rockets are hopelessly over the salary cap.
The qualifying offer amounts are (a) $4.11 million for Scola; (b) $2.97 million for Lowry; and (c) $3.85 million for Armstrong. Scola and Lowry will most assuredly receive qualifying offers. Armstrong will most likely not and will become an unrestricted free agent (although the Rockets will still have Armstrong's Bird rights).
In his post-trade press conference on February 18, Daryl Morey flat out said that the Rockets WILL be keeping both Scola and Lowry. This is a fairly bold statement, given that the Rockets have no idea how much other teams will be willing to offer them this summer. Perhaps this is Morey's veritable "shot across the bow" at any team even thinking about extending an offer to either Scola or Lowry.
