Rockets Face Tough Choice With Montrezl Harrell

NCAA Basketball: Louisville at Pittsburgh

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Jason Terry helped the Rockets make a key step toward completing their roster for the season ahead, agreeing this week to return on what appears to be a one-year, minimum salary deal. That leaves Houston with wiggle room to sign No. 32 overall pick Montrezl Harrell, but the Rockets still face a dilemma as they attempt to do so. Signing Harrell, a Rich Paul client, would almost certainly impose a hard cap on the team, and Harrell’s contract would leave the Rockets so close to that cap that they’d have almost no room to maneuver the rest of the season, barring some kind of other move to clear salary.

The collective bargaining agreement calls for a hard cap of $4MM above the tax threshold on teams that use the $5.464MM non-taxpayer’s mid-level exception instead of the $3.376MM taxpayer’s mid-level. The Rockets have already re-signed K.J. McDaniels for nearly $3.19MM. That’s close enough to $3.376MM that any use of the mid-level for a full-season salary for Harrell would push the Rockets above that figure and trigger the hard cap.

Houston couldn’t have paid McDaniels nearly as much had they not used the mid-level, because they didn’t have cap space and because their Non-Bird rights with McDaniels would provide no more than about $1.014MM, which is 20% greater than the minimum. They were hemmed in with McDaniels because he took his one-year required tender from the Sixers last year, the very sort of scenario Houston is seemingly trying to avoid with Harrell.

High second-round picks almost always end up with more than the minimum salary. That’s the case with each of the five second-round picks from No. 31 through 39 who have signed with their NBA teams so far this summer. Thus, the Rockets probably wouldn’t be able to convince Harrell and Paul to take a deal via the minimum-salary exception, unless it’s his required tender. That tender functions like a miniature version of a qualifying offer. Teams have to submit required tenders to their second-round picks no later than September 5th, or they lose the draft rights to them and they become free agents. The tender is for a one-year, non-guaranteed contract at the minimum salary. Some second-rounders wouldn’t sign the tender out of fear that their teams would cut them in training camp, leaving them with no salary for the season ahead. That’s assuredly not the case for Harrell, who was just two picks shy of becoming a first-rounder and who had been a lottery prospect at times during his college career at Louisville.

Harrell could seek a lucrative deal overseas, but if he signs his required tender, he’d become an NBA free agent next summer. That proved a lucrative path for McDaniels, last year’s No. 32 overall pick, who took his required tender from the Sixers a few months before they traded him to the Rockets. No second-round pick from last year will make a salary this season that comes close to the nearly $3.19MM that McDaniels will see.

Harrell’s association with Paul adds another wrinkle. Paul recently declared that Tristan Thompson, another of his clients, wouldn’t re-sign with the Cavs next year if he took his qualifying offer this summer. The Rockets would have the right to match offers for Harrell next year if he signs his required tender this year, a privilege the Cavs wouldn’t have with Thompson if he takes his qualifying offer, but Houston wouldn’t have Harrell’s Bird rights. The Rockets would probably have to use cap space or their mid-level to keep him, just as with McDaniels. The Gilbert Arenas provision would be around to protect the Rockets from having to commit more than the non-taxpayer’s mid-level, but the Rockets would surely prefer to avoid a bidding war for a player with whom they currently have exclusive NBA negotiating rights.

Averting that scenario may prove just as thorny for GM Daryl Morey and company, however. Any deal that Houston gives Harrell this season that’s worth more than the minimum salary or runs for more than two years would result in a hard cap. The Rockets have a payroll of $85,233,113, according to Eric Pincus of Basketball Insiders, not counting the minimum salaries for Terry and Chuck Hayes, whom the Rockets have also agreed to sign. Both Terry and Hayes reportedly have one-year deals for the minimum salary. Since their pacts only cover one year, the Rockets would have to pay them no more than $947,276, the two-year veteran’s minimum. The Hayes deal apparently carries only a partial guarantee, though it’s unclear just how much guaranteed money is involved. Assuming Terry’s deal is fully guaranteed, and assuming Harrell would take a first-year salary equivalent to the $1,170,960 that No. 33 overall pick Jordan Mickey will make this season, according to Pincus, Houston’s payroll would be $87,351,349 absent of Hayes. The hard cap would be $88.74MM, so depending on the amount of the partial guarantee for Hayes, the Rockets would only have about $1MM to play with the rest of the season.

That would handicap the team if it wants to make a trade, since the Rockets wouldn’t be able to do a deal that brings their salary above the hard cap. Houston would have to be especially choosy with midseason signees, since their salaries couldn’t add up to more than the $1MM or so that the team would have left to spend. Claiming an intriguing player off waivers would be nearly impossible. Houston could create more flexibility with a salary-clearing trade, but the Rockets, who are title contenders, must be careful not to trim too much talent from the roster, especially after injuries left the team thin at critical times last season. Waiving a player via the stretch provision before September 1st would represent another path to increased flexibility beneath the hard cap, but that, too, would reduce talent, since no obvious waiver candidate exists.

The constraints of that hard cap nonetheless seem more palatable than allowing Harrell to hit the open market next year. The Rockets could match competing bids for him, since he’d be eligible for restricted free agency, but they wouldn’t truly hold sway over his price point. A hard cap would provide Morey with a measure of control, since he’d have several months to find a trade that reduced salary without draining talent. That’s a difficult task, but Morey has proven among the most canny and creative dealers in his eight-plus years in charge of Houston’s front office. No one stands a better chance of wriggling free from the chains of the hard cap than he does.

Regardless, we’ll soon find out just which less-than-appealing option the Rockets choose. For now, we know simply that the Harrell dilemma proves that negotiations between teams and their second-round picks are infinitely more fascinating than the straightforward rookie scale signings of their more celebrated first-round counterparts.

What do you think the Rockets should do with Harrell? Leave a comment to tell us.

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29 thoughts on “Rockets Face Tough Choice With Montrezl Harrell

  1. Charlie Adams

    Great piece Chuck. I’m curious to see what happens since Morey values financial flexibility, so considering a decision that would put him so close to that hard cap must really make him pause. Like you said, no obvious stretch-candidates, so he’s pretty much locked in with the roster he’s got. Tough to have much sympathy, though, since most teams in the league would kill to be as deep as Houston…

    • Chuck Myron

      Thanks, Charlie! Yeah, I don’t think the 29 other teams feel too bad for Morey, though I wouldn’t be surprised if he works out a trade that would be mutually beneficial and creates the financial flexibility that he desires.

  2. rxbrgr

    Thanks Chuck. It will be interesting to see if Christian Wood sticks as well (he agreed to a non-guaranteed VM deal a while back which hasn’t been finalized). Keeping him vs Hayes as the 15th man (after Harrell and Terry) would save them an extra ~400K against the hard cap and he has much more of a future than Hayes.
    I see them waiting past September 5th to decide on Montrezl. The thinking behind that being to see if they can extend either Motiejunas or T.Jones. If one or both don’t extend then they become their most logical trade chips (and desirable ones) heading into the season. They could be easily dealt for more room under the hard cap, justifying swallowing the difficult decision of signing Harrell with the MLE.
    If Morey is really ballsy he’ll let Montrezl sign the one-year tender and keep open the possibility of a big (and potentially expensive) acquisition during the season, going all in on this year.

    • I like the logic in trading either Jones or Motiejunas, but both players should play heavy minutes. Not sure you can give up on either one and remain among the Western Conference elite. Not sure who’d I chose to trade away though if it came down to that.

    • Chuck Myron

      You bring up an interesting point about Wood, since he would cost less than Hayes and ostensibly give them a lot more upside. Adrian Wojnarowski reported that it’s a partially guaranteed deal for Wood (link to It might come down to how much partially guaranteed money Hayes is getting versus how much Wood has.

  3. Jacob Jackson

    I see it playing out one of two ways:

    1.) They sign Harrell to a four-year deal, with the final two years non-guaranteed, starting at $1.2M.

    2.) They sign him to the minimum tender, allowing him to hit RFA after next season.

    Two key points to me are the Rockets’ desire to get in the mix for Kevin Durant next season, and the fact that they are already such a deep team this year. If they sign Harrell, they basically have 15 rotation-worthy players. How many teams can say that? That’s why they shouldn’t be worried about hard-capping themselves. They’d still have 800K to play around with for 10-day contracts.

    The only downside I can think of to an offer of four-years, $5M for Harrell is that the Rockets will need every little bit of available money to make a max-salary offer to Kevin Durant next summer. And if Harrell were off the books next summer (as an RFA), that would be better for the pursuit of Durant than it would be to have Harrell’s $1.35M on the books for 2016-2017.

    Either way, the Rockets are sitting pretty. To me, this is the second-best team in the Western Conference. People are underrating them a bit.

  4. Arthur Hill

    The disadvantage Harrell has, in relation to K.J. McDaniels a year ago, will be playing time. McDaniels got heavy minutes as part of the rotation in Philadelphia. Harrell, barring significant trades or injuries, will probably be stuck in the D-League most of the season. The Rockets’ strategy could be to give him a minimum deal and gamble that no one will make a big offer next summer.

  5. Alvin

    Need to sign this kid because I think he’s going to be one of the best players in the league in the future

    • johnny G

      I agree very much Alvin, I watched every Rocket summer league game and he stood out. Do what is necessary to keep Mr. Slam Dunk.

  6. slammy

    Is there no way of signing him outright to the vipers? Suppose that the rockets want to both retain financial flexibility and keep Montrezl, there must be a way that the D-league affiliate can help make the numbers work…?

    • Chuck Myron

      They could do that, but it’s doubtful Harrell would be on board with that. The D-League caps individual salaries at around $50K.

  7. Ray Qadri

    Keep him he is worthy, a great second round option another Chandler Parsons

  8. johnny G

    One thing is for sure, the Rockets will win if they can keep him. So trust in Morey is all I have to say because he seems to get things done the right way all the time.

  9. Parkz

    No doubt in my mind that we need to sign him, he is explosive and in my opinion is nba ready, if you look at what we have atm, jones and dmo who we both need to keep, jones a shot blocker and not to bad on the boards and plays with great spirit and aggression, dmo the more focused, 7ft, great post game and can spread the floor, both guns in my opinion…but they have both had serious injuries…this is where chuck Hayes comes in, lodge a few minutes and fill a small window if there’s a hole..but he is a veteran…(not to mention that Capella is ready after what we saw in the playoffs) so now this is were Harrell comes in, nba ready to fill in the gaps if there is an injury, beast on the boards and got mad hops for dunks and can lift a the crowd therefore lifting the crowd, this gives us options and incredible depth, morey needs to sign him! Stick with this full squad for the season because we are serious title contenders and have replaced smith with 2 players in Hayes and Harrell whilst also adding Lawson, we are deep. I see dekker playing more time in the d-league then Harrell, He must be signed!

  10. Jacob

    I believe we should deal T Jones, Harrell looks to have alot of potential. I am excited to see what he can do at the nba level. We should take the risk and clear some cap for him.

  11. Hourocketfan

    Why sign Hayes? Hopefully, Hayes won’t see significant minutes. Harrell had a far bigger upside than Hayes. We still should move Tjones as well



  12. rxbrgr

    So I’ve rethought my stance on this and decided this should be the deal the Rockets give Harrell: use the VM exception to offer a two year deal, first year guaranteed, and second year a player option. For Harrell this still can be a win if he’s willing to bet himself. It’s better than signing the tender since it’s guaranteed money and he can then have more guaranteed money as injury insurance. Whether he finishes the contract in one or two years, he’s still a restricted free agent at an early stage in his career (with the Arenas rule applying), which I guess helps the Rockets know they still control his destiny. It’s especially good for them since they avoid the hard cap this year.

  13. Donald McFarlin sr

    Sign Him, and do it quick! He will become a star player for your team, in fact any team!

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