Summer agenda: Should the Rockets extend James Harden?

Bobby Marks
The Vertical
James Harden is eligible to sign a Designated Player Veteran Extension this summer. (AP)

The Vertical Front-Office Insider Bobby Marks, a former 20-year executive with the Nets, looks at the possible offseason plans and roster details for every team in the league.

Previous teams in the series: Nets and Suns | Timberwolves and 76ers | Magic and Kings | Hornets and Pelicans | Knicks and Nuggets | Lakers and Heat | Mavericks and Pistons | Pacers and Blazers | Hawks and Thunder | Bulls and Grizzlies | Clippers and Bucks | Raptors and Jazz | Spurs

HOUSTON ROCKETS

Offseason focus

The James Harden contract

For a second consecutive summer, Houston has the opportunity to reward James Harden with a new contract.

Achieving All-NBA criteria this season makes Harden eligible for the Designated Player Veteran Extension.

While the Rockets cannot renegotiate his current contract like they did last summer, Houston can add an additional four years to the back end of his current deal.

The additional four years would be worth $168 million, starting with a $37.5 million salary in 2019-20.

However, there isn’t a great deal of urgency when it comes to a possible extension.

Unlike Russell Westbrook, who is set to enter the last year of his contract, Harden is under contract for two more seasons.

The extension does represent long-term security for Harden, but unlike his contract renegotiation last summer to reflect a max salary, a new extension does not give him an added benefit financially.

By July 2019, Harden will have reached 10 years of service and be eligible to sign a max contract for 35 percent of the salary cap – the same amount he would get if he were to sign an extension this summer.

Cap space vs. exceptions

The Rockets have an interesting decision to make when it comes to creating cap space.

Because the Rockets sit $4 million below the salary cap, Houston has the $8.4 million mid-level exception and $3.2 million bi-annual exception to use.

If the Rockets fall far enough below the cap, the mid-level and bi-annual exceptions will be lost and Houston will be relegated to the $4.1 million room mid-level along with the cap space created.

Though the exceptions appear to be minimal compared to cap space, Houston has shown an ability to use exceptions to get under-the-radar free agents. Houston got Nene with the bi-annual last summer.

Patrick Beverley is also eligible for an extension this summer. (AP)

The extension candidates

The rule change in the new CBA that focuses on veteran extensions could have an impact on the Rockets.

Starters Patrick Beverley, Trevor Ariza and Clint Capela and reserves Lou Williams and Montrezl Harrell are eligible to sign extensions this summer.

Under the 2011 CBA, only Ariza and Capela would have been eligible.

Beverley and Williams are now eligible because players who signed contracts for more than three or four years can now be extended after the second anniversary of the contract.

Under the 2011 CBA, only players who signed four- or five-year contracts could be extended and only after the third anniversary of when the contract was signed.

Beverley is now eligible to sign a three-year, $31 million extension that would start in 2019-20.

The first-year salary of $8.8 million would represent a significant pay increase for a player who ranked 34th among point guards in 2016-17.

Williams, entering the final season of a three-year contract, can sign a four-year, $39 million extension.

Capela, entering the fourth year of his rookie extension, can be extended for a total of four years and up to 25 percent of the 2018-19 salary cap.

However, because Capela has a $7 million cap hold in 2018, Houston would be best off waiting to re-sign him unless an extension allows them to retain flexibility.

Summer cap breakdown

Guaranteed                                     2017-18                                 Insider info
James Harden                              $28,299,399                Designated extension eligible
Ryan Anderson                             $19,578,455
Eric Gordon                                  $12,943,020
Trevor Ariza                                   $7,420,912                         Extension eligible
Lou Williams                                 $7,000,000                        Extension eligible
Patrick Beverley                            $5,513,514                         Extension eligible
Sam Dekker                                   $1,794,600
Clint Capela                                   $2,334,528                   Rookie extension eligible
Montrezl Harrell                            $1,471,382                         Extension eligible
Chinanu Onuaku                           $1,312,611

Non/partial                                     2017-18                             Guarantee date
Kyle Wiltjer                                    $1,312,611                                   Aug. 1
Isaiah Taylor                                  $1,312,611                      First day of the season

FA cap hold                                    2017-18                                 FA status
Nene                                             $3,477,600                                Non-Bird
Troy Williams                                $1,512,611                         Restricted non-Bird
Bobby Brown                                $1,724,305                        Restricted non-Bird

Salary table                                       2017
Guaranteed salaries                   $87,668,421
Non-guaranteed                          $2,625,222
Tax variance                                  $317,542
Free-agent cap holds                  $6,714,516
Salaries: cap                               $97,008,159
Salaries: tax                                $90,611,185
Salary cap                                 $101,000,000
Luxury tax                                 $121,000,000
Cap space                                   $3,991,841
Tax room                                    $30,388,815

Projected cap space

Houston is $4 million below the salary cap.

The Rockets could create an additional $9 million in room by releasing their own free-agent cap holds and non-guaranteed contracts.

The available cap exception the Rockets have will depend on what direction is taken when it comes to the cap.

Houston will have either the $4.2 million room mid-level or the $8.4 million and $3.1 million exceptions.

June draft picks

Houston traded their first-round pick to the Lakers in exchange for Lou Williams.

The Rockets have the No. 43 pick in the second round from Denver and the No. 45 pick from Portland.

Future draft picks

Houston has its own future first-round picks.

WASHINGTON WIZARDS

It’s essential for the Wizards to retain restricted free agent Otto Porter. (AP)

Offseason focus

The restricted free agents

The Wizards have little leverage when it comes their own restricted free agents.

A year after spending a lot to build its bench, Washington now has little flexibility to improve outside of retaining Otto Porter and Bojan Bogdanovic.

Washington has $91 million in guaranteed contracts and losing either player would not create cap space for a replacement.

When it comes to Porter, the negotiation with agent David Falk should not be drawn out.

One of the top small forwards in free agency, Porter is in line for a contract that will start at $25.5 million.

If Washington hesitates on the asking price, Porter will have a list of suitors willing to sign him to an offer sheet.

Falk is obviously no novice when it comes to restricted free agency.

He is not afraid to advise clients to sign a one-year qualifying offer if talks break down, which he did with Greg Monroe and the Pistons.

Regarding Bogdanovic, it all comes down to how much luxury tax Washington is willing to spend.

Acquired at the trade deadline from Brooklyn in exchange for Andrew Nicholson and a 2017 first-round pick, Bogdanovic is the Wizards’ most productive bench player.

Losing Bogdanovic would hurt a bench that already had questions heading into the offseason. The Wizards would only have the $5.2 million tax mid-level exception to find his replacement.

Rewarding John Wall

John Wall is in line to receive a significant pay raise this summer.

Wall ranked seventh among point-guard salaries is now eligible to receive a DPVE worth up to 35 percent of the salary cap.

Earning All-NBA honors this season has Wall eligible to sign a four-year, $168 million extension that would start in 2019-20.

The total is based off the projected $107 million salary cap in 2019-20 and could increase based on overall league revenue.

The last two years of his current contract – $18.1 million and $19.2 million – will stay on the Wizards’ cap with a potential $37.5 million cap hit starting in 2019-20.

There is risk if either side tables extension talks.

If Wall fails to sign an extension this summer and misses out on earning All-NBA honors in 2017-18, he would be ineligible to sign the DPVE next summer.

Wall could still sign an extension, but only for 120 percent of his $18.1 million 2017-18 salary.

The extension would be four years, $97 million, roughly $71 million less than what Wall could receive this summer.

But waiting another season and earning All-NBA honors in 2017-18 could earn Wall an additional $50 million.

Because Wall would only have one year left on his original contract, Washington could add an additional five years.

Locked into the roster

The three potential max salaries of Wall, Porter and Bradley Beal instill optimism and continuity for the franchise, but present a challenge in how Washington can improve.

Those three players will count toward half of the Wizards’ $101 million salary cap next season.

Washington also has $29 million tied up in centers Marcin Gortat and Ian Mahinmi for the next two seasons.

Any team improvement will need to come from within.

If the Wizards return the same roster, a significant luxury tax bill and lack of flexibility will be in place for the next two seasons.

If they extend Wall, the Wizards will have $90 million committed to him, Beal and Porter for the 2019-20 season.

The task for management will be to improve the bench, including the backup point guard position, with limited resources.

Summer cap breakdown

Guaranteed                                    2017-18                              Insider info
Bradley Beal                                $23,775,506
John Wall                                     $18,063,850                      Extension eligible
Ian Mahinmi                                $16,661,641
Marcin Gortat                              $12,782,609                      Extension eligible
Markieff Morris                            $8,000,000                        Extension eligible
Jason Smith                                  $5,225,000
Tomas Satoransky                       $3,000,000
Kelly Oubre                                  $2,093,049
Chris McCullough                         $1,471,382

Non/partial                                     2017-18                    
Daniel Ochefu                               $1,312,611
Sheldon McClellan                       $1,312,611

FA cap hold                                    2017-18                               FA status
Otto Porter                                   $14,734,953                        Restricted Bird
Trey Burke                                     $8,466,495                        Restricted Bird
Bojan Bogdanovic                         $6,788,738                        Restricted Bird
Brandon Jennings                         $1,440,000                             Non-Bird

Dead cap space                            2017-218
Martell Webster                              $833,333

Salary table                                      2017
Guaranteed salaries                   $91,073,037
Dead money                                 $833,333
Non-guaranteed                         $2,625,222
Tax variance                                  $317,542
Free-agent cap holds                 $31,430,186
Salaries: cap                               $125,961,778
Salaries: tax                                $94,849,134
Salary cap                                  $101,000,000
Luxury tax                                  $121,000,000
Cap space                          None ($24,961,778 over)
Tax room                                     $26,150,866

Projected cap space

The Wizards will not have cap space when free agency starts.

Washington has $92 million in guaranteed contracts, not including Porter’s expected $25 million deal.

With Washington nearing the luxury tax, expect the $5.2 million mid-level exception to be the only resource the Wizards will have to improve their bench.

June draft picks

Washington traded its first-round pick to Brooklyn in exchange for Bogdanovic.

The Wizards have the No. 52 pick in the second round.

Future draft picks

Washington has its own future first-round picks.

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