How the Rockets got Chris Paul without cap space

Chris Paul to the Houston Rockets is happening, even though it seemed nearly impossible for the Rockets to pull it off properly when the season ended.

There’s plenty of time to analyze the on-court fit between Paul and James Harden, whether the Rockets are on the same level as the Warriors, and if Mike D’Antoni can actually make this mix work.

But before we do that, let’s explain how Rockets general manager Daryl Morey will be able to pull this heist off — and how he can make it even better by securing Paul’s long-term future.

By turning the Paul acquisition into a trade in which the Rockets sent back Patrick Beverley, Sam Dekker, Lou Williams, a 2018 first-round pick, and several other pieces we’ll detail later in this piece, Morey found a way to get Paul onto his roster without having the cap space to do it once free agency began.

Here’s how.

The Rockets knew they couldn’t create enough room to sign Paul outright

To sign Paul in free agency, the Rockets would have needed to trim more than $20 million in salary to be able to give him a new maximum contract. At a minimum, that would have entailed trading Ryan Anderson to another team while taking no salary back. Anderson has three years and $61.3 million left on his contract, so convincing another team to take him on was a difficult sell.

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Photo by Sean M. Haffey/Getty Images

Even that wouldn’t have been enough to fit Paul in. Houston was set to have about $11 million in cap space with its existing roster. If the Rockets found a taker for Anderson, they would have cleared another $19.6 million.

But that still wouldn’t have been enough to afford Paul on the first year of a maximum contract, which would have started at more than $34 million based on current cap estimates. To get all the way to that number, Houston would have needed to move either Beverley or Williams to another team.

The chances of Houston finding new teams for Anderson and either Beverley or Williams without taking any salary back were slim to none. So, Morey came up with a different approach, thanks to a little cooperation from Paul.

Morey convinced Paul to opt in instead of opting out

Paul was widely expected to exercise an early termination option to opt out of the final year of his previous deal to officially become a free agent this summer. It was seen as a mere formality.

Instead, Paul reversed course. He informed the Clippers that he wanted to go to Houston, then agreed to opt in to the final year of his deal to facilitate the trade. That allowed Houston to acquire Paul without dipping into cap space and gave the Clippers the chance to recoup value for a player they would have otherwise lost for nothing. Plus, Paul got to go to his preferred destination. Win, win, win.

The actual mechanics of this trade proved to be complicated. Paul was slated to make $24.2 million next season by virtue of opting in, plus he has a 15 percent trade kicker that would bump his salary up more. (It appears he waived most of it to facilitate the deal). The combined salaries of Williams, Beverley, and Dekker add up to $14.3 million, which wasn’t enough to complete the trade by NBA rules.

To solve that problem, the Rockets canvassed the league for minimum contracts that were included to make the money work. Here’s an update on how that’s going.

In the official deal announced by the Rockets, they included backup center Montrezl Harrell, former Piston Darrun Hilliard, former Maverick DeAndre Liggins, and existing minimum-salary player Kyle Wiltjer. That was 80 percent of Paul’s incoming salary, which is the necessary threshold for over-the-cap teams to complete trades. Anyone left over — Shawn Long, Tim Quarterman, Ryan Kelly, Chinanu Onuaku, and Isaiah Taylor — can be used in future deals for other stars, if the Rockets can somehow pull those off, too.

Daryl Morey knew the only way he could get Paul was to convince him to opt in to the final year of his contract and then trade players directly to the Clippers to acquire him. This was a scenario few considered. Now, it’s happening.

How long will Paul stay a Rocket? Probably a long time

Technically, Paul is only making a one-year commitment to the Rockets. He can become a free agent again next summer and command the same maximum contract on the open market that he bypassed this year to facilitate this trade.

But there are ways the Rockets can work around that to keep Paul around for the long haul.

The most obvious is to agree to a wink-wink arrangement and agree to pay Paul a full five-year maximum deal next summer. Because Paul is being traded rather than signed, the Rockets would have his full Bird Rights:

Paul could also agree to a normal contract extension with the Rockets sometime in the middle of the season, though he’d make less total money. He must wait six months if he waives his trade bonus, per NBA rules, but once that time is up, he can sign a new four-year deal with Houston starting at 107.5 percent of his previous salary. The exact dollar figure depends on whether Paul waives a portion or all of his trade bonus, but here’s a rough estimate:

Regardless of the path they choose, the Rockets have ways to keep Paul around for the long haul. Rest assured, they did not make this trade only for Paul to bolt next summer.

All in all, this move was the function of the Rockets’ creativity to make a deal happen. It’s a firm reminder that NBA teams no longer need to clear cap space first before pursuing big names. If they secure commitments from the player, these front offices are full of brilliant people that can make the money work.

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