Analysis: Rockets, Morey have window to expand Covington trade

With the Covington-Capela trade agreed to but not finalized, Rockets GM Daryl Morey has a unique opportunity to further expand the deal.

The Houston Rockets and GM Daryl Morey have a unique opportunity to expand Tuesday night’s huge trade involving Clint Capela and Robert Covington, which was agreed to in principle but not finalized.

The NBA’s salary cap rules allow teams to take back 125% of their outgoing salary in a trade. In the Covington deal, Gerald Green (to Denver) and Jordan Bell (to Houston) aren’t counting toward that figure, since they’re each being acquired with minimum salary exceptions.

From Houston’s perspective as an above-the-cap team, Capela at $16.5 million, Covington at $11.3 million, and Nene at $2.6 million are the three salaries of significance, since they were all acquired using non-minimum resources. Capela and Nene are both being sent to Atlanta.

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Because Covington makes nearly $8 million less than Capela and Nene combined, the Rockets have the ability to bring in additional salary through an expanded version of the trade.

Based on salaries in the current agreement, the Rockets can add salary up to $5.8 million while still staying below the league’s luxury tax line. If they are willing to pay the tax, they could take back closer to $12 million.

While Tilman Fertitta has reportedly not put any financial restrictions on Morey at this year’s deadline, the Rockets haven’t paid the tax in any of Fertitta’s three seasons to date as owner. Thus, it remains to be seen if they would actually go through with such a move. But even if they do not, $5.8 million is still very much a salary slot of significance.

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Reports prior to the agreement indicated that Morey was aiming to acquire both a wing player (Covington) by Thursday’s trade deadline and a replacement center for Capela. In the deal’s current construction, they have the former but not the latter.

It’s also possible that Houston could turn to the buyout market after the deadline to fill the center need, but it’s unclear at the moment who the available players will be and whether they would choose Houston.

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Thus, as opposed to waiting for the uncertainty of buyouts, Morey and the Rockets might prefer to make another addition via trade. While the Rockets are limited with regards to tradable assets, since Houston’s 2020 first-round pick went to Denver in the Capela trade, other teams could still have incentive to participate in an expanded version because the Rockets are now able to take salary off another team’s books.

As ESPN‘s Wojnarowski indicated, there are two primary paths that Morey could pursue. The first would be searching for a good player (likely a center) that helps now. For one example, acquiring big man Kevon Looney — who the Rockets targeted in last summer’s free agency — would allow the Warriors to avoid the tax, all while not pushing the Rockets over it.

The other possibility, as Wojnarowski notes, is taking on a bad contract for assets. For example, if the Rockets are confident in their ability to lure a rotation center in the buyout market, they could use this salary matching window and their second open roster spot to take on a negatively valued contract. It could be to help a team avoid the luxury tax, or to possibly give them additional cap room for 2020 free agency.

In doing so, the other team could give Houston a future draft pick to help Morey and the Rockets replenish their stockpile of assets, which has been significantly drained in recent months. Between the Covington deal and last offseason’s trade for Russell Westbrook, the Rockets have surrendered three future first-round picks (2020, 2024, 2026).

They’ve also dealt away many of their future second-round picks. This route could allow the Rockets to recoup some of those lost assets.

To get a first-round pick, the salary taken in by Houston would probably need to be higher than $5.8 million — which would push the Rockets into tax territory. But with Fertitta reportedly giving the green light with regards to spending at this year’s trade deadline, it can’t be ruled out.

One potential downside to not immediately finalizing the trade is that Covington won’t be able to play for his new team until the league officially approves the deal, and until all players involved report to their new destinations and pass physicals.

That means it’s very unlikely that Covington will be available for Houston’s upcoming back-to-back, on Thursday in Los Angeles and Friday in Phoenix. But considering the deal’s size and the historically high amount of players involved, that may have been the case no matter what.

Even so, there’s certainly still a path for the Rockets (32-18) to compete without any new players at all, considering they’ve now won six of their last eight games overall — including the last four without Capela. And at the moment, Capela is the only rotation player to depart.

In the meantime, they have until the 2019-20 trade deadline at 2 p.m. Central on Thursday to canvass the league and consider all scenarios. Hours later, the Rockets will tip off against the Lakers (38-11) at 9:30 p.m. Central time from Staples Center.

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