Rockets luxury tax update after waiving Gary Clark

Although the Rockets are slightly above the luxury tax, there are factors that should make them operate as if they are much more above it.

The Houston Rockets waived forward Gary Clark on Tuesday ahead of the NBA’s salary guarantee deadline. He only appeared in 18 games this season and was in and out of the rotation.

Clark’s 2019-20 salary was only 50% guaranteed. Had he not been waived today his $1.4 million salary would’ve become fully guaranteed. Guard Ben McLemore and center Isaiah Hartenstein both are now fully guaranteed for the rest of the season.

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Clark leaves the Rockets with a $708,426 dead cap hit, bringing them from $1.2 million over the luxury tax down to about $331,000.

Houston Rockets current cap sheet after waiving Gary Clark and fully guarantee Ben McLemore and Isaiah Hartenstein.
Houston Rockets current cap sheet after waiving Gary Clark and fully guarantee Ben McLemore and Isaiah Hartenstein.

The Rockets need to reduce much more payroll than the figure they are over the luxury tax by if they are to stay under it by the end of the season. Although the Rockets are slightly above the  tax, there are factors that should make them operate as if they are much more above it.

For starters, center Clint Capela has $2 million in incentives that he can earn. He can earn $500,000 if he plays 2,000 minutes and finishes with a 30% defensive rebounding rate, and $1 million if the Rockets reach the 2020 Western Conference Finals.

Capela currently has a 31.6% defensive rebounding rate as of January 7 and has played 973 minutes in 29 of the team’s 35 games, according to Basketball-Reference. If he earns both incentives, that would increase his cap hit by $1.5 million. This means the Rockets, as currently constructed, can consider themselves $1.8 million over the luxury tax.

One thing that feels certain is that veteran center Nene will be traded. He is eligible to be traded on January 15, and clearing his $2.6 million base salary would bring the Rockets from $1.8 million over the tax to $734,000 below it. This leaves them with tight flexibility for the rest of the season to fill their last one or two roster spots, which they could do through either 10-day contracts or pro-rated minimum deals while avoiding the luxury tax with Capela potentially earning $1.5 million in incentives.

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A second trade would give them a lot more flexibility below the tax line. They can trade one of Gerald Green (who has trade veto power), Thabo Sefolosha, or Tyson Chandler, all of whom have a $1.6 million cap hit. If they were able to trade one of them, Houston would further increase their luxury tax cushion to about $2.4 million.

Initial indications are that GM Daryl Morey wants to use Clark’s open roster spot to bring in an impact player, perhaps sooner rather than later. If such a move happens in January, that could require a second trade.

There are several ways the Rockets can go about evading the tax while filling out the roster. They generally all lead back to the same road, but the route they take will become clear once the trade deadline passes.