Rockets trade Ariza, No. 16 pick to Detroit for future first rounder

Per reports, Houston believes that this deal will allow it to use the larger mid-level exception (worth ~$9.3 million) in free agency.

The reunion between the Houston Rockets and Trevor Ariza — as well as the concept of making a first-round draft choice — was short-lived.

Two days after acquiring Ariza and the No. 16 pick in the 2020 NBA draft for Robert Covington, Houston is sending both to Detroit for a future first-round pick, as first reported by ESPN’s Adrian Wojnarowski.

Here’s the explanation from Jonathan Feigen of the Houston Chronicle:

The Rockets made the move to be able to go into free agency this week with a full mid-level exception [MLE], worth $9.3 million, rather than the tax-payer mid-level, worth $5.7 million, a person with knowledge of the team’s thinking said. The Rockets also preferred a future pick, rather than one this year, in case needed in a trade, he said.

The downside of using the “full” MLE is that it implements a hard salary cap at the luxury tax “apron” level of ~$138.9 million. Without shedding Ariza’s $12.8-million salary, Houston’s team payroll would have almost certainly exceeded the hard cap if using the larger MLE. Thus, Houston would have been forced to use the smaller “taxpayer” MLE.

The Rockets will generate a $12.8-million traded player exception (TPE) in the deal, since Ariza is being absorbed into cap space by Detroit. However, Houston probably can’t use the TPE and the larger MLE this offseason, since using both would likely push them over the hard cap.

Depending on future moves by Rockets GM Rafael Stone that might alter team payroll, that TPE could potentially be used down the line. (The TPE will last until an equivalent point in the 2021 offseason.)

Per James Edwards III of The Athletic, Detroit’s future first-round pick being sent to Houston is top-16 protected for the next four years; top-10 protected in the following two years; and then top-nine protected. If it is not conveyed after seven seasons, it becomes two second-round picks.

For now, Houston continues its streak of not having made a first-round draft selection since 2015 (when the Rockets took Sam Dekker). In drafts since, Houston has often traded its picks for short-term upgrades to bolster the veteran roster around James Harden. Assuming Houston uses the larger MLE, that’s effectively what they are doing here.

In a separate transaction, but potentially related, the Rockets are buying a 2021 second-round pick from the Pistons (via the Lakers) for $4.6 million in cash. A potential motivation of that deal is that it partly compensates the Pistons, financially, for absorbing Ariza’s contract.

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