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Houston Rockets: Morey works his magic with structure of Nene contract

Nene Hilario #42 of the Houston Rockets (Photo by Bill Baptist/NBAE via Getty Images)
Nene Hilario #42 of the Houston Rockets (Photo by Bill Baptist/NBAE via Getty Images)
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Daryl Morey has always been viewed as one of the league’s best general managers, as he’s always proven to be adept at how to work the salary cap, despite the fact that the Rockets have always been a fringe taxpayer.

Daryl Morey’s brilliance has been especially evident this offseason, as he’s been able to improve the roster without putting the team over the luxury tax apron. Morey’s creativity has been on further display with the contract of Houston Rockets big man Nene, who agreed to terms on a new deal with the team.

The contract is uniquely a two-year veteran’s minimum contract worth $2.6 million per year, however, it could go up to $10 million per year due to incentives, according to Jeff Siegel of Early Bird Rights. For that reason, the contract has been dubbed as a two-year deal worth $20 million. This means Nene has an outgoing salary of $10 million for the Houston Rockets, which allows the team to acquire a player with a salary of up to $12.6 million.

The contract also holds a non-guaranteed second year, which could prove to be beneficial to whichever team acquires Nene. The second year of the contract becomes guaranteed only if Nene isn’t waived by February 15, 2020, which means the team that acquires him would have total control over whether the second year of the contract would count against the cap. Furthermore, if Nene goes to a team that won 52 games or fewer last season, his contract only counts as $2.6 million worth of incoming salary.

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According to Bobby Marks of ESPN, the bonuses in Nene’s contract are tied to games played and team wins. If Nene plays in 10 games and his team wins 52+ games, he would earn $2.435 million. If he plays in at least 25 games and his team wins 52+ games, he’ll earn an additional $2.5 million. Furthermore, if he plays in at least 40 games and the team wins 52+ games, he’ll make an additional $2.5 million. In total,  the incentives equal $7.435 million.

The Rockets have total control over whether he’ll hit these incentives, as they can control whether or not they play him, which is part of the brilliance of this contract.

The reason this is creative on Morey’s part is because the Houston Rockets didn’t really have much else to trade, yet were able to essentially work the cap and sign Nene to a minimum contract that can become a trade piece of essentially $10 million in salary, which would allow them to add a significant contributor in a trade.

The team acquiring Nene would be able to cut ties without even having to carry Nene on their roster, let alone pay his incentives. This is because the second year technically wouldn’t even count and the potential bonuses would be controlled by the team.

The question, however, is what is the endgame for Nene? Why would he agree to such a contract? Well it’s likely he was considering retirement, but regardless, he’ll go off into retirement with an additional $2.6 million this season without having to play much, as he’ll certainly not be on a roster after the date the second year becomes guaranteed.

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Being able to exploit these loopholes and having knowledge of these ergonomics is what makes Daryl Morey one of the best in the business.

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