The financial implications for the Houston Rockets
The NBA salary-cap has been set at $109.14 million with the luxury tax threshold at $132.6 million for the 2020-21 season. The Rockets currently have $130.68 million in salary commitments for nine players. This figure also includes Austin Rivers’ $2.369 million player option, which is unlikely to be exercised.
The Rockets need to fill around seven roster spots at about $4 million. The Rockets, without a major shakeup, are going to be an expensive team next season. A critical factor will be how Rockets’ owner, Tilman Fertitta, decides to run the franchise.
Fertitta’s business, Landry’s Inc., has been hit very hard by the coronavirus pandemic. The thought around the league is that Fertitta won’t continue to spend big while his main business is floundering.
The Rockets have yet to cut spending but Rafael Stone, the Houston Rockets’ new general manager, when asked if Fertitta has told him to cut costs said, “Tilman has never once said that he’s not willing to spend if spending results in winning. That’s been consistent.” What follows the “if” is of the utmost importance.
Fertitta indicates he is willing to spend if the Rockets are winning. However, this is a false promise. Teams that win make money.
The Rockets are only going to spend as long as they are making money. The coronavirus pandemic has caused the NBA to lose billions in revenue, which means Fertitta’s definition of “winning” will be crucial for the future of the franchise.
If the Rockets want to be competitive they are almost certainly going to be above the luxury tax threshold for the foreseeable future. These are James Harden, Russell Westbrook, and Eric Gordon’s combined salary commitments for the next three seasons.
Season: 2020-21 2021-22 2022-23
Total (in millions): $98.7 $106.014 $113.102
If winning means finishing between 4th or 6th in the West the next three seasons, then Fertitta will happily sign the checks. However, that seems unlikely. If Fertitta is only willing to spend if the Houston Rockets are legitimate title contenders then Rafael Stone might have to start shedding salary.
Next: The Rockets' on-court production