Houston Rockets: The secret value of Eric Gordon’s contract

It’s no secret that the Houston Rockets have their fair share of bad contracts. From John Wall and his remaining $91.6 million to D.J. Augustin and his $14 million, the Rockets have their share of regrettable deals filling up their cap sheet.

However, Eric Gordon’s contract might take the Rockets proverbial bad-contract cake, as he is owed $58.7 million over the next three seasons. NBA franchises usually try to avoid paying players almost $20 million a season as they enter their mid-30s, but Gordon, and his agent, should be applauded for bucking that trend.

On the surface, Gordon’s deal appears to be an unmovable albatross, but when you dig a little deeper there is actually a tremendous amount of value in it. The final year of Gordon’s deal is for a non-guaranteed $20.9 million.

Houston Rockets: How Eric Gordon’s contract is so valuable

What makes Eric Gordon’s non-guaranteed salary of $20.9 million so valuable? The simple answer is, it is an accounting cheat code that can be used to facilitate trades without costing a team real money, now for the long answer.

Teams above the salary cap can only take on so much new money when making a trade. The term that is used to describe this NBA trade rule is salary matching and it is what makes NBA trades so complex.

If a team wants to trade for James Harden and his $40 million or so in salary they have to send out close to $40 million and another team has to be willing to accept that incoming money. The salaries going in and out, in most cases, have to match and it makes it difficult for teams to cut costs in the short term.

This is where Gordon’s contract and his $20.9 million for the 2023-24 season become so valuable. In essence, Gordon can be used as part of a deal to make the salaries match and then be released at no cost to the acquiring team.

The accounting value for the final year of Gordon’s contract is incredibly high because he acts as a salary that you don’t have to pay. For the team acquiring him, he essentially acts as a free $20.9 million.

The Rockets, in two seasons, could leverage his contract to bring in a superstar or be the grease that helps facilitate another deal. Any team looking to cut salary or keep a roster spot open would love the chance to acquire and then waive the final year of his deal.

The Rockets will be hard-pressed to land much of value for Gordon through trade over the next two seasons, but if they wait it out until all of his guaranteed money is gone, then they can leverage his ‘ghost-money’ into something much bigger. It is true that Eric Gordon’s contract is bad but right at the end it becomes an incredibly special trade instrument.

The Rockets need to hold onto Gordon for the next two seasons because of the doors that his final non-guaranteed season can open up. However, if the Rockets win the championship or Gordon makes an All-Star team then his final season becomes fully guaranteed. Either way, I’m sure Rockets fans can live with those outcomes.