Houston’s front office has done a wonderful job of adding depth to its roster this season through the buyout market, particularly guard Austin Rivers and forward Kenneth Faried. They were unquestionably talented before joining the Rockets but their fits on previous teams with high salaries made them hard to trade. Both were waived and Houston took advantage and won the buyout market before anyone realized it began early this year.

Though they are now key rotation players for the Rockets heading into the playoffs, both players may end up being one-year rentals. They seem like perfect rotation players for this core going forward, but it will be very difficult to retain them both, even if the Rockets are willing to go over the tax for them. If Houston loses both players during the offseason, it is not because of a lack of desire to invest in either of them, or luxury tax purposes. It would be due to the restrictions of re-signing non-bird free agents who outplayed their minimum contracts.

Houston signed both players to rest-of-season, prorated, minimum deals after they agreed to buyouts with their previous teams. A prorated, minimum deal is what players usually get after being waived mid-season since they are still getting paid by their previous teams. Because they are signed mid-season they enter free agency as non-bird free agents. This means that the maximum salary they could get without using an exception is 120 percent of their previous salary, which is the minimum. The Rockets will need to use an exception to offer Rivers or Faried more.

Rockets current projected 2019-20 payroll

The Rockets currently have $122 million committed to eight players in 2019-20. That is $13 million above the salary cap and $9.55 million below the luxury tax. Their largest means to pay either player more than the minimum is through their mid-level exception (NT-MLE) and bi-annual exceptions (BAE). The current NT-MLE is projected at $9.25 million and the BAE is projected at $3.62 million. They could use portions of them to re-sign both players.

The problem with utilizing the BAE or more than the taxpayer portion of the MLE ($5.71 million) is that the Rockets hard cap themselves. One small downside of being hard capped is that they wouldn’t be allowed to acquire free agents via sign-and-trade afterwards, which the Rockets often pursue. More importantly, they would not be allowed to surpass the currently projected $138-million apron if hard capped. This makes re-signing Iman Shumpert and filling out the rest of the roster difficult.

Rockets payroll if they split the MLE among Faried and Rivers

Let’s say Faried and Rivers agree to split the entire NT-MLE with each other. In this projection the Rockets are now $7 million below the apron. They would only have $7 million to spend to fill out the rest of the roster. It is important to have a big cushion under the apron since teams add payroll throughout the season as they waive and sign new players.

Rockets payroll with Shumpert re-signed and having the taxpayer MLE available

Houston has Shumpert’s full bird rights, so they won’t have any restrictions in re-signing him and he could garner $7 million annually, or more. Let’s say the Rockets re-sign him first in free agency for a starting salary of $8 million. His cap hit will push the Rockets very close to the luxury tax threshold. This means they wouldn’t be able to use their NT-MLE or BAE unless they shed significant salary first. They would only have the taxpayer MLE to use, and it may only be enough to re-sign one of Faried or Rivers.

In classic Rockets fashion, it’s possible that they remain confident in their ability to land talented role players for the minimum and forego re-signing either player. If there is a free agent the Rockets value with their MLE, they may sign that player and roll the dice on re-signing the replacements for Rivers and Faried later. With a great track record this season that also includes Danuel House and Gary Clark, they are likely to strike gold again next season.