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Sports News Without Fear, Favor or Compromise

Rockets Owner Swears Luxury Tax Isn't Influencing Team's Offseason Plans

Illustration for article titled Rockets Owner Swears Luxury Tax Isnt Influencing Teams Offseason Plans
Photo: Bob Levey (Getty)

The Rockets let Luc Mbah a Moute walk yesterday, ostensibly because they didn’t want to pay the luxury taxes that an extra $5.3 million would have cost them, when they could just pick up a ring-chasing veteran—maybe washed Carmelo Anthony?—at the minimum. But Rockets owner Tilman Fertitta swears that’s not true! In an interview with ESPN’s Tim McMahon, Fertitta super-duper promises that the luxury tax “never even came up in any discussion” this offseason.

“We know we’re going to be in the luxury tax, and if you want to compete for a championship, I feel like unless you get real lucky, you’re going to be in the luxury tax,” Fertitta said. “So it is what it is. ... It never even came up in any discussion.”

Re-signing Chris Paul certainly indicated that the Rockets are willing to run it back and reach for whatever sliver of championship hope remains now that the Warriors are going to field a playoff starting lineup with five All-Stars. Letting Mbah a Moute and Trevor Ariza walk, however, indicates that they aren’t totally willing to spend every dollar that might be necessary.

Giving Ariza more than the $15 million he got from the Suns may have been unrealistic, but not signing Mbah a Moute to a $5.3 million contract, their taxpayer mid-level exception, looks precisely like a move that was made to dampen luxury tax penalties. The Rockets will presumably re-sign Clint Capela, and if they get him for something around the $15 million per year they’ve offered, they will be entering the third-highest luxury tax bracket, where teams are taxed $2.50 every $1 spent. If they fill out the rest of the roster with guys on minimum deals, they might be able to stay in that bracket.


Signing Mbah a Moute at the MLE, however, would have easily vaulted the team into the second-highest tax bracket, and likely in the highest one, where they’d be taxed about $4 for every dollar spent above a $143 million payroll. At the very minimum, they would have had to pay $40 million in taxes in that scenario, as opposed to the roughly $20-25 million they’re on pace to pay now.

Fertitta saying publicly that the team hasn’t even thought about the possibility of entering the highest tax bracket is a dubious claim, and if GM Daryl Morey seriously hasn’t discussed their salary cap situation with the owner, like Fertitta claims, then I’m not sure what the hell is going on in Houston. If they’re banking on extracting the same amount of value they would have gotten from Mbah a Moute from somebody else on the roster, or a washed vet, that’s fine! Just don’t lie about it.

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