Rafael Stone's ability to improve the Rockets through free agency took a hit late Monday night when the NBA announced its salary cap and luxury tax figures would hold steady from last season.
In January, the NBA projected the 2020-2021 salary cap to be $115 million and the luxury tax line at $139 million, but revenue losses from the COVID-19 pandemic will keep the salary cap at $109 million and the luxury tax threshold at $132.6 million. The Rockets will still be able to add to their roster when free agency begins on November 20, but they will have much less flexibility than they had hoped.
Despite being well over the salary cap, the Rockets can add a significant player in free agency by using their non-taxpayer mid-level exception, which is worth as much as $9 million, but if a team elects to use that exception it is hard capped at $6 million over the luxury tax line, which would be $138.6 million.
The Rockets payroll currently sits at $128.3 million, assuming the team exercises its $2.2 million option on Ben McLemore and Austin Rivers opts out of his $2.17 million deal, so the Rockets would essentially be hard capped if they used the entire mid-level exception. They could clear an additional $3.4 million by waiving Chris Clemons and declining David Nwaba's option.
Had the NBA held at their January projection, the Rockets salary ceiling would've been $145 million, allowing them plenty of space to not only use their full mid-level exception but re-sign Rivers using his early bird rights for up to $8 million.
The mid-level exception is how the Rockets signed P.J. Tucker three years ago, and with very few teams holding salary cap space they could use it this month to add a significant piece to their roster.
