Per David Hardisty of ClutchFans, the Houston Rockets have already used up their entire cash allotment in trades for the 2020-21 NBA season.
In each league year, teams are allowed to send out up to a certain amount ($5.6 million in 2020-21) to help facilitate various deals. Houston sent out all of that money to Detroit in the massive sign-and-trade transaction that brought 25-year-old center Christian Wood to the Rockets. In theory, that cash was to compensate the Pistons for absorbing the expiring salary of Trevor Ariza, a less desirable player. Ariza’s salary had to be fully guaranteed for the trade to work under the league’s salary cap.
The Rockets did not use most of their 2019-20 cash allotment — and when part of the eventual Wood trade was agreed to on draft night (Ariza and the No. 16 overall selection for a protected future first-round pick), some fans had hoped that Houston might use its funds from the 2019-20 pile and save the 2020-21 allotment for a future deal. After all, the NBA’s annual draft is considered part of the previous season’s league year.
Teams can include a maximum of $5.6M in cash in trades in one year and I can confirm the Rockets did use their entire cash allotment for this year: $4.6M in the Christian Wood deal and $1M along with the LAL 2nd rounder for Kenyon Martin Jr.
— ClutchFans (@clutchfans) November 27, 2020
However, when Ariza’s contract was used to facilitate the Wood sign-and-trade by expanding the original agreement, it became clear that the cash would have to come out of Houston’s 2020-21 allotment.
Wood was not a free agent until the 2020-21 league year, so the transaction could not be backdated. And since the Rockets were and are well above the NBA’s salary cap, they could not have given Wood his three-year, $41-million deal without a sign-and-trade transaction.
With cash now unavailable, new Rockets GM Rafael Stone will have to use player or draft assets as sweetener for any trade proposals over the remainder of this league year. That could make the acquisition of young prospects — such as Friday’s sign-and-trade deal with New York for recent second-round pick Issuf Sanon — particularly important this year.
Well, there it is. The Rockets are out of cash to use in 2020-21 trades. Makes the acquisition of Sanon’s draft rights all the more valuable as a cash replacement is salary dumps, if necessary. https://t.co/I3GqDmVw0T
— David Weiner (@BimaThug) November 27, 2020
