Discerning Morey’s Philosophy – Part 11

I started writing this series back five years ago when there was actually something to discern.  Now, with Morey’s star having risen to uncharted heights (has there ever been a general manager more famous on the internet?), most people who care to know already know what he’s trying to do and how he’s trying to do it.  To that end, this series has just morphed into a chronicle of events.  When you’ve been doing something for five years, you kind of have no choice but to see it through.  (Think of it like staying in a marriage just for the kids.  Or something like that).  So until either Morey gets fired or leaves, or I shut down this blog, this is what we have.

A preliminary matter

Initially, I’d note that one mischaracterization about Morey is his contribution to the sport.  While he’s widely recognized as the face of the basketball analytics movement, I’d argue that his most innovative tendency has been his manipulation of the league’s collective bargaining agreement.  The Rockets, in Morey’s tenure, have been in the business of creating what I’d call ‘salary cap instruments’, or in other words, financial tools with artificial, constructed value.  The team made waves by signing Omer Asik and Jeremy Lin to what were deemed as ‘poison pill contracts’, but a lot of their equally innovative maneuvers have been less heralded.  The draft pick they are owed from the New Orleans Pelicans has reverse protection in that it will only be transferred if falling between a certain range.  (Conventional pick protection had always entailed protection at the top.)  That pick is the same asset garnered in return for Kyle Lowry, and used in the James Harden trade.  Kostas Papanikolaou is earning $4.8million this year, an eye-popping figure for an unproven rookie import.  But look closer: next season, the team carries a team option on his deal, making him essentially an expiring contract, and one large enough to fit the purposes of a bigger trade.  The thinking would go, if you are going to have to spend the money anyway, it’s better to overpay on short term obligations that carry liquidity.  This is not unlike Houston’s practice in the past–like with Luis Scola’s deal–where the last year on the deal would be non-guaranteed or partially guaranteed.

Lastly, look closer at the four year contract Trevor Ariza signed this summer.  Already proving to be the most underrated acquisition of the offseason, the structure of the deal has gone unappreciated.  While Ariza is making $8.6million this year, that dollar figure actually declines with each successive year, closing out at $7.4million in 2018.  With a team as aggressive as Houston has been on the free agent front, each extra penny of wiggle room is critical and can mean the difference in saving a valuable young contributor.  (In example, Terrence Jones this year is making roughly the same amount as that price difference between Ariza’s first and last years).

Stay the course and stick to the plan

As you know all too well by now, this summer, Morey swung for the fences, striking out on the aforementioned Bosh.  Had he landed the All-Star power forward, the team likely would have been considered the favorite in the league coming into the season.  What hurt about the misstep, though, was the string of moves that preceded it.  Prior to the Bosh offer, Houston traded both Omer Asik and Jeremy Lin, valuable members of their bench, to create the room necessary for a max slot.  They were seemingly so confident in their chances of signing one of the big free agents, that they enabled Chandler Parsons to enter restricted free agency, rather than retaining him for another year at a mere fraction of his cost.  (It has since come to light, from various reports and sources, that the curious Parsons debacle was in result of a deal Morey made with the devil the preceding summer: to get Dwight Howard, the team would need to let Parsons out of his contract a year earlier.  The spectacle raises interesting questions, for myself in particular, as an attorney as well, about fiduciary ethics and the grossly inefficient role of agents in sports.  If Howard wanted to come to Houston regardless, appeasement of Fegan can be seen as nothing but wasteful, especially when said appeasement necessitates future crippling of Howard’s team.  If adhering to legal ethics, Fegan’s duty was owed solely to his client–Howard–not to his greater body of clients.  But this is a longer discussion for another day).

When they struck out on Bosh, the Rockets were left with nothing, their roster stripped down to the bare bones.  The team quickly moved to secure Ariza and then was faced with the decision of whether or not to retain Parsons at an exorbitant amount.  Keeping Parsons was the obvious choice in the public eye, when the alternative meant entering the next year with a shell of a roster.  But keeping Parsons meant locking the team into that group of players through the remainder of James Harden’s contract.  Understandably, Morey let Parsons walk, inviting widespread ridicule over the decision.  The popular mantra “flexibility doesn’t win championships” reared its head again in the print and airwaves.

Now, while it is early, Houston looks to have a team far superior than the one it sent out last season, and it has the flexibility for a massive upgrade down the line.  This tale bears out the dictum that the best decisions are made insulated from public opinion.  Morey could have panicked, bringing back Parsons, but he felt the only thing that mattered was winning a title.  There really is no difference between a 45-win team (Houston’s probably worst-case floor upon losing Parsons) and a 54-win second round flameout (Houston’s probable ceiling if keeping Parsons).

To his credit, none of this could have occurred without the full support of Les Alexander.  Most general managers are operating within the restrictions of ownership, needing to keep an eye towards ticket sales and the bottom line.  Had Alexander not bought in to the long-term vision of his head man, Morey might have had to bring back Parsons, just to maintain goodwill with the fanbase and ensure a playoff berth.  Instead, the Rockets have been allowed to bide their time and keep the window open for the final upgrade.  Morey still has the chips for that last final song, and through some shrewd moves, his team hasn’t missed a beat in the wake of a failure.

About the author: Rahat Huq is a lawyer in real life and the founder and editor-in-chief of Red94.net.

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