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Asked and Answered: Does Parson’s offer from the Mavs count against the Rockets’ cap?

Those jubilant noises you hear emerging from Houston come from Daryl Morey’s offices at the Toyota Center. LeBron James’ decision to return to Cleveland may have also jarred Chris Bosh loose from Miami, and Morey has extended the stretch-4 a maximum contract. Further, now Morey has the discretion to match the 3 year, $46 million offer the Mavericks made to Chandler Parsons. Things are working out pretty well for Morey but with a few slight changes in the circumstances, the Rockets might’ve had to forfeit Parsons to try to sign Bosh. Which brings me to the latest installment of Mid-Level Exceptional’s Asked-and-Answered series:

The way the CBA governs this scenario is as follows:

1. The Rockets have offered Parsons a qualifying offer, or a one-year $2,875,130 deal under Section XI.1.c.iii of the CBA. (Parsons’ qualifying offer is a larger amount than most second round picks could get since Parsons met the “starter criteria,” a complicated topic for another day).

2. This entitled the Rockets, under Section  XI.4-5 of the CBA, a “Right of First Refusal,” legalese for the notion that they can match any offer another team makes to Parsons. The CBA refers to Rockets as the ROFR team.

3. According to Section XI.5.b of the CBA, both the “New team” and the ROFR team have to have to be able to fit the player into their cap room, or have an exception that would enable the player to sign at the full amount of the new deal (the Rockets have Parsons’ bird rights).

4. But the cap hold for the New team and the ROFR team are not the same. The cap hold for the New team is immediately their offer amount. While the cap hold for the ROFR team remains the qualifying offer. Remember, the ROFR team hasn’t offered anything beyond the QO. That amount is on their books for three days, at which time the ROFR team must decide if it will match. If the ROFR team matches, according to Section XI.5.e, the new contract amount replaces the qualifying offer on the ROFR team’s cap.

The three days mentioned in paragraph 4 have enormous significance: While the Rockets can create space for Bosh or another free agent if Parsons is only on their books for roughly $2.8 million, there would be virtually no way to accomplish the same feat if they were forced to keep Parsons at the end of the three day period at a $15.3 million charge instead.

Because the Mavericks signed Parsons on July 10th, if the Rockets want to keep Parsons and offer Bosh the max, they must make all their cap-clearing moves and sign Bosh by this Sunday, July 13th. So basically what I’m trying to say is, if you’re a Rockets fan, put on your seat belt.

Dan Litvin

Dan Litvin is a lawyer, blogger, and co-author of "We'll Always Have Linsanity: Strange Takes on the Strangest Season in Knicks History". He is the co-founder of The Knicks FanBlog and his work appears on ESPN affiliate KnickerBlogger.net and on other Knicks related sites across the 'net.