Reports: Rockets to decline contract option for Chandler Parsons

Chandler Parsons will reportedly become a restricted free agent this summer. (Sam Forencich/NBAE/Getty Images) Rockets forward Chandler Parsons, long one of

Chandler Parsons will reportedly become a restricted free agent this summer. (Sam Forencich/NBAE/Getty Images)

Rockets forward Chandler Parsons, long one of the NBA's best values, could receive his first big NBA pay day earlier than expected.

Yahoo Sports and the Houston Chronicle both report that the Rockets will likely decline the fourth-year option on Parsons' rookie contract, making him a restricted free agent this summer. Houston will therefore have the ability to retain Parsons by matching any offers made to him. Had the Rockets picked up Parsons's option for 2014-15, worth $964,750, he would have become an unrestricted free agent in 2015.

The reported decision comes as somewhat of a surprise because Parsons is a 2011 second-round pick who has massively outperformed the terms of his deal. One of the top small forwards in the Western Conference, the 25-year-old Parsons averaged 16.6 points, 5.5 rebounds and four assists per game in his third season, all career-highs. Given the subsidized nature of rookie contracts, many teams would let the full term of the deal play out so as to reap the maximum possible return on investment.

Here, the worst-case scenario for Houston is that Parsons walks as an unrestricted free agent next summer to a team that is willing to overpay to snatch him away from the Rockets. With All-Stars Dwight Howard and James Harden already pulling down max contracts, retaining Parsons in such a scenario could have proven difficult. By sending him towards restricted free agency this summer, Houston is theoretically hedging against a clean departure next year and gaining leverage in his negotiations, at the cost of tearing up his current, super-cheap contract and paying him market value for the 2014-15 season.

Let's say Parsons lands a four-year, $48 million offer sheet, which would seem to be in the neighborhood of his absolute ceiling. Is it worth it for Houston to pay the extra $11 million in 2014-15 to ensure that Parsons, who fits neatly next to Harden and Howard, is around for the long-term? It would seem so. Parsons will get paid, sooner or later. Taking a proactive approach now simply allows Houston to remain in the negotiating driver's seat because of their matching rights.

Sending Parsons towards restricted free agency could also result in more amenable contract terms for the Rockets. Some suitors are likely to be turned off when a player is known to be highly-valued by his incumbent team, as is Parsons. Although this summer's free agency class still has some question marks, there are a number of small forwards who will command big-dollar contracts, either from their current team or outside suitors. Those names include: LeBron James (should he opt out), Carmelo Anthony, Rudy Gay (should he opt out), Luol Deng, Gordon Hayward (restricted), Paul Pierce and Trevor Ariza. Aside from James and Anthony, Parsons -- given his versatile skillset and the fact that he's about to enter his prime -- is probably the most desirable name on the list. But will he be able to find a team willing to throw funny money at him in a market that's somewhat crowded at his position?

Even when restricted free agents do pull down more than expected, a la Nicolas Batum's four-year, $46 million offer sheet from the Timberwolves, retaining the talent at a mark-up is still usually preferable to losing the talent outright. Even if Batum was initially deemed to be "overpaid" when he signed his new deal, the Blazers knew they would still have, at the very least, a proven starter who could be included in future trade packages. As it turned out, Batum has blossomed nicely since signing his contract, and is now generally seen as fairly compensated.

Another pertinent example: the Pacers' decision to retain Roy Hibbert despite a max offer sheet from the Blazers. Sure, Hibbert's salary looked outrageous at times this season, as he struggled through a series of ups and downs, but would Indiana even have been in a position to make back-to-back trips to the Eastern Conference finals without their All-Defensive team big man in the middle? No chance.

The biggest risk in overpaying to retain a restricted free agent comes with the possibility of injury. The Pelicans, for example, have been hampered by their decision to match the Suns' four-year, $58 million offer sheet for Eric Gordon, who is perpetually sidelined with knee problems. Such a cautionary tale doesn't really apply here. Parsons has missed just 17 total games during his three-year career and he logged more than 2,700 minutes in each of the last two seasons, putting him among the league leaders.

Houston's near-constant presence in rumors related to stars -- Anthony and Kevin Love, among others -- may or may not be influencing this decision. If the Rockets are able to add such a star, they would be able to go over the cap to re-sign Parsons, which would clearly reflect an absolute best-case scenario. However, declining Parsons' contract option, by itself, doesn't significantly change Houston's short-term cap situation in terms of landing a star by clearing cap space or via a trade that doesn't include Parsons.

Allowing Parsons to become a free agent this summer does open up sign-and-trade possibilities. As a hypothetical, let's say the Timberwolves and Rockets were interested in a trade package centered around swapping Love for Parsons. Minnesota's interest in such a deal without a long-term commitment from Parsons would be minimal. The last thing you want to do after trading a franchise player is watch the player you received in return walk out the door the very next summer. Theoretically, Houston and Minnesota could reach agreement on a sign-and-trade involving Parsons that could satisfy everyone: the Rockets would receive Love, the Timberwolves would receive Parsons on a long-term contract, and Parsons would get his pay day.

Such a scenario clearly involves many moving parts and open questions. Are the Rockets capable of putting together a package that entices another team to part with a superstar-level player? Do those teams in turn value Parsons as a foundation building block type of player worthy of big dollars? Is Parsons even open to participating in such an arrangement, or would he prefer to seek his own offers in restricted free agency or simply re-sign with Houston at a price both sides deem fair?

We won't know the answers to those questions until we get closer to free agency and have a better sense of which A-list free agents will become available. Regardless of who else is or isn't willing and/or able to move, Parsons is an integral piece to Houston's foundation, a key complementary player whose outright departure in 2015 would alter the Rockets' trajectory.