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Should K.J. McDaniels or Josh Smith receive the Rockets' Mid-Level Exception?

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With limited cap space, the Rockets will likely only be able to keep one of the two.

Troy Taormina-USA TODAY Sports

The Rockets' offseason has been a relatively quiet one. They struck out on LaMarcus Aldridge, but hadn't put nearly as many eggs in that basket as they had for Chris Bosh last season. They've agreed to re-sign Corey Brewer and Patrick Beverley on fairly team-friendly deals, largely keeping together the squad that made it all the way to the Western Conference Finals last year (pending the Pablo Prigioni and Jason Terry situations). But they are near the salary cap, and their toughest decision still looms.

As a team that looks like it might be over the salary cap next year, the Rockets have the ability to use the Mid-Level Exception, which would pay around a $5 million dollar salary for next year, and a contract of up to four years in length. They would be eligible for this so long as they stay in the bubble above the salary cap and below the luxury tax. Discussions surrounding Houston's decision about how to use it has largely been focused between K.J. McDaniels and Josh Smith, two players who joined the Rockets last year and had seasons about as different as they could possibly be.

Smith was likely the third-best Rocket after he joined the team around Christmas last season. In some ways, his performance was a microcosm of Houston's, especially in the playoffs. He was wildly streaky -- at his best, he was a stretch power forward who knocked down clutch three-pointers while providing above-average defense inside, even guarding centers for stretches. At his worst, he chucked ill-advised shots, blew assignments on defense that led to easy buckets, and was a target for intentional fouls with a worse free-throw percentage than Dwight Howard.

Smoove took the Rockets to heights they would never have reached, especially considering the various injuries their big men suffered last year. But those big men will be healthy when next season starts (hopefully), and the more humble emergence of Clint Capela in the playoffs (as well as the second-round pick of first-round talent Montrezl Harrell) means that Houston may not need (and certainly won't want) to rely on Smith having good nights to win playoff games. Smith will turn 30 next season, and it would be a surprise if he gains any more consistency at this point in his career.

On the other side of the coin, K.J. McDaniels is all potential. After Daryl Morey snagged him from the Philadelphia 76ers (who his mom didn't much care for), Kevin McHale planted him firmly on the end of the bench. He only appeard in 10 games out of a possible 28, totaling 33 minutes. He's dynamite athletically, and he puts that to use on the defensive end of the floor. He averaged 1.9 blocks per game for the Sixers last year, and he's only 6'6! That rate would have tied him for seventh in the NBA had he qualified. His full-season rate of 1.1 blocks per game, depressed by his usage in Houston, still was the best of all perimeter players last season, according to NBA.com's stats.

Offensively, McDaniels is a lump of clay. He's obviously a great leaper, and he's fun to watch in the open court, but his jump shot is a rumor at this point. He was a rookie last year, and an NBA offseason could do wonders for him, but any offensive expectations for him next season are based on speculation. His immediate value to the Rockets will be in his defense first, as a more reliable wing stopper than Corey Brewer and a way to give Trevor Ariza the occasional breather. If the Rockets signed McDaniels long-term, they'd be betting on his offense improving enough to keep him on the floor eventually. At 22, McDaniels is not a finished product.

Thanks to McDaniels' strange one-year rookie deal with Philly, he's a restricted free agent. Smith is not, but the market for him has been a quiet one, with only the Clippers rumored to be interested in him as an emergency replacement for DeAndre Jordan (While we're at it, welcome to the Southwest, DAJ and LMA! UUUUGH). Because of Smith's track record, he should be the more expensive of the two, but he's still getting paid big money by Detroit to not be a Piston, so who knows how much money he's actually looking for. He signed a dirt-cheap contract for a partial season with Houston, but probably will want more than that this time around.

According to Chronicle beat reporter Jonathan Feigen, the Rockets have made their choice:

In the end, perimeter depth might wind up being the determining factor in Daryl Morey's decision to favor McDaniels over Smith. The Rockets were much more reliant on James Harden and Trevor Ariza than they were on any single big man, as the curiously staggered injuries created a rotating cast of characters that all produced meaningful moments. Terrence Jones still might be traded, but Donatas Motiejunas and Dwight Howard look like the starters, and a bench of Harrell and Capela might just be good enough without Jones (or with whatever comes back to the Rockets for T-Jones), considering how versatile Ariza is defensively (see: his valiant efforts against Blake Griffin in the conference semis).

The chance that Smoove will take another cheapo deal like the non-Bird tender is a slim one, simply because players who are meaningful pieces in conference finals teams don't tend to take deals far below their value (unless they're David West). But if Smith like his situation in Houston enough to take a massive discount, maybe the Rockets can have their cake and eat it too.

As of now, it looks like the Rockets are waiting to see what kind of offers McDaniels gets from other teams, hoping that their benching of him depressed the market somewhat. He will get an offer, and the most likely scenario is that the Rockets dip into that Mid-Level Exception to match it, and McDaniels comes back to Houston for a proper season with the team. If his offer is too steep, or if Morey decides to change course and bring back Smoove at closer to market value, then the Rockets gave up a second-round draft pick and Isaiah Canaan (miss you, Lil' Sip) for next to nothing.