The proposed deal would send New Orleans' Darren Collison and James Posey to Indiana, Houston's Trevor Ariza to New Orleans, New Jersey's Courtney Lee to Houston and Indiana's Troy Murphy to New Jersey.
Ariza signed a five-year, $35 million contract with Houston a year ago, but not long after, the Rockets acquired guard Kevin Martin at the February trade deadline. By parting with Ariza, who averaged 14.9 points last season but struggled with his shooting, Houston's payroll would fall below the luxury-tax threshold for next season.
The Pacers have been seeking a quality point guard for a while, and they would get one in Collison, who gained notice as a rookie last season while filling in for the injured Chris Paul. Collison, the 21st pick in the 2009 draft, averaged 18.8 points and 9.1 assists in his 37 starts. But while filling a void with Collison, the Pacers would have to take on the $13.5 million over two years still owed to Posey, the veteran forward who averaged only 5.2 points on 36.5 percent shooting last season.
The Nets, meanwhile, may secure their starting power forward in Murphy, who averaged 14.6 points and 10.2 rebounds last season. Murphy is set to make $12 million in the final year of his contract, and the New Jersey native could hold the starting position while No. 3 pick Derrick Favors develops off the bench.
The proposed trade was first reported by ESPN.com.