Here’s what you need to know about the Heat’s salary-cap situation entering free agency
With the start of free agency just days away, the Heat will have to be creative if it wants to be an active participant because it currently has limited financial flexibility to make significant changes to its roster this offseason.
Miami has 13 players under contract for 2019-20 who are due about $141 million. That puts the Heat above the $109.14 million salary cap and even above the $132.627 million luxury tax line for next season, and not in a position to aggressively pursue free agents.
Free agent negotiations are allowed to begin Sunday at 6 p.m, with free agents allowed to sign contracts starting at noon July 6.
How do we calculate the $141 million the Heat is already committed to, excluding cap holds, for next season? By counting the 2019-20 salaries of Hassan Whiteside ($27.1 million), Ryan Anderson ($21.3 million), Goran Dragic ($19.2 million), James Johnson ($15.3 million), Kelly Olynyk ($13.1 million), Justise Winslow ($13 million), Dion Waiters ($12.1 million), Josh Richardson ($10.1 million), Bam Adebayo ($3.5 million), Derrick Jones Jr. ($1.6 million), Yante Maten ($1.4 million), Duncan Robinson ($1.4 million) and Kendrick Nunn ($1.4 million).
When including first-round pick Tyler Herro’s $3.6 million salary, the Heat’s payroll for next season grows to about $145 million. Draft picks can sign their rookie deals starting July 1.
As for the Heat’s second-round pick, forward KZ Okpala, that cap hit is still to be determined. Players taken in the second round might sign for any amount from the minimum to the maximum, but end up signing for a minimum salary most of the time. A second-round pick can also take a two-way deal, which doesn’t count against the regular-season 15-player roster limit or the salary cap.
Not including Okpala in this exercise because his cap hit is still undetermined, there are a few realistic ways the Heat can shed salary this offseason …
▪ The $145 million of combined salaries can be lowered by about $6 million by waiving Anderson by July 10 because only $15.6 million of his $21.3 million salary is guaranteed if he’s released by this date. Now at about $139 million in combined salaries after this move, the Heat still would be above the projected $109 million salary cap and projected $132 million luxury tax line.
▪ The Heat can also take advantage of the non-guaranteed contracts on its roster.
Jones’ $1.6 million salary for 2019-20 is non-guaranteed, with his full salary becoming guaranteed Aug. 1.
Robinson holds a partially guaranteed $1.4 million contract for 2019-20. The two-year deal includes $250,000 guaranteed for next season and that will increase to $1 million if he is not waived by July 15. The rest is guaranteed if Robinson remains on the Heat’s roster after several other dates during the offseason.
Maten also holds a partially guaranteed $1.4 million contract for 2019-20. The two-year deal includes $100,000 guaranteed for next season and that will increase to $150,000 if he is not waived by Aug. 1. The rest is guaranteed if Maten remains on the Heat’s roster after several other dates during the offseason.
But Jones, Robinson and Maten are each solid candidates to make the Heat’s 15-man roster. Jones was in the Heat’s rotation when healthy, and Robinson and Maten impressed during their first year in the Heat’s system last season.
Meanwhile, Nunn is the other Heat player with non-guaranteed money in his contract. Nunn holds a non-guaranteed $1.4 million contract for 2019-20, with $50,000 guaranteed if he’s not waived by July 1 and he’ll receive an additional $100,000 if not waived by Aug. 1. The rest is guaranteed if Nunn remains on the Heat’s roster after several trigger dates during the offseason.
But even releasing two of these players before their contracts become guaranteed won’t be enough to get below the luxury tax threshold in the roster’s current state since they are minimum deals. And releasing more than one of these players would be counterproductive because the Heat would likely replace them with other minimum contracts to fill out its roster, negating any sense of minimal cap relief.
▪ The Heat can also make trades to shed salary, but that’s more complicated because it takes another willing team to get a deal done. A trade can be made to get below the luxury-tax line, but it’s going to be very difficult to shed the $30-plus million needed to merely get under the cap through trades.
One option is to trade a short-term contract to take on longer-term money, which could provide an immediate boost but erase longer-term cap flexibility.
Dragic and Whiteside are both entering the final seasons on their deals, and Waiters, Johnson and Olynyk each have two seasons remaining on their contracts.
The question becomes, should the Heat sacrifice flexibility in 2020 and 2021? As it stands now, the Heat is projected to have about $34 million in cap space in 2020.
THE EXCEPTION
Unable to sign players into space unless a major move is made to shed salary, the capped-out Heat will have to rely on exceptions, minimum contracts, the power of Bird Rights and trades to fill out its roster.
What exception money does the Heat have this offseason?
With the Heat currently above the cap and tax, it can use the $5.7 million taxpayer mid-level exception on one player or split it between multiple players. This exception can be used for contracts up to three years in length, with raises up to five percent of the salary in the first year of the contract.
But because the Heat is already above the tax threshold, it could opt not to use this exception. Miami also decided not to use its exception this past season, as it was in a similar position before dropping below the tax line just before the end of the regular season.
ROSTER SPACE AND HASLEM
As it stands now, the Heat doesn’t have many roster spots to fill. The Heat currently has 13 players who are realistic candidates to make next season’s 15-man roster: Whiteside, Dragic, Johnson, Olynyk, Waiters, Richardson, Winslow, Adebayo, Jones, Robinson, Maten, Herro and Okpala.
Udonis Haslem, who is the Heat’s lone free agent this offseason with Dwyane Wade now retired, could claim the 14th roster spot if he returns for his 17th season. The 39-year-old Haslem is still considering retirement.
With the Heat already facing the tax, it could decide to move forward with a 14-player roster (one shy of the league limit) this upcoming season. The two additional two-way contracts the Heat can offer are not included in this total, which allows Miami to sign two players who don’t count against the roster limit or salary cap and spend most of the season in the G League.
The expectation is Haslem would play another season at a veteran minimum salary, which is $2.6 million, if he returns. Haslem has played on a minimum deal in each of the previous two seasons.
HEAT’S OPTIONS
So, now what?
Miami can choose to remain patient, bring back a lot of the same faces, and wait for the contracts on its books to expire. This would be the route to take if it wants to preserve as much cap space as possible for the 2020 and 2021 offseasons.
The luxury tax is still a concern, but it’s important to note that NBA teams have until the end of the regular season to find a way to get under the tax line before they receive the bill. The Heat has proven in the past it can pull off the necessary moves to narrowly avoid the tax, just like it did last season when trading Wayne Ellingon and Tyler Johnson, and waiving Rodney McGruder got it just below the tax threshold days before the end of the regular season.
Or the Heat can find creative ways to improve the team this summer through trades, which would likely eat into its 2020 cap space and maybe even its 2021 cap space. Miami now has the assets to pull off a trade for a difference maker, with its young core of Adebayo, Richardson and Winslow and the expiring deals of Dragic and Whiteside.
On the surface, it looks like the Heat’s hands are tied this offseason because of its cap situation. But there are ways for the Heat to make changes this summer if it decides to forgo future cap space.
This offseason will reveal part of Miami’s long-term plan. Remain patient, continue to collect and develop its assets while waiting on cap space to arrive in 2020 and 2021, or sacrifice its assets and future financial flexibility for immediate improvement.
“There’s possibilities. As I said, there’s no obstacles,” Heat president Pat Riley said last week when asked if substantive changes can be made this offseason. “Well, there are tons of them, but there’s none, so we’ll try to get past them if we can to add more to the team if that’s a possibility. But if we can’t, we’re not going to give away anymore assets unless it’s for, I don’t know, a top-tier player, whatever it is. I don’t call them whales anymore. I’m after orcas. They’re killer whales. The whale is gone. They’re not as good anymore. The orca is what I’m after.”
This story was originally published June 27, 2019 at 2:33 PM.
