‘I’m still chasing another championship,’ says Pat Riley
In order to complete the four-team trade to acquire Jimmy Butler, the Heat used the “stretch provision” when waiving Ryan Anderson to fall below the hard-cap threshold, according to a league source.
The four-team deal between the Heat, Blazers, Clippers and 76ers is not official yet. But it’s expected to become official soon, with the NBA moratorium coming to an end Saturday at noon.
As part of the deal, the Heat traded away wing Josh Richardson to the 76ers, Hassan Whiteside to the Trail Blazers and a protected 2023 first-round pick to the Clippers to acquire Butler from the 76ers and center Meyers Leonard from the Trail Blazers.
The Heat does not have cap space, which is why it needed to acquire Butler from the 76ers through a sign-and-trade deal. Because Miami had to go the sign-and-trade route, the Heat is hard-capped for the rest of the season at the $138.9 million apron.
There was a sense of urgency for Miami to get under the hard-cap line because the team receiving the player in the sign-and-trade (the Heat, in this case) cannot be above the hard-cap line at the conclusion of the deal. That means before the trade is fully consummated and announced, the Heat needs to shed additional money to get its team salary below $138.9 million and then must stay under that threshold for the rest of the season.
To achieve this, the Heat used the “stretch provision” when waiving Anderson.
Only $15.6 million of Anderson’s $21.3 million salary was guaranteed if he was released by July 10. But waiving and stretching Anderson reduces his cap hit to an annual $5.2 million over the next three seasons to create an extra $16.1 million in room from his full $21.3 million salary and gets the Heat below the hard-cap threshold.
The downside of using the “stretch provision” when waiving Anderson is the Heat incurs an annual $5.2 million cap hit over the next three seasons, which eats away at some of its 2020 and 2021 cap space, rather than just dealing with a single $15.6 million cap hit this upcoming season if Miami simply released him.
One way the Heat could have avoided “stretching” Anderson’s contract was to shed additional salary through a trade. But another trade never materialized.
After waiving and stretching Anderson, the Heat has nine players under guaranteed contracts: Butler (a 2019-20 salary of $32.7 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), Meyers Leonard ($11.3 million), Tyler Herro ($3.6 million, but has not signed contract yet) and Bam Adebayo ($3.5 million). With the acquisition of second-round pick KZ Okpala made official Saturday, he would be the 10th player if he signs a guaranteed deal with the Heat, as expected.
The Heat also has four players under partially guaranteed contracts: Derrick Jones Jr. (full 2019-20 salary of $1.6 million), Yante Maten ($1.4 million), Duncan Robinson ($1.4 million) and Kendrick Nunn ($1.4 million).
Waiters’ unlikely $1.1 million bonus and the $350,000 owed to center AJ Hammons from when the Heat used the “stretch provision” on him in February 2018 also needs to be included when calculating payroll for hard-cap purposes.
With those 14 players and Anderson’s $5.2 million cap hit for next season, the Heat’s team salary stands at about $138 million and just below the $138.9 million hard-cap apron.
Unless the Heat is able to shed additional salary in a trade, the Heat will likely be forced to use minimum contracts to fill out its 15-man roster because it’s still above the $132.627 million luxury tax line and just under the $138.9 million hard-cap threshold. The two two-way contract players Miami is allowed to sign do not count against the roster limit or salary cap.
The Heat currently holds a $5.7 million taxpayer mid-level exception it can use on one player or split between multiple players. But because the Heat is already above the tax threshold and also hard-capped, there’s a chance it could opt not to use this exception unless considerable salary is shed and also move forward with a 14-player roster (one shy of the NBA regular-season maximum of 15 players).
None of these calculations include veteran forward Udonis Haslem, who is expected to play at a veteran minimum salary if he returns for a 17th NBA season. Haslem is still deciding whether to continue playing or retire.