Miami Heat Sign Dion Waiters to 2-Year, $5.9 Million Deal

July 26th, 2016 No comments
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Pat Riley wasn’t expecting to use the Miami Heat’s $2.898 million mid-level exception for room teams this summer.

“As far as the $2.9 million room exception, we’re going to hold on to that,” Riley said on July 16. “I don’t think we’re going use it for the rest of the summer. There isn’t anybody out there right now that I want to give it to.”

Little did he know, things would dramatically change just two days later.

There had been mutual interest between Riley and Oklahoma City Thunder free agent shooting guard Dion Waiters since the start of free agency. Any such possibilities, however, were rendered effectively meaningless by virtue the fact that he was a restricted free agent.

Waiters’ restricted free agent status caused two serious problems for Riley(1).

First, it meant that Riley would need to offer a contract that would not only be acceptable to Waiters, but also one that would be high enough such that he could be relatively certain the Thunder would not match. The Thunder, at the time, were expected to match any reasonable offer.

Second, it meant the contract would need to be for at least two seasons in length (not including any option years).

The combination made a Heat pursuit of Waiters effectively impossible. Any first-year salary that, at the start of free agency, figured to be high enough to entice the Thunder not to match would also need to contain a second-year salary high enough to destroy any of the Heat’s grand visions for the summer of 2017. The Heat has big plans for that summer.  Read more…

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Breaking Down Russell Westbrook’s Complex Situation

July 24th, 2016 No comments
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Two months ago, the Oklahoma City Thunder were positioned to perhaps consider themselves the best team in the NBA. They had pushed the defending champion and all-time regular season winning percentage record-holding Golden State Warriors to brink of elimination in the Western Conference Finals, with a home game among three opportunities to close the deal. A single win in three chances, followed by a series win versus a Cleveland Cavaliers team against whom they were projected to be favored, and the Thunder would be NBA champions for just the second time in franchise history, and the first since 1979.

Things didn’t work out as planned.

The Warriors went on to eliminate the Thunder in seven games. A short time later, Kevin Durant went on to join the Warriors, leaving Russell Westbrook and the Thunder to pick up the pieces.

Westbrook is set to become an unrestricted free agent next summer. With the balance of power in the Western Conference dramatically shifted, if a return trip to the NBA Finals is a priority, he may not want to remain in Oklahoma City.

The concept has sparked a fire-storm of speculation about a potential trade, which would at least allow the Thunder to avoid losing two top five NBA players to free agency in the span of a single year without receiving back anything in return.

The ability of Westbrook to leave in free agency next summer, however, is just as problematic for a trade partner as it is for the Thunder. If Westbrook were to leave the following summer, the trade partner would not only lose him without receiving back anything in return but also sacrifice the assets it took to acquire him. To that end, if a trade partner is to risk the type of assets the Thunder will demand for him, it is likely to demand that Westbrook agree to an extension.

The Thunder, for their part, haven’t given up hope of retaining their star point guard either. They, too, are positioning to offer Westbrook an extension.  Read more…

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Breaking Down James Harden’s Renegotiation and Extension

July 19th, 2016 No comments
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Heading into the 2016-17 NBA season, extensions for veteran players had all but vanished for several years — the result of changes to the league’s Collective Bargaining Agreement that make it more beneficial for players to finish out their existing contracts and enter free agency thereafter, even if they plan to re-sign with their prior teams.

The rapidly rising salary cap – which has reached an all-time record $94.1 million this season, a whopping 34.5 percent increase from $70 million in 2015-16 – has, however, created a short-term opportunity for teams to leverage intricate salary cap rules to offer key players extensions that, in some cases, can be too tempting to pass up.

Many teams are finding themselves with more salary cap space than quality free agents on which to spend it. For these teams, that cap space can be used to simultaneously renegotiate and extend the contracts of its key players, giving them more up-front money in exchange for more seasons under team control.

This is exactly what the Houston Rockets elected to do with its key player, James Harden, in what to this point has been the most intriguing utilization of cap space thus far this summer.

Contract renegotiation is a concept largely attributed to various other sports. Only very rarely do they occur in the NBA. They can only occur on or after the third anniversary of the original signing date of a contract (or extension or renegotiation), and they can only increase a player’s salary. To do so, a player’s team must have salary cap space to cover the full amount of the proposed increase.

Heading into this season, Harden had two seasons remaining on his contract — $16,784,032 for this season, and $17,811,626 for next.

Though he signed a “maximum” five-year rookie-scale contract extension in October 2012 that ran through the 2017-18 season, the subsequent jump in the salary cap meant that he was set to earn far less than his current maximum salary for this season.  Read more…

Pat Riley Addresses the Miami Heat Summer

July 17th, 2016 1 comment
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The following post attempts to parse through the eloquent words of Pat Riley, delivered at his press conference on Saturday, to arrive at their true meaning.

Things are not always necessarily what they seem.

During a press conference on Saturday to discuss the state of his Miami Heat team, Pat Riley opened up about the sadness he feels for having lost Dwyane Wade, the team’s most important ever player.

“What happened with Dwyane floored me. And I’m going to miss the fact of what I might have had planned for him and his future and how I saw the end and my thought process in how I could see his end here with the Heat… It’s not going to be the same without him… I have been here when Zo left, Shaq left, when Brian Grant, Eddie Jones. But Dwyane is unique.”

After 13 seasons, Wade is gone. Officially signed by the Chicago Bulls.

Wade will get paid $47.0 million over the next two years, with a player option on the second season. That’s more than the Heat’s two-year, $40.0 million offer. But this wasn’t about the money.

Wade’s decision was predicated on a deteriorating relationship that resulted from a fundamental difference in philosophies. A difference that was two years in the making.  Read more…

Revamped Heat Roster Maintains Youthful Core, Flexibility for 2017

July 11th, 2016 1 comment
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The Miami Heat initiated its post-Dwyane Wade transition by completing a flurry of moves in rapid-fire succession on Sunday, the timing of which dictated by the man potentially set to replace him and the execution of which pursued with a singular goal in mind.

Pat Riley has always dreamed big. In the past 12 years, he has acquired Shaquille O’Neal and LeBron James — arguably the NBA’s two greatest post-Michael-Jordan era players — and paired them with Wade to secure the franchise’s five NBA finals appearances and three titles.

Title aspirations are standard course for Riley and owner Micky Arison. It represents the foundation for everything they do. How they think. How they plan. How they negotiate, even if the parameters for negotiation ultimately lead to the loss of a franchise icon.

Facing the potential overwhelming loss of the team’s most critical ever player, Riley and Arison were unwilling to concede so much in their negotiation with Wade as to paralyze their team’s ability to build a title contender. They believe the Heat is currently in a better position to succeed than would have been the case if they were to have met Wade’s demands. They believe they have compiled a solid core of multi-talented youngsters in guards Tyler Johnson and Josh Richardson, forward Justise Winslow and center Hassan Whiteside. They believe they have a potentially perfect, floor-spacing frontcourt compliment to Whiteside in Chris Bosh, assuming health. And they believe they have a strong lead guard in Goran Dragic to spearhead the charge.

They may be right.

In an offense system designed to capitalize upon it, what was once a shocking inability to space the floor – predicated largely on the always imperfect backcourt tandem of Wade and Dragic — could now be considered a strength. And depending upon where Richardson – who led the entire NBA in three-point shooting percentage after the All-Star Break, at 53 percent – and Johnson – who shot 41 percent on three-pointers last season (excluding heaves), despite often being miscast on offense as a point guard — level off with their shooting, a potentially big one at that.

That type of shooting could provide Whiteside — now a franchise cornerstone with his four-year, $96.4 million contract secured – the much-coveted floor-spacing into which to maneuver.

At 7-feet, 265-pounds, and with a ridiculous 7-foot-7-inch wingspan, Whiteside alters the geometry of the game. His individual statistics last season, were silly – 17.6 points (on 60.6 percent shooting), 14.7 rebounds and 4.6 blocks per 36 minutes played. And he did it despite constantly having two, three, and sometimes four defenders draped all over him every time he tried to touch the ball. Because why not collapse at even the hint of danger? Who’s going to hurt you from the perimeter if you do? Not Wade.

This Heat team may well have lost its best player, but it will be fast in transition and it will look to capitalize upon a type of floor spacing it has never before had in the half court.

Imagine what Whiteside could do in an offense that spaced the floor around him. Is it so preposterous to imagine he could become one of the best, and most efficient, scorers in the whole of the NBA?

Is it so preposterous to envision a constant stream of Whiteside pick-and-rolls, Bosh pick-and-pops, and swished three-pointers when defenders rotate away from Heat shooters to try to stop it?

Is it so preposterous to imagine that with Whiteside down low; Bosh, Richardson and Johnson to space the floor around him; and Dragic’s speed and Winslow’s defense thrown into the mix; that the team, despite the absence of Wade – it’s leader and, perhaps more importantly, it’s closer — could still be a force with which to be reckoned?

Is it so preposterous to imagine that while it might struggle on offense at times with the absence of its most reliable crunch-time scorer, its defense will be undeniably improved without him?

Is it so preposterous to imagine that the addition of one elite player could have it competing for titles? Riley surely believes it.

But how do you get that elite player?

With Wade’s departure, the Heat found itself with just $19 million in salary cap space left to be spent on any one player, not nearly enough to grab an elite contributor, if even he were willing and available. It simply wasn’t going to happen this summer.

That, in turn, made Riley’s goal for filling out the roster crystal clear: Maintain maximum flexibility for the summer of 2017.  Read more…

Without Dwyane Wade, Where Do The Miami Heat Go From Here?

July 7th, 2016 6 comments
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It is still impossible to believe.

After 13 seasons, the best and most important player in the Miami Heat’s 28-year history is gone.

Dwyane Wade is headed to the Chicago Bulls.

How could it be possible that the team’s franchise icon could leave the only professional team he has ever known?

Wade will get paid $47.0 million over the next two years, with a player option on the second season. That’s more than the Heat’s two-year, $40.0 million offer. But this wasn’t about the money.

Wade’s decision was predicated on a deteriorating relationship that resulted from a fundamental difference in philosophies. A difference that was two years in the making.

Last summer, Wade petitioned the organization for a final three-year, $60 million contract to close out his career. It was a lofty first proposal, to be sure, which he subsequently reduced into the range of $45 million to $50 million.

His desire for one last large, long-term contract could easily be justified. He had guided the Heat to five NBA Finals appearances, and three titles. He had played a critical role in luring LeBron James and Chris Bosh to Miami. And through it all, he had consistently chipped away at portions of his own potential salary to make it all possible. Wade had never been the Heat’s highest-paid player.

The Heat countered at one-year, $20 million. Wade accepted. Reluctantly.

The deal was positioned as something of a compromise. For Wade, it provided an increased single-season payout. For the Heat, it maintained “flexibility” for the summer of 2016.

Flexibility, of course, could in this context be loosely be defined as: “the opportunity to re-allocate elsewhere monies otherwise meant for Wade.”

So, naturally, frustration ensued again this summer when Wade was made to sit tight as Pat Riley and the Heat organization made its first priority to retain Hassan Whiteside, and second priority to pursue the never realistic pipe dream that was Kevin Durant. Wade, a future Hall-of-Famer, is no third option – particularly when successful pursuits of either or both of the first two severely limits that which is left over for the organization to compensate himself.

Whiteside in hand and Durant pursuit having failed, the Heat offered Wade every ounce of salary cap space it had left to give: the full $19 million.

Total contract value built onto that starting salary: two-years, $40 million.

More than the Heat would have liked to offer. More than enough to destroy any prior plans for next summer. Imminently fair. Perhaps even acceptable in an emotion-free environment. But that’s not the environment in which it was given.  Read more…

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NBA Lowers Its 2017-18 Salary Cap Projection From $107M to $102M

July 7th, 2016 No comments
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The NBA’s salary cap projection for the 2017-18 season has dropped from $107 million to $102 million, according to a league memo distributed by the league to its member teams.

The luxury tax projection has dropped in turn, from $127 million to $122 million.

The reason for the drop had nothing to do with the league’s revenue growth projections, which continue to increase, but rather with increasing player salaries.

To arrive at a projected salary cap figure, the league must first project revenues for that season. The league then takes 44.74 percent of that projected revenue amount, subtracts projected benefits, and divides by 30 (the number of teams in the league). The luxury tax uses a similar formula, but is based on 53.51 percent of projected revenues.

Adjustments are then made to the cap if players received either too little or too much in salaries and benefits for the just completed season relative to the finalized revenue figure. These adjustments can be quite large.

The players are contractually guaranteed to receive a 51 percent share of those revenues in the form of salaries and benefits.  Read more…

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Framing the Dwyane Wade — Miami Heat Dilemma

July 4th, 2016 8 comments
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Update: The Heat has reportedly offered Dwyane Wade a two-year, $40 million contract with a player option on the second year that would allow him to become a free agent next summer. My guess is that he will, at the very least, push the Heat to add a third year to the contract which, for reasons stated below, the Heat will strongly resist. 

For the second straight summer, the Miami Heat and its star free agent Dwyane Wade and are having difficulties reaching conclusion on a new contract. Only this time around, things feel significantly more serious. Dire even.

Wade is frustrated.

He’s frustrated at having been asked to stand pat as Pat Riley and the Heat organization made its first priority for the summer to retain Hassan Whiteside, and second priority to pursue the never realistic pipe dream that was Kevin Durant. Wade, a future All-Star is no third option – particularly when successful pursuits of either or both of the first two severely limits that which is left over for the organization to compensate himself.

He’s frustrated by what appears to be an unwillingness by Riley to offer an adequate contract. A total of 10 unrestricted free agent shooting guards have come to agreements on new contracts thus far this summer. The average payout: $18 million per season. Average length: Four years. Combined All-Star selections: Two.

Even Wade’s own backup, Tyler Johnson, received an offer sheet from the Brooklyn Nets that will pay him an average of $12.5 million per season, and that was reportedly less than other teams were willing to offer.

Wade’s salary demands are unknown, but perhaps not all that dissimilar to what they were last season: perhaps three-years, somewhere in the range of $60 million.

His desire for such a contract can easily be justified. He has guided the Heat to five NBA finals and three titles. He played a critical role in luring LeBron James and Chris Bosh to Miami. He has sacrificed $25 million in salary in order to give the Heat flexibility over the past six years (a disputable amount, considering the sacrifice surely benefited himself as much as it did the organization). And, perhaps most importantly, his on-court play, in this market, is worthy of it.

The Heat would surely love to give Wade every last penny he wants in theory, but paying him what he’s seeking would present significant challenges in practice.

The team currently has $18.9 million of cap space. With that, it could build out a potential three-year, $61 million contract (or even a four-year, $84 million deal).

But, if you were Pat Riley, would you give it to him?  Read more…

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How Can Miami Heat Sign Hassan Whiteside AND Kevin Durant?

July 3rd, 2016 No comments
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This post was written lightening quickly at the request of readers. There is no lead-in, no explanation and no context. It just contains the raw numbers that readers were asking for.

The Miami Heat will start the summer with six players under contract for the 2016-17 season – Chris Bosh, Goran Dragic, Josh McRoberts, Justise Winslow, Briante Weber ($219K guaranteed) and Josh Richardson (non-guaranteed). Those six players will cost a combined $49.8 million.

At the $94.4 million salary cap announced yesterday by the NBA, the Heat would have — after subtracting that $49.8 million, the $1.2 million cost to retain the right to re-sign Tyler Johnson to a contract that exceeds the cap, and necessary roster charges — up to $42 million or so of cap space with which to spend on free agents.

On July 1, free agent agent Hassan Whiteside announced that he will re-sign with the Heat. The deal is tentatively scheduled to be for the max, with a starting salary of $22.2 million and a total payout of $98.4 million. He can make the signing official starting on July 7th. The signing will reduce the Heat’s cap space available to any one player to $18.9 million.

Earlier today, we also learned that the Brooklyn Nets will extent a four-year, $50 million offer sheet to Tyler Johnson. The contract will pay out $5.6 million in the first year, $5.9 million in the second year, then jump to $18.9 million in the third year and $19.6 million (subject to a player option) in the last. Once he signs the offer sheet, which he can do starting July 7th, the Heat will have three days to decide whether to match. Until it decides, Johnson will continue to count $1.2 million against the cap. Once (and if) the Heat matches, he will cost $5.6 million. If the Heat decides not to match, he will cost nothing. The Johnson decision therefore has ramifications for another free agent the Heat is currently pursuing: Kevin Durant.

But would it be possible for the Heat to sign Kevin Durant, now that it has secured Whiteside?

Durant coming to the Heat is an extreme long-shot. He would need to be pass up opportunities with such teams as the Golden State Warriors, San Antonio Spurs, and his hometown Oklahoma City Thunder, among others. But if that were possible, would it be mathematically possible as well?

Durant’s maximum salary would be $26.5 million. With Whiteside at $22.2 million, the two figures alone total to $48.7 million. That’s way above the Heat’s $42 million of projected cap room, and that’s before even dealing with Dwyane Wade.

So, how can the Heat acquire the necessary cap space for Durant?

There are three likely scenarios:  Read more…

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NBA Salary Cap for 2016-17 Set at $94.143M, Tax at $113.287M

July 3rd, 2016 No comments
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On Wednesday July 7 at 12:01 a.m. ET, the NBA’s 2016-17 season begins. That’s when the league’s salary cap, luxury tax threshold, maximum salaries and other figures all adjust to their new values; when free agents can be can signed; and when players can be traded.

Most NBA business ceases for the first several days of July as the league conducts its annual audit to determine its revenues from the previous season. With that figure in hand, the league huddles with the players association to project revenues for the coming season, and uses it to calculate the new cap, tax and related figures.

Revenues for the 2015-16 season from the national TV rights deals with ESPN/ABC and TNT were pre-set when the deals were signed back in 2007, at $1.03 billion.

Revenues from all other sources blasted higher to $4.26 billion, up nearly 11 percent from the previous year (the highest annual growth rate for the league over a full season in more than a decade), smashing projections for the season issued last year at this time (off of which the salary cap was based) by a whopping $247 million!

Where did all that growth come from?

Gate receipts spiked, along with related concessions and merchandise sales, thanks in large part to the Golden State Warriors’ record-breaking 73 win season and long playoff run as well as the retirement tour of the Los Angeles Lakers’ Kobe Bryant.

Commissioner Adam Silver also landed several new sponsorship deals and extensions of existing arrangements at rates that far outpace their previous amounts.

Anheuser-Busch InBev extended its partnership with the NBA, which began in 1998, for another four years in December. Financial terms of the deal were not disclosed, but the new deal, which kicked in immediately, is considered to be among the league’s largest.

PepsiCo replaced Coca-Cola as the league’s official beverage partner after 29 years, in a five-year deal struck in April 2015 that kicked in this past season. Financial details were not disclosed, but PepsiCo is also considered one of the league’s largest sponsors.

Verizon replaced Sprint as the league’s sponsorship content provider in November, signing a contract worth around $400 million over three years. 

Tissot partnered with the NBA in October as the league’s first ever official timekeeper, signing a contract worth around $200 million over six years.

State Farm in January extended its multi-million dollar partnership with the NBA for six more years.

International revenues also boomed.

Internet giant Tencent started a deal with the NBA in July to provide live games and other programming in China. The pact, worth $500 million over five years, also has a revenue sharing component that could add an additional $200 million.

The story was the same on the local TV front, where both the Atlanta Hawks and New York Knicks started new contracts this past season.

Add it all up, and it came to an all-time NBA record revenue total of $5.29 billion!  Read more…

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