A Stroll Down Memory Lane
Do you remember the last time the Heat had substantial cap space?
It was the summer of 1996.
Owner Micky Arison had hired basketball’s most celebrated coach the year prior with one goal in mind: to build a championship-caliber roster. This was Pat Riley’s chance.
Without hesitation, Riley traded away Glen Rice, Khalid Reeves, Matt Geiger, Kevin Willis, Bimbo Coles, Billy Owens and Kevin Gamble in moves designed to create more salary cap room for the summer’s free-agent shopping spree, giving him maximum maneuverability in what was considered at the time to be the NBA’s biggest free-agent market ever.
The Heat began the offseason with just $3.8 million in salary commitments to three players (Sasha Danilovic, Kurt Thomas and Keith Askins), leaving $20.6 million of available room below the $24.4 million salary cap.
Free agent guard Tim Hardaway and center Alonzo Mourning were the cornerstones of the team’s vision. The rest was to be filled on the open market.
One minute after the new labor agreement was finalized at 4:59 p.m. on July 11, the NBA’s free agent marketplace officially opened.
Riley kicked off the summer by turning his sights to budding young superstar Juwan Howard, in what was soon to become one of the most heated and controversial battles in league history.
Boosted by gaudy per game averages of 22.1 points, 8.1 rebounds and 4.4 assists, Howard had opted-out of his existing contract with the Washington Bullets in favor of the big payday. Pairing Mourning with the 23-year-old first-time All-Star forward was expected to instantaneously boost Miami into the league’s upper echelon.
The Bullets opened up the bidding with an initial seven-year, $78.4 million offer. Although publicly stating his desire to stay with the Bullets, Howard was not impressed. Howard felt that his market value was far greater than that.
The Heat countered at seven years and $91.0 million, plus $3.5 million in bonuses. The Bullets then pushed their offer to an $84.0 million take-it-or-leave-it ultimatum that left Howard in tears about the prospect of leaving Washington. The Heat upped the ante to seven years and $95.2 million offer, plus an additional $5.6 million in bonuses and perks that included luxury hotel suites and limousine service during road trips. It was all but inevitable.
At around 1 a.m. on July 13, Riley’s phone rang. Howard was on the other end. “Coach,” he told Riley. “I’m coming to Miami.”
When the moratorium ended on July 17, the Heat officially signed Howard to a seven-year, $100.8 million contract, making him the NBA’s first ever nine-figure player. Howard was slated to earn more than the likes of Hakeem Olajuwon and David Robinson.
Riley made another big splash the next day, signing forward P.J. Brown to an incentive-laden seven-year deal with a $19.0 million base, but worth as much as $35.8 million based upon the achievement of certain individual and team milestones.
He then turned his sights back inward.
On July 23, Hardaway was re-signed to a four-year, $10.4 million deal, but worth as much as $20.8 million.
The final move in the master plan was to sign Mourning to a seven-year, $105 million contract, utilizing his Bird rights to legally exceed the salary cap by $1.5 million. This opportunity was made possible because Mourning’s $6.8 million cap hold was $2.5 million less than his $9.4 million first-year salary to be.
However, on July 31, with Howard parading around Miami as a member of the Heat, the NBA shockingly voided his contract.
Two reasons were given by the league for its decision.
According to NBA chief legal officer Jeff Mishkin: “First, the Heat incorrectly calculated their available cap room because they excluded performance bonuses provided for in contracts submitted for Tim Hardaway and P.J. Brown that should have been included. Second, Miami had already reached a deal with Alonzo Mourning prior to the signing of Howard, thereby further reducing the amount of cap room available for the Howard contract.”
Either Riley broke the rules, or the league was waging a personal vendetta against the Heat and Howard’s agent David Falk.
Neither Arison nor Falk was well liked by Commissioner David Stern.
Arison had tangled with Stern before. In 1995, Stern accused him of tampering with Riley while Riley was still head coach of the New York Knicks. The Heat settled, and avoided league-imposed penalties, by compensating the Knicks with $1 million and their first round draft pick in 1996.
Falk was widely regarded as Stern’s supreme nemesis. He is often considered to be the most influential player agent the NBA has ever seen. In fact, during the peak of his career in the 1990s, he was considered the second-most powerful figure in the league behind Stern. Falk was best known at the time for representing Michael Jordan. He had also previously negotiated the then-highest contracts in NBA history for Patrick Ewing and Danny Ferry. But most of all, and much to the dismay of Stern, he was at the time of the Howard ruling in the midst of spearheading the league’s most unprecedented free agent period in history, during which his company, FAME, changed the entire salary structure of the NBA, negotiating more than $400 million in contracts for its free agent clients (including the $100+ million contracts of both Howard and Mourning as well as Jordan’s one-year, $30 million deal). These actions would subsequently prompt Stern to negotiate for a maximum salary in the new collective bargaining agreement (“CBA”) three years later.
The Heat’s dealings with Mourning opened the door for Stern to step in and scream foul, and Stern struck with full force and fury.
The off-season had initially started with Riley asking Mourning to sign a one-year contract at less than market value to help the Heat create more room under the salary cap. Mourning dismissed the proposal. Riley then tabled his discussions with Mourning while he focused his attention exclusively on Howard, assuring Mourning that after “taking care of some business” with other players, “I will make you the highest-paid player on the team.”
In a July 16 interview with ESPN, Mourning left the impression that he had an agreement with the Heat. Asked if his new deal would be for $100 million plus to match that of his soon-to-be teammate Howard, Mourning said “Yeah, it is.”
At that moment, the seeds of controversy were planted.
Under the terms of the CBA, club officials were forbidden from making undisclosed agreements, promises, “representations, commitments, inducements . . . or understandings of any kind” with players. The agreement also required teams to report immediately all player contracts – oral or written – to the league, and required such contracts to be charged against the team’s cap figure. Stern deemed that such an undisclosed agreement existed between Riley and Mourning, shaving $2.9 million from the Heat’s payroll ceiling.
Riley contended, bitterly, that his pledge to Mourning was proper because it contained no specific dollar figures – an interpretation of the CBA supported by the players’ union.
Riley was equally infuriated by the allegations of misappropriation of performance bonuses for P.J. Brown and Tim Hardaway.
Under the terms of the CBA, clubs were permitted to offer players performance bonuses that were either “likely to be achieved” or “unlikely to be achieved.” Unlikely bonuses were not to be charged against the cap. The CBA defined “unlikely” bonuses as those based on achievements not attained the previous season by a player or his team. The CBA also gave the Commissioner authority to contest any “unlikely” bonus he considered to be, in fact, probable.
Riley felt he had given Brown and Hardaway “unlikely” bonuses.
The incentive in question was one that would have paid Brown $1.5 million and Hardaway $1.0 million for the coming season if the Heat won either 27 home games or 43 total games in the upcoming season. The Heat deemed them “unlikely to be achieved” because the franchise had never once won more than 26 home games or 42 total games in its eight-year history. But the league, noting that the Heat had significantly improved its prospects by signing Howard, disagreed. Stern now deemed these incentives “likely,” shaving a further $2.5 million from the Heat’s payroll ceiling.
According to the league’s calculations, the Heat’s salary cap figure appeared as follows:
The $4.0 million excess was the basis for the league’s invalidation of Juwan Howard’s contract.
Riley denounced the Howard ruling as “unconscionable.”
According to his calculations, the Heat was comfortably within the confines of the salary cap:
Such a perspective would have then enabled the Heat to provide Mourning with a contract of up to seven years in length, utilizing his Bird rights to offer any first year salary it chose (there was no maximum salary at the time) with 20% annual raises.
In a news release issued on July 31, the NBA stated that the matter would be resolved by arbitrators jointly selected by the league and union.
The Heat faced significant risk in arbitration. If the Heat were to pursue arbitration, and in the process were to be found guilty of reaching an under-the-table agreement with Mourning that was not reported to the league, Mourning’s contract could have been invalidated, draft picks could have been taken away, the team could have been fined up to $5 million, and Pat Riley could have been suspended for up to an entire season.
With the support of Howard, who quoted himself as saying to Riley “Coach, I’m behind you 100%” with Arison looking on, the Heat trudged forward.
But in the next several days the warm relationship between new player and team quickly cooled. Howard concluded that if he backed Miami and the team lost a protracted fight, with cap space quickly dwindling around the league, other NBA clubs might have as little as $40 million or $50 million to offer him for seven years. In effect, he would take a $50 million pay cut and become, he said, “a laughingstock.”
Riley quickly found he couldn’t get Howard to return his calls.
“I mean, this is a business,” Howard later explained. “Yes, indeed, I believe in loyalty. But I believe in loyalty in the sense that it has to be done right and make sure that I don’t lose in no kind of fashion.”
On August 1, the NBA declared Howard a free agent.
On August 2, NBA Deputy Commissioner Russ Granik told Arison by phone that based on his understanding of the CBA the Heat would be unlikely to regain Howard’s services through arbitration. “You will not get Juwan Howard,” Granik declared, according to Heat officials.
Riley responded by filing a temporary injunction in the Dade County Circuit Court to prevent Howard from signing with another team until the situation was resolved, unless that contract recognized “the prior validity and superiority” of the Heat’s original deal. The injunction was granted.
But on August 5, the league and players union came to an agreement that proved disastrous for the Heat. The agreement stated that if a player signs a second contract after his first deal has been disapproved, the second contract is the valid one. The deal made arbitration moot. The league justified the deal by saying it was intended to protect players against financial losses in disputes between the NBA and its teams.
The league and union also agreed to restore Howard’s full Bird rights, even though the Bullets had already used the cap space freed up by his departure on free agents Tracy Murray and Lorenzo Williams. If the club were to re-sign Howard, though, it would forfeit its 1997 first round pick.
The Bullets seized the opportunity. They agreeing to match the terms of Howard’s $100.8 million Miami deal (replacing the hotel and limo perks with an increased salary), and added an additional $4.2 million to cover Maryland state taxes, even though Howard seemed to be a decidedly weaker negotiating position so late into the off-season.
Howard’s seven-year, $105 million contract, signed August 5, did contain the “prior validity and superiority” clause requested by Riley.
But with Howard no longer in his corner, Riley dropped his fight.
In a settlement announced on August 10, Howard’s contract with the Bullets was approved and the NBA agreed to forgo proceedings against Miami in regards to its alleged under-the-table agreement with Mourning. The Heat’s signings of Brown and Hardaway were approved with compromises on the allocation of bonuses between “likely” and “unlikely,” and Mourning was signed to a seven-year, $105 million deal.
Riley was nevertheless irate. And he had no problem telling his side of the story.
In response to the league’s treatment of the issue, Riley commented to reporters, “There was not one mistake made by us when it came to the salary cap. We did not forget how to add. We never broke the rules. We played within the rules of the collective bargaining agreement. The only people who broke the rules were the NBA, because they changed the rules as they went along. That’s a fact.
Micky Arison is one of the people who pays the commissioner’s salary. I have no idea why we didn’t get cooperation, despite the fact we were within the guidelines. They took Juwan Howard and put him with the team he wanted to be with. They didn’t want him down here.”
In response to Howard’s change of heart, Riley commented, “The day that Juwan Howard signed a contract with the Washington Bullets is the day I hit a new low in my 30 years in the NBA. I knew that once he signed that contract, we would probably never get him back, even if we took it to the Supreme Court and won it, because he wanted to stay in Washington. It’s very disconcerting to invest $100 million in a player, to go that far, know that you’re going to fight to keep him, and they just run to another deal.”
Buoyed with a nine-figure contract from the Bullets, Howard celebrated by buying a $230,000 Ferrari sports car and by contemplating his dream house: a Washington-area mansion with eight bedrooms, indoor and outdoor swimming pools, a bowling alley, theater, and basketball court. “I want elevators inside my house,” Howard would explain. “That’s always has been a dream of mine.”
Ironically, history shows that the league actually did Riley a huge favor.
It was widely held that Riley’s failures would set the Heat’s rebuilding plan back several seasons. Instead, the Heat went on to complete its most successful regular season ever, finishing in first place in the Eastern Conference with a 61-21 record. In the playoffs, Miami beat the Magic and Knicks before losing to Michael Jordan’s Chicago Bulls in the Eastern Conference Finals.
Howard’s contract ultimately proved to be one of the worst in NBA history. He and teammate Chris Webber helped lead the Wizards to the playoffs in 1997, where they were swept in the first round, but the Wizards never made a return trip with Howard on the roster. He was unceremoniously traded to Dallas in 2001. He went on to have a career has a journeyman, bouncing from Dallas to Denver to Orlando to Houston, then Minnesota, back to Dallas, back to Denver, on to Charlotte and finally, to Portland. He never made another all-star team.