How the Heat can afford three max contract players

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Can Riley make the room to offer 3 maxes of these?

Videos such as this, which suggests that the Heat can acquire three maximum contract players without sacrificing Mario Chalmers, and articles such as this, which suggests that the Heat cannot acquire three maximum contract players even if they sacrifice both Michael Beasley and Mario Chalmers, are confusing the heck out of us.

We’re all trying to figure out what it would take to be able do what no other team in the league can do — offer Dwyane Wade, LeBron James and Chris Bosh full, maximum contracts.

So what’s the true answer?

Neither of the above is correct. Based on the league’s current salary cap projections, the Heat can make three maximum contract offers if, and only if, it trades away both Beasley and Chalmers.

Allow me to explain.

Remember this number: $56,100,000. This is the latest projection provided by Commissioner David Stern for the 2010-11 salary cap, issued on April 16.

Remember this number: $16,568,908. This is the maximum salary to which LeBron James, Chris Bosh or Dwyane Wade can be signed.

Remember this number: $473,604. This is the amount of one roster charge. Teams in the hunt for multiple maximum contract free agents are hurt a little bit by the cap holds associated with empty roster spots. If a team has fewer than 12 roster spots accounted for by players under contract, unsigned first-round draft picks, or unrenounced free agents, then it incurs a roster charge equivalent to the rookie minimum salary for each spot fewer than 12. Waived players who continue to count against the cap, such as James Jones, do not count toward the 12. As the team builds back up to 12, the roster charges fall away.

The Heat will enter the off-season with two players under contract (Beasley and Chalmers) and one player whose buyout reduces cap space (James Jones).

Let’s take a detailed look at exactly how much the Heat could offer that elusive third maximum contract player, after already having secured two, in each of three scenarios: (i) keep both Beasley and Chalmers, (ii) trade Beasley for cap space but keep Chalmers, and (iii) trade both Beasley and Chalmers for cap space.

These scenarios assume that Miami does everything else in its power to maximize it cap space, including: (i) withdrawing the qualifying offer to Joel Anthony and (ii) renouncing every exception and every player on its roster.

Keep Both Beasley and Chalmers
The Heat would have 4 players under contract, which means that it would incur 8 roster charges.

Michael Beasley: $4,962,240
Mario Chalmers: $854,389
First Max Player: $16,568,908
Second Max Player: $16,568,908
James Jones (buyout): $1,544,172
Roster Charges (8): $3,788,832
Team Salary: $44,243,277

The Heat would have $11,812,551 left over to offer any one player, well shy of the required amount.

Trade Beasley, Keep Chalmers
The Heat would have 3 players under contract, which means that it would incur 9 roster charges.

Mario Chalmers: $854,389
First Max Player: $16,568,908
Second Max Player: $16,568,908
James Jones (buyout): $1,544,172
Roster Charges (9): $4,262,436
Team Salary: $39,798,813

The Heat would have $16,301,187 left over to offer any one player. That’s a mere $267,721 short of a maximum contract.

Trade Beasley and Chalmers
The Heat would have 2 players under contract, which means that it would incur 10 roster charges.

First Max Player: $16,568,908
Second Max Player: $16,568,908
James Jones (buyout): $1,544,172
Roster Charges (10): $4,736,040
Team Salary: $39,418,028

In this scenario, the Heat would acquire the required cap space to offer a third player a max contract, with $113,064 of room to spare.

What this all really means is that if the Heat truly has visions of signing three players to maximum contracts, and not a penny less, the finalized salary cap figure to be released on or about July 7 needs to be $55,986,936 or more. It also means that if the Heat wants to retain Mario Chalmers as its starting point guard, the cap figure needs to be no less than $56,367,721 (or the Big Three will be asked to accept a tiny pay cut to accommodate him). In either scenario, the Heat would need to find a taker for Beasley, for whom the Minnesota Timberwolves reportedly have a strong interest.

You can see just how wonderful James Jones’ willingness to reduce his buyout truly was. The added $311,828 in savings is the only reason why the Heat has the ability to offer three max contracts at all.

Why did he do it?

Would you believe he’s a genuinely nice guy who loves his hometown, and loves his hometown ball club — even if he is no longer a part of it? The fact that the Heat agreed to pay him his entire buyout amount up from probably helped as well.

If neither of those explanations work for you, there’s always this. It is conceivable that an agreement could be in place for the Heat to re-sign him at the end of the off-season utilizing the minimum salary exception. If so, he’d earn $1,146,337 next season, which makes up for the total $1,000,000 in salary he sacrificed over the next three years. Of course, this is pure speculation.

The Heat’s triple max contract dreams are very much alive and well!

10 Responses

  1. Remote Heat fan says:

    Albert – You are a god with numbers against the mere mortals who spew stupidity on the internet. I <3 your explanations.

    Reading the ESPN article about Riley meeting with Amare proved what I have been stating. That he is pushing a team of three to be the winners of it all.

    Look at what happens if . . .

    Lebron stays in Cleveland.

    Do they have any space? Nope. Can they beat the Lakers? Nope.

    Lebron goes to Chicago.

    Noah, Lebron, Rose, Noah and ??? can they beat the Lakers? I doubt it.

    Lebron goes to NY/NJ . . . uhh. Nope.

    So let's assume that there is a pairing going. LeBron and Bosh/Amare. It boils down to a simple thing. Noah/Rose/Deng with a ROOKIE head coach (read as Mike Brown 2.0) or Wade with Riley as a coach and some scrubs.

    It is as simple as that.

    If these guys are to believed that they want to win a championship, they need to look at what it is going to take to beat Kobe/Pau/Bynum (useless imo) / Odom.

  2. H says:

    I am probably wrong, but if you need to fill 12 slots, it seems like you are overcounting the roster charges by one in each scenario. Said another way, it seems like you are saying you have to count the roster charge for the final slot, and THEN offer the max contract. But if the max contract is filling the final slot, why would you then still need a roster charge for it??

  3. Albert says:

    @H
    A team needs to have 12 players accounted for at all times.

    Jones doesn’t count in this scenario, because he will have been waived. The player for which the team is prepared to make an offer does not count either, as he is not affiliated with the team.

    The one exception, which doesn’t apply here but I thought I might mention, is that restricted free agents for which an offer sheet is outstanding do count toward the twelve, because an offer sheet is an executed contract.

  4. Albert says:

    In case anyone was wondering…

    The roster charge concept exists to ensure that teams with cap space are thinking about their entire rosters when making player personnel decisions. It ensures that teams below the cap can complete their required 13 player minimum regular season rosters without exceeding the salary cap. Math dictates the charges need to be (i) equivalent to the cheapest possible player and (ii) stopped at 12 players.

  5. H says:

    Yes, but at the moment of signing the new player, wouldn’t his salary “replace” a cap hold? Otherwise, in reality, it seems like you need to allocate 13 spots.

  6. Albert says:

    @H
    The concept here is as I described it at 19:05 above. It is, as you mention, to ensure a team has enough cap space to account for 13 players — the minimum number of players a regular season roster demands.

  7. Eric says:

    Albert, your information is very detailed and I like that very much 🙂 However, I must respectfully disagree with your conclusions. Even though there is a 13 player minimum on the regular season roster, one is inactive and it is my understanding that only 12 are required to be under the cap. Therefore in each of your 3 examples, you need to subtract the one cap hold when you add the Third Max Player. (And yes, I’ve read all the previously made comments… I swear the NBA could not have made this more complicated if they tried!)

    • Albert says:

      @Eric
      Eric, I would respectfully reply that your understanding is incorrect.

      The roster charge concept is actually quite simple. It ensures that if a team has fewer than 12 players on its roster, such charges must be added so that the total number equals 12 at any given time. This is so that the next player that signs, the 13th, can theoretically fit within the confines of the cap.

      You are certainly correct that teams that elect to utilize cap space can still exceed the salary cap. Please review this post for a list of all the ways in which they can do so. However, the two concepts are mutually exclusive, and have nothing to do with the allocation of a roster between active and inactive.

      Teams are required to carry a minimum of 13 players on their rosters, composed of 12 active players (although they can drop to 11 for up to two weeks at a time) and between 1 and 3 inactive players (although they can drop to 0 for up to two weeks at a time). Inactive players are ineligible to play in games. The composition of the inactive list can change on a game-by-game basis (meaning that a player who is inactive for one game can be activated for the next).

      As an expert in these matters, I can assure both you and H that my calculations are correct.

  8. B.C. says:

    Thanks for the analysis, Albert. I was getting annoyed with hearing that the Heat couldn’t pull this off. But this does assume the 16.5 max contract, so it doesn’t apply to guys like Amare or Dirk with higher maxes. It also would mean the Heat have some additional room if one of the maxes goes to a guy like Gay (too late) or Lee.

    I think LeBron is staying with the Cavs, so I’d like to see your preferred lineup with Wade and one other max. For example, would you prefer Bosh or maybe take Lee to free up another 4M to fill out the roster? They’re both 20/10s, but Bosh’s defense probably makes the difference. If we’re not going for the triumvirate, isn’t Beasley a decent value at 5M? Seems like without the pressure to be the second scorer on the team, he might become a decent role player. What about adding a shooter like Korver to split time with Beasley at the 3? What will teams offer Haslem and would it be worth bringing him back as a 6th man if he’ll play here under market value? Where to direct the remaining money – PG or C?

    Sorry…that’s a lot of questions. Guess I’m basically asking for an entire post on the issue. But I do have two easier salary cap questions:
    1. The minimum salary you quote for James Jones is higher than Chalmers’. How is a players’ minimum salary determined? Number of years in the league? Previous salary?
    2. Am I right to think Miami cannot use the Bi-Annual or Mid-Level exceptions to exceed the cap? Why? (I apologize if you’ve covered this elsewhere.)

    • Albert says:

      @B.C.

      1. Minimum salaries are based on how long the player has been in the league. However, when a player has been in the NBA for three or more seasons, and is playing under a one-year, ten-day or rest-of-season contract, the league actually reimburses the team for part of his salary – any amount above the minimum salary level for a two-year veteran. Only the two-year minimum salary is included in the team salary, not the player’s full salary. They do this so teams won’t shy away from signing older veterans simply because they are more expensive when filling out their last few roster spots. So even though Jones would be making more actual dollars if he signed a one-year minimum contract, they would both be charged $854,389 on the Heat’s team salary.

      2. Yes. Because an “exception” by its nature is something that would allow a team above the salary cap to operate. However, there are certain exceptions available to teams which elect to utilize cap space. You can find a list here. You can also click the “Rules and Regulations” link to the right for explanations of several confusing topics.

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