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Heat signs Patrick Beverley to a curious two-year deal

Patrick Beverley signed a two-year minimum salary contract with the Heat on Monday

The Miami Heat signed Patrick Beverley to a two-year, $1.3 million fully-guaranteed contract on Monday. That much we know.

What we don’t know is why. Why did the Heat sign him? Why did they sign him so soon? And why did they fully guarantee his contract?

Despite the guarantee, Beverley is still far from a lock to make the regular season roster.

The Heat currently has 14 veterans under guaranteed contract. Teams can have as many as 20 players under contract during the offseason, but must pare down to 15 by the start of the regular season.

Beverley figures to compete with Kenny Hasbrouck, Shavlik Randolph, and Da’Sean Butler for the 15th and final spot. Hasbrouck and Randolph have each signed a $250,000 partially guaranteed two-year minimum salary contract, while Butler should be signed shortlyDespite the ACL tear in his left knee, Butler is currently thought to have the inside track.

Beverley was initially selected with the 42nd overall pick by the Los Angeles Lakers in the 2009 NBA Draft. His draft rights were immediately traded to the Heat in exchange for a 2011 second-round pick and cash considerations.

If Beverley should fail to make the opening day roster, the Heat would lose his draft rights. Pat Riley will have wasted the $1,500,000 (and the 2011 second round pick) it took to acquire his draft rights, the $473,604 he is guaranteed for this season, the $788,872 he is guaranteed for next season, and the $788,872 in tax consequences his contract will almost certainly cause next season. That’s a total of $3,551,348. Wasted.

***

 So why did the Heat sign him? 

A brief explanation of the rules related to second-round draft picks may help to understand why.

When a player is selected in the second round of the draft, he remains the exclusive property of the team that selected him until at least the September 5th immediately following the draft. At that point, the team needs to make a decision.

In order for the team to thereafter retain draft rights to the player, it must submit to him a “Required Tender” by September 5th. The tender is an offer of a contract that affords the player until at least the immediately following October 15 to accept, has a term of one season, calls for at least the minimum salary applicable to the player, and can be fully unguaranteed. The mere issuance of the tender extends the period during which the team has exclusive negotiating rights to the player until the following NBA draft.

If, instead, the team does not issue the tender by September 5, the drafting team would lose its exclusive rights to the player, and the player would become an unrestricted free agent the following day.

Once issued, the player can then choose to either forgo the tender and seek employment outside the NBA, accept the tender, or reject the tender and instead negotiate with the team for a better contract.

Players often forgo the tender.

This is a path taken by many second round draft picks who have been told that they have little chance of making the opening day rosters of the teams which selected them in the draft. Since the tender wouldn’t be guaranteed anyway, they instead choose to play elsewhere, typically overseas, both to gain experience and to earn a living. These players know that if they instead accept their tenders, they will ultimately be released, and left without an organization that believes in them and is grooming them. They also know that by the time they are released (perhaps after training camp, sometime in late October) most roster spots on teams around the world will have already been filled. They will have lost the opportunity to secure a roster spot elsewhere, without having earned a dime in the interim. Many simply cannot afford this option. By forgoing the tender, they give themselves these several months to find alternate work. By rule, once a draft pick signs a contract to play professional basketball somewhere other than in the NBA, the team retains the player’s draft rights for one year after the player’s obligation to the non-NBA team ends.

This is the path Beverley chose last year. After failing to make the Heat’s regular season roster, Beverley accepted a two-year, €420,000 contract (about $600,000 at the time of signing) with Greek powerhouse Olympiakos. In 41 games of Greek League and Euroleague play, Beverley contributed 3.9 points, 2.4 rebounds and 1.1 assists as a reserve, while shooting 55.7% from the field.

Players can also accept the tender.

Under this scenario, the player would be under contract. It  would likely be an unguaranteed one-year minimum salary contract. In Beverley’s case, if things played out this way, he would have been competing against Butler, Randolph and Hasbrouck for one of the Heat’s final roster spots on a make-good contract, but without the partial guarantee they received.

With these rules in mind, Beverley’s relationship with Olympiakos offers insight into to why the contract was offered.

The second season of his two-year, €420,000 contract was mutually terminated in June, despite his successful play. Olympiacos was in the midst of a reshaping. After a season largely considered a failure – despite the fact that they had won their first Greek Cup in eight years, and reached the Euroleague and Greek League Finals – head coach Panagiotis Giannakis had been fired and a major roster restructuring was about to ensue. Beverley didn’t want to stay without Giannakis, and the team was planning to move in a different direction. The two sides parted amicably.

Beverley wanted to try his luck in the NBA. It was a lifelong dream, and the driving force behind every decision he has made over the course of his wildly interesting, trying, tumultuous, vindicating and encouraging 21 years.

If Beverley’s mission was to exhaust all possible NBA alternatives before considering a return to Europe, accepting the tender would have been the way to go. He would then have been under contract with the Heat. If the Heat were to subsequently waive him, likely in late October, he would have become an unrestricted free agent, free to try out for any NBA team. Accepting the tender would therefore have represented Beverley’s best chance of making an NBA roster this season, at the substantial risk of not finding work elsewhere (whether it be with another team in the NBA, in Europe, or elsewhere).

If he communicated such an intention to Riley, it would certainly explain the contract offer, and quite neatly. The Heat would have been forced to offer Beverley a one-year tender anyway. Why not instead lock him up for two years?

***

But his August 2nd signing date was still more than a month away from the Heat’s September 5th deadline.

So why did the Heat sign him so soon?

Apparently, after its overhaul was completed, Olympiakos changed its stance, and wanted its former point guard back. And it was more than just a passing interest. According to Red Planet, a Greek media outlet, Dusan Ivkovic, the new head coach of Olympiakos, was reported as saying on July 23 that he was “very interested” in having Beverley return.

Riley was in a position of leverage. He could have withheld the tender until the September 5th deadline, putting a potential Olympiakos offer at risk of being withdrawn and thus forcing Beverley’s hand to either accept it or risk losing it.

But Riley didn’t take that approach. One week later, Beverley was signed. It would appear that Riley really wanted Beverley on the Heat roster. Here and now. This season. Not sharpening his game for another year overseas.

It was an interesting development, one that could have several potential roster implications.

It almost certainly means that Hasbrouck no longer has a shot to make the Heat’s opening day roster.

But if Beverley, Hasbrouck and Butler were all competing for the one remaining spot, and that spot has been set aside for Butler, there would still be no space for Beverley even if Hasbrouck were to be waived.

Why then would Riley offer Beverley a contract – with no guarantee that he’d make the opening day roster and knowing full well that his draft rights would be lost if he didn’t – if he instead could have retained Beverley’s draft rights by forcing him back to Olympiakos?

Could it be that Riley has in mind to open up a second roster spot? If not, he’s just throwing away a $3,551,348 investment.

It could mean that one of the Heat’s 14 veterans under guaranteed contract may not be safe.

So who could this at-risk player be?

We know it’s not Chalmers, Wade, James, Bosh, Anthony, Arroyo, House, Miller, Haslem, Ilguaskas or Jones. It’s probably not Pittman. Riley has an unusual affinity for Howard (despite the fact that he’s not going to contribute anything that he couldn’t otherwise provide as a coach and the fact that he caused Riley, according to Riley’s own words, the worst pain of his entire NBA life). That leaves only Magloire.

Could Beverley be competing for the roster spot that is currently being occupied by Jamaal Magloire?

None of this, however, explains the guarantee.

***

So why did the Heat fully guarantee Beverley’s multi-year contract?

Nothing explains the multi-year guarantee.

Beverley was not like Hasbrouck or Randolph. He was not an unrestricted free agent. He did not have the option to instead sign with another team. He was the exclusive property of the Heat as long as the Heat extended him a fully unguaranteed tender by September 5th. If he wanted to play in the NBA, he would have been forced to accept it. He would have had no other choice.

Beverley now becomes the only draft pick in the entire NBA to have tried out for his team, fail, and subsequently receive a multi-year guarantee the following season.

Perhaps a partial guarantee – perhaps the $250,000 the Heat gave to Randolph and Hasbrouck, an amount roughly equivalent to the second year salary in Greece that he had turned down – in exchange for a two-year deal would have been reasonable. His effort alone warrants that much. But certainly not a multi-year full guarantee which, if he is to be waived, not only increases team salary this year but next year as well, in what figures to be a more restrictive salary cap environment under a new collective bargaining agreement.

***

Despite the guaranteed contract, Beverley is no guarantee to make the opening day roster.

The battle between Beverley, Hasbrouck and Butler figures to be the most interesting, and most debated, storyline remaining this offseason. Hasbrouck brings with him the better offensive repertoire. Beverley brings with him the superior defensive ability and higher ceiling. Butler is the unknown coming off major injury.

One, perhaps two, will likely make the team. The other(s) will become an unrestricted free agent.

It should be fun.

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  1. Heat-Struck
    August 3rd, 2010 at 19:15 | #1

    Beats me… I was hoping to open your post with some logic to the signing… looks like if you can’t find some dollar reasons to it, then there is no good reason for it, since he clearly was a non-factor in summer league and overseas.

  2. Pimpin lincoln
    August 3rd, 2010 at 19:46 | #2

    I didn’t like his play in summer league but who knows. If Rudy could still be had for 1st rounder Riley needs to do that. He is already all in with these guys… what’s another first rounder lost.

  3. daniel
    August 3rd, 2010 at 19:54 | #3

    Beverley was on track to become a solid 1st round pick before he got suspended. He played on the under 19 US national team.

    Hasbrouck has looked more solid playing for the Heat in the summer league, but Beverley should have the higher upside if he can get back on track to where he was going.

    If it were up to me, I’d likely give the spot to Beverley as I believe he has a better shot at cracking the rotation and giving you meaningful minutes somewhere down the road.

  4. August 3rd, 2010 at 20:39 | #4

    @Pimpin lincoln
    The Heat only has one first round pick to offer, likely in 2017.

  5. CyrusTheVirus
    August 3rd, 2010 at 20:52 | #5

    I’m with Daniel: http://irasfollowers.blogspot.com/2010/08/pat-beverley-keeper-or-deep-sleeper.html

    One of my main points – Beverley’s performance in Europe was slightly better than Brandon Jennings the year before and he played for a better team in a more important role. He backed up the top PG in Europe and was used as a defensive stopper (he got Ricky Rubio benched by forcing him into a few turnovers in a few crucial possessions in the European final – Rubio is the best young player in Europe and a great ball handler and decision maker usually, but Bev exposed him in a way nobody on Team USA could in the Olympic final).

    So, Beverley may or may not be more NBA ready than Hasbrouck, but he likely has a better chance to be special in this league. If Hasbrouck’s 3 point accuracy is not a fluke, then he will make it on the roster as well. If Hasbrouck is just a solid all around NBA player, there are always going to be good all around players available to the Heat. Beverley seems to have the higher ceiling because he has “defensive stopper ability” – you’re probably not inserting Hasbrouck to stop Rondo or Jennings, but you certainly would throw Bev at them to see if he can throw them off their game. Great move by the great Pat Riley, who should not be questioned at all this year.

  6. CyrusTheVirus
    August 3rd, 2010 at 20:58 | #6

    Also, I have disagreed with not trading Wright at last year’s deadline, but if we did not land LBJ, he is another player who we could have given a massive raise to in order to build a different core above the salary cap.

    Joel Anthony was given the biggest contract the Heat could offer and it was brilliant, because he becomes a tradable asset next season when he is no longer a base compensation player with 4 years and about $16 million left on his deal, he will be someone that could help Miami match salaries if a better player is available. If not, he still proved his worth to the team last year when the Heat had a great record when he was a starter. He is still making much less than league average and he is much better than he looks really.

    You will be happy Riley locked him up for 5 years.

  7. Ed
    August 3rd, 2010 at 21:03 | #7

    I’ve been trying to figure this out myself. Why are they signing guys like Beverly and Randolph when options such as Jason Williams and Roger Mason were available for minimum contracts? Why mortgage the future and give up like all our draft picks for the next 4 or so years(even if we may not need them) when Lebron and Bosh were willing to sign outright? I would have been very upset if it hadn’t been for the Eddie House signing. I like that Miami retained Joel(confused by the price though), and Jones, but there were more suitable options than Arroyo available, and the rest of the signings made little sense to me. I think its a loyalty thing maybe but many questionable moves have been made after such a good start to the off-season.

  8. August 3rd, 2010 at 21:13 | #8

    @CyrusTheVirus
    Actually, Wright could not have been utilized in the manner you suggest. Wright’s cap hold this offseason was $5,774,330. Therefore, unless the Heat signed him to a contract with a 2010-11 salary starting at above this amount, the team could not have exceeded the cap to re-sign him (as they did with Joel Anthony). Golden State ultimately signed Wright to a three-year deal starting at $3,540,000.

    The Heat could have just as easily offered Wright a long-term contract if they traded him at the deadline as if they retained him. The only difference would have been the maximum raises (8.0% vs. 10.5%) and the maximum length of the contract (5 years vs. 6).

  9. August 3rd, 2010 at 21:25 | #9

    @CyrusTheVirus
    Just to clarify your statement, Joel was actually not given the largest contract the Heat could have offered. He could have been offered up to a six-year maximum contract paying him $103 million.

    Your point, however, is certainly valid. Joel may very well be used in trade. In my opinion, however, it is very unlikely. Joel is barely an NBA-caliber player. Yet he is making 4x the minimum salary. That’s a lot. But even more egregious is the length of the contract. Even if he does ultimately improve to such an extent that his play merits his annual salary, a five-year contract to a player who, at its end, will be 32 years old is highly questionable. I imagine teams will be very reluctant to trade for Anthony, given his limited and very specialized skill-set, and if they do, it is even harder to imagine his contract will be seen as an asset.

    Please do not misunderstand my meaning. I was, and still am, a fan of the Joel signing. I question, however, the length (and, to a smaller extent, the value) of the contract.

  10. August 3rd, 2010 at 21:27 | #10

    i think this kid has a lot to prove. forgotten high school player. just like everyone forgot about brandon jennings in italy. give him a few yrs he will be a role player who is verstaile enough to guard rondo, i think riles is onto something here.

  11. August 3rd, 2010 at 21:40 | #11

    @Ed
    You ask a couple of questions; I will attempt to give both a go.

    As far as Beverley is concerned, perhaps the Heat was more committed to developing for the future than adding a veteran role player that is unlikely to play significant minutes at the end of the rotation. As others have eloquently suggested, Beverley is a supreme talent with lots of potential.

    As far as surrendering draft picks in the Lebron and Bosh sign-and-trades when they were each willing to sign outright, the sign-and-trades were necessary to create the added cap room to secure the services of Mike Miller and Udonis Haslem. Here’s a look at how Riley was able to structure it.

    I certainly agree with your concern over the team’s future draft picks. In this post, I offer a look into how things might have been handled in such a manner to provide the team with more draft picks and a nearly identical roster. Of course, this is perhaps being a bit nit-picky, with a general manager who has just produced a potential dynasty.

  12. CyrusTheVirus
    August 4th, 2010 at 00:31 | #12

    That’s right Dorell’s cap hold was too big. I thought about that too when they could have traded him for a future 1st. It seemed like a no brainer. However, I figured, they wanted to keep their options open. The extra money that Miami could have given him due to the higher raises might have helped keep him for a lower starting salary if we retained his rights.

    Either way, you are right that Riley is not in total penny pinching mode with Micky as the owner. The team wants to make smart basketball decisions with an eye on winning first. The team was on its way to a #5 seed and they decided not to rid themselves of a rotation player that could have been a part of the future core (while he could have technically come back to Miami, you typically will not give a hometown discount to a team that just traded you).

    Thanks for the clarification on Joel… I think it was Chris that was saying we should give him a bigger contract for shorter years (is 2 the minimum?) so that he would be a valuable trade piece. I honestly believe the team likes what he brings to the table and that he will live up to every penny he is scheduled to earn… most centers are overpaid, Joel is still on the lower end of the spectrum.

    Some people compare this signing to Anthony Carter, which I guess could be fair… Carter did have a long career in this league, but he was severely limited in some ways… the difference is that Joel is on a team that is loaded on offensive talent and gets to play the Ben Wallace role – with less rebounds of course.

  13. CyrusTheVirus
    August 4th, 2010 at 00:44 | #13

    Really hate to make the comparison, because I erroneously compared Chalmers to Rondo once upon a time and Rondo has reached a level of excellence that should not be taken lightly.

    However, Beverley is the guy who most resembles the Rondo type on the Heat roster. I remember Rondo as this great all around player, pesky defender with long arms who had some swagger to him, but lacked the offensive refinement. He couldn’t shoot (he’s finally coming around there), but he kept gaining confidence and with a Big 3 at his side, he flourished.

    Again, not saying I expect Bev to become Rondo, but I think he is lacking confidence right now and perhaps that is the biggest reason to give him two years guaranteed salary. It lets him know that Riley believes in him and he does not have to play scared… just a theory. He is part of the family now and Riley/Arison figure $1.2M is nothing for a guy that has first round talent and second round/undrafted work ethic.

  14. August 4th, 2010 at 00:58 | #14

    @CyrusTheVirus
    My apologies if you somehow felt my post suggested that I do not think highly of Beverley; in fact, it is very much the opposite.

    My only question is regards to Beverley is the timing of it, and more-so the guarantee. A second round draft pick who tried and failed to make the team’s opening day roster the season prior should not require a multi-season minimum salary contract. It was a small but horrible decision by Riley. If Beverley does not making the opening day roster this time around, that money (and any associated tax consequences for next season) will have been completely wasted. And we will have lost his draft rights.

  15. Pimpin lincoln
    August 4th, 2010 at 04:36 | #15

    I think the reason wright was kept was for trade reasons. Again how could you argue with pat doing practically the impossible. I didn’t know we are out of first rounders till the 17th. How dors that break down? Two to cleveland and two to Toronto?

    • August 4th, 2010 at 11:04 | #16

      @Pimpin lincoln

      Dorell as a trade asset was an exceedingly unlikely scenario. You can’t trade a player after the trade deadline in the final year of his contract. The only way Dorell could have been used in trade was via sign-and-trade this offseason. In the meantime, he would have been taking up more than $7 million in valuable cap space as a cap hold.

      Here’s a look at how the team’s draft picks break down. Keep in mind that teams are restricted from trading away future first round draft picks in consecutive years.

  16. CyrusTheVirus
    August 4th, 2010 at 22:32 | #17

    Gotcha. Yeah, we may lose the rights to Beverley… I wouldn’t worry too much. I actually think we have gained his loyalty and we could actually release him and re-sign him midseason after he gets some experience in the D-League… we’ll see :)

  17. CyrusTheVirus
    August 5th, 2010 at 00:58 | #18

    I re-read your article and it explains your perspective perfectly.

    I don’t think Arison has any issue, whatsoever with Riley giving these amounts of money to players that may not make the squad, because the team is committed to camp competition and this level of marginal talent would go elsewhere if not for the guarantees.

    Beverley likely had a solid offer on the table on a multi-year deal from Europe. Did Riley want to risk the player heading to Europe for the bulk of his career? He has already played two years there and maybe he keeps extending his contract, thereby forcing the Heat to buy him out of his European contract down the road anyway.

    That $600K keeps him in the states and away from those pesky European contracts… the guaranteed money says that Riley thinks he could realistically be a part of the future core. I don’t think Riley has to justify the $1.5M with Micky.

    I agree Hasbrouck has the look and feel of a player who is more NBA ready than Bev, but they have different roles. Beverley is more ready to come off the bench and disrupt another team’s playmaker. Hasbrouck is solid all-around, but I do not see him getting into an opponents head and creating turnovers (as I saw Bev do to Ricky Rubio – who I think will be a star in this league).

    If you remember Bruce Bowen in his Heat years, he hardly seemed to be as NBA ready as many other options available… but his D was exceptional. Likewise, Joel Anthony still does not seem to be NBA ready, but the Heat was 13-3 in his starts last season.

    I’m happy they gave him a guarantee because as of right now he is the guy I would bring off the bench to slow down an opposing point guard… glad to keep him in the states and give him his shot to grow alongside the big 3.

  18. CyrusTheVirus
    August 5th, 2010 at 11:49 | #19

    Great blog Albert. Thank you for the Heat analysis and discussion.

  19. vincent
    August 5th, 2010 at 12:53 | #20

    Thks Albert ,good post CTV…

    I hope you stick around..

  20. August 5th, 2010 at 20:51 | #21

    everybody advertise this guy albert… give him a good reference. he deserves to do this for a living

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