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Birdman Will Keep Flying with the Miami Heat

The Bird is back!

Chris Anderson will receive a one-year minimum salary deal worth approximately $1.4 million from the Miami Heat, with a player option on a second year.

When the Heat originally signed Andersen last January, they were hoping for an extra body off the bench who could bring energy, rebounding and defense. The veteran forward/center gave them much more than that.

Andersen’s “Birdman” infectiousness helped energize the Heat during their franchise-record 27-game winning streak and throughout the playoffs. He has become known in South Florida for his shocking efficiency, wildly athletic dunks and reckless intensity. What he lacks in unpainted skin he more than makes up for with a floor-burn-inducing style of play and an arsenal of eccentricities that have won over fans across the region. The decibel level at home games soared when he checked his human-wrecking-ball act into the game.

Fans spiked their hair mohawk-style, fake-tattooed their bodies. The level of detail – from the neck tattoo to the earlobe stars to the headband to the sleevework – was, at times, jaw-dropping. They imitated his signature Birdman hand gesture by interlocking their thumbs and flapping their fingers whenever Andersen threw down one of his high-flying dunks. He averaged just five points and four rebounds on the year, in less than 15 minutes of playing time, but seeing that toothy grin after he crashed into the stands trying to save a ball he had no shot at saving was always worth the price of admission.

Fans showed their love. The Birdman returned the favor, accepting a reduced salary while he certainly could have commanded better deals elsewhere. He simply couldn’t bear to leave such a good situation in Miami.

“It feels like as soon as I got into the city, I had nothing but big support for me,” he said. “Everywhere I was going, they were rooting me on. To be able to come in here midseason and collaborate with these guys and play for such an extraordinary, talented team and play with some of the best all-time players, it’s amazing.” 

Contract Details

Andersen is already owed $4,818,000 from the Denver Nuggets for next season, the final season of a contract which was terminated utilizing the amnesty provision in July 2012. That’s already a nice chunk of guaranteed money.

He will double-up when he officially signs his new contract with the Heat. But not entirely. The Nuggets will be allowed to reduce the amount of money it still owes him by a commensurate amount. This is called the right of set-off.

It is not a straight dollar-for-dollar offset. When a player is claimed off amnesty waivers, it is a straight dollar-for-dollar offset. But Andersen wasn’t. He cleared waivers, became an unrestricted free agent, and was subsequently signed by the Heat. Therefore, a different set of rules applies. The amount Denver would get to set off is equal to one-half the difference between Andersen’s new salary and the $788,872 minimum salary for a one-year veteran. So, to figure Andersen’s combined total compensation, the formulas would be as follows:

1. Set-off Amount = (New Salary – $788,872) / 2
2. Total Compensation = Salary from Denver – Set-off Amount + New Salary

There were only three types of contracts the Heat could offer Andersen: (i) the $1,399,507 minimum, (ii) up to 120% of the minimum, or $1,679,408, using his Non-Bird rights, or (iii) up to $3,183,000 using the Taxpayer Mid-Level exception.

For financial reasons, they chose the minimum. The math works out like this:

Chris Andersen 2013-14 Compensation Breakdown
Set-off Amount: ($1,399,507 – $788,872) / 2 = $305,318
Denver Pays: $4,818,000 – $305,318 = $4,512,683
Miami Pays: $1,399,507
Total Compensation = $5,912,190
Andersen will make $1,094,190 more than his original contract with Denver

It was a wise decision. The difference between the agreed-to amount (the minimum) and the most the Heat could have offered (the MLE) was only another $891,747 to the Birdman for next season. For the Heat, when including the tax, it was many millions more.

The addition of the second year player option, however, was very costly – much more costly than offering a one-year minimum salary contract this summer, followed by a one-year contract next summer.  The reason requires an understanding of how minimum salary contracts work.

When a player has been in the NBA for three or more seasons, and is playing under a one-year minimum salary contract, the league reimburses the team for part of his salary — any amount above the minimum salary level for a two-year veteran. In 2013-14, the minimum salary for a two-year veteran is $884,293, so for an eleven-year veteran like Andersen, with a minimum salary of $1,399,507, the league would reimburse the team $515,214. Only the two-year minimum salary is included in the computation of team salary and luxury tax, 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 than younger veterans.

Therefore, instead of paying just $884,293 in salary next season — and being taxed on that amount — the Heat will pay and be taxed on the full $1,399,507.

While that ~$500K per season difference probably doesn’t sound like much, it is significantly more than you might realize.

At the Heat’s current tax level, the incremental difference will cost about $2.2 million next season. Should Andersen exercise his player option, assuming a similar tax level, it would add another $2.9 million the following year.

That’s right! Signing Andersen to a two-year minimum salary deal will cost approximately $5.1 million more than signing him to two consecutive one-year minimum salary deals. Even though Andersen himself would make equivalent money. He wouldn’t lose a cent.

Was Andersen really that committed to formalizing the second year offer?

The Heat could have instead elected to sign Andersen to a one-year minimum salary contract, and then made a marginally illegal, undocumented promise of a minimum salary contract the following season if Andersen should so desire (marginally illegal because future contract offers are not allowed; however, without documentation, it is nearly impossible to know they exist; they are speculated to exist in large quantity across the NBA). The word of no man around the league means more than that of Pat Riley.

Were the Heat really wise in taking on the extra $2.1 million this year, and a projected $2.9 million extra in a season in which team salary projects to be more than $120 million, in order to give it to him?

Whatever you believe, the contract is now official. Andersen will be receiving $4,512,683 from the Nuggets and another $1,399,507 from the Heat for the current season.

The Sacrifice

Andersen now becomes the latest of a slew of players who have agreed to take less to play for the Heat. His concession, however, is of particular note.

He has never really had that break-the-bank contract on which to fall back. He’s made just over $24 million thus far into his NBA career. Including this season’s dual paychecks, that amount will rise to $30 million. But he was denied another $10 million when his 4-year, $14 million contract with the New Orleans Hornets was voided in January 2006 for violating the league’s substance abuse policy. He would spend more than two years away from the game before being reinstated in early March 2008.

“When I look back at everything that happened, I don’t regret it,” he said. “This whole thing saved my life. I needed this to happen. I don’t know where I’d be today if I didn’t change my ways.”

He certainly knows where he is now – in a city that loves him, playing with teammates who have embraced him.

***

Outside of LeBron James, Andersen was the Heat’s most important player on offense during various stretches of the regular and postseason. Andersen was the beneficiary of James’ creative passing, scoring mostly at the rim, mostly on dunks, adding vertical floor spacing to the Heat’s offense, drawing double and triple teams away from the perimeter, and forcing opposing defenses to pay the ultimate price for their help defense. He was particularly spectacular in the Heat’s Eastern Conference finals series against the Indiana Pacers, making 15 consecutive shots. For the postseason as a whole, he shot .807 from the floor, bettering his already astonishing regular season conversion rate of .577.

Outside of James, he was also the Heat’s most important player on defense at times. James has praised Birdman profusely in the past, comparing him to his former Cleveland Cavaliers teammate Anderson Varejao for his hustle and energy. He blocks shots, he’s versatile enough to check both frontcourt positions, and he rebounds the basketball.

At 35 years of age as of two days ago, the undrafted big man from humble beginnings in the nowhere town of Iola (Texas), who lived out a year of his youth in a depression-era barn amid hay and horseflies and across from stalls and chicken coops, who sacrificed a scholarship to the University of Houston because he couldn’t make the grades he needed, who never knew you had to officially apply for the draft rather than just publicly declare it, who started his pro career with the Jiangsu Nangang Dragons of the Chinese Basketball Association before being the first-ever D-League call-up, who more or less threw away the first five years of his NBA career, has come full circle. Despite it all, he seems to have plenty in the tank to contribute to yet another deep playoff run.

“Let’s try to get a three-peat next year,” said Andersen.

The Heat will now look to solidify its frontcourt with the possible additions of Greg Oden and Samuel Dalembert.

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  1. berkeley223
    July 10th, 2013 at 14:17 | #1

    from reports it seems like the Heat chose the “stupid” option–has that been confirmed?

  2. July 10th, 2013 at 14:24 | #2

    @berkeley223
    The contract has reportedly been agreed to. Therefore, confirmation is at this point a forgone conclusion.

  3. berkeley223
    July 10th, 2013 at 14:29 | #3

    and the contract that was agreed to was the “stupid” option you mention above, as opposed to the min salary one?

  4. July 10th, 2013 at 14:36 | #4

    @berkeley223
    Yes. That is, it’s “stupid” if you agree with me.

    The contract that was agreed to will cost the Heat $3.4 million extra, but will only give Andersen an extra $140k.

    What do you think? A good decision?

  5. berkeley223
    July 10th, 2013 at 14:50 | #5

    I don’t think they really had much choice. Bird is already taking (much) less than he could get elsewhere, and while it’s “only” 140k, asking him to give up another 140k I think is asking too much (I somehow doubt Bird has banked all the cash he’s been paid in his career, and as you note he came from poverty). If the choice is asking Bird to give up 140k or Micky A to give up 3.4mm–Micky can better afford it.

  6. July 10th, 2013 at 15:01 | #6

    @berkeley223
    I must say that I disagree.

    I don’t imagine Andersen squandered much of his money because the majority came well after his more severe personal problems. Of his $30 million, $25 million has come after he was reinstated by the NBA.

    In addition, the Birdman image is a very marketable asset and yet he donates most of the proceeds derived from it to charity. This is a wonderful gesture from a wonderful person who is quite fond of charity work, but hardly paints the picture of someone who wouldn’t be willing to sacrifice a few extra bucks to make things work if he were explained the issue properly.

    It has been rumored that Birdman sacrificed more with at least one team to re-sign with the Heat. But it’s difficult to imagine it was much more – particularly when considering the set-off and state tax differences.

    In any case, I agree with you — asking him to sacrifice $140K is substantial. But he is already making $5.9 million this year. And the Heat could have paid him back for the gesture, in full, by utilizing his Early Bird rights next season if they were so inclined.

    There is no response to be made to an argument which is based on the fact that Arison can afford it. He can afford it. But just because somebody is wealthy does not mean his money should be treated irresponsibly.

    This post enumerates just one mistake. But it needs to be viewed in a broader context. All of the Heat’s little mistakes thus far this summer have cost Arison roughly $8 million.

    How much is $8 million? It’s equivalent to using the Mid-Level Exception vs. the minimum salary exception to sign player No. 15. So the question you need to be asking yourself is how you feel about these little issues when the alternative was to have [name of whichever MLE player you like] on your team.

    Please don’t misunderstand my meaning. I love – LOVE – Chris Andersen. A review of my post history would tell you that — I was pushing for his signing several months before it actually happened. But I am concerned equally with the strategic as with the financial. To produce a winning team in any sport, which is always the ultimate goal, you must balance both.

  7. berkeley223
    July 11th, 2013 at 13:28 | #7

    given how much the players have “sacrificed” in terms of giving up major dollars they could have gotten elsewhere, it seems a tough sell for the organization that they should take even less so that ownership can avoid spending a few million extra. Birdman is the “micro” version of this, and the luxury tax/amnesty issue the micro version.

    Seperately, do you think from a long term perspective, it makes sense to hang onto the amnesty this year, and then use it next year on bosh or even wade (assuming he is further diminished by injury) if needed to hang onto LeBron (e.g., I could see a situtation where LeBron agrees to stay if we bring in another big time FA and the only way to have the ability to do that is if we have the ability to get rid of bosh’s max salary via amnesty).

  8. July 11th, 2013 at 13:44 | #8

    @berkeley223
    Yes, the players have made sacrifices. But don’t forget the sacrifices ownership has made. The Thunder just gave away perhaps the best shooting guard in the game today because they weren’t willing to pay the tax. Arison has not just committed to paying the tax, but rather to paying massive amounts of it, and for multiple seasons. He has agreed to take on a payroll far exceeding $100 million.

    We, as fans, tend to picture owners as evildoers and players as victims. The reality for the Heat this year is that Andersen will be making $5.9 million while Arison loses far more than that.

    Everyone needs to make sacrifices in this new salary cap environment. It’s not like he’d be asking for millions of dollars. He’d be asking for a mere $140K. Which he could give back the very next season.

    I can guarantee you that Andersen’s agent initially asked for the Mid-Level exception and a negotiation ensued. That’s already a $1.5 million reduction. I am not sure why you would draw the line so heavily at another $0.1 million.

    Amnestying Bosh would not create any cap room with which to pursue a free agent next offseason. It would only reduce Arison’s tax exposure.

    The Heat is currently committed to $80 million from 8 players for next season. Amnestying Bosh would take them to $60 million. Factoring in roster charges, their team salary would be $62 million. The salary cap is currently projected at $62 million. Therefore, the most they’d have available is the full Mid-Level exception. Since Wade makes roughly the same amount as Bosh, the same would hold true for him.

    The only logic in saving the amnesty for future use is the tax savings in the event of a long-term injury of a player making $20+ million. So I ask you this: Is it better to lock in the up-to $50 million of savings today, or to keep it in the off chance that one of your big time players suffers a long-term injury during next season? Also bear in mind that if you amnesty him, you still need to pay him. If he’s long-term injured, his contract would be partially covered by insurance.

  9. berkeley223
    July 11th, 2013 at 14:34 | #9

    tough question. there is a real risk the LeBron bolts in 2014 (maybe 50-50) and if he does, then we’re back to a 2d tier club. If keeping the amnesty in our back pocket gives some flexibility to keep that from happening then I am in favor of it, at the expense of Micky’s tax bill this year (some savings could be gained by trading Miller and not amnesty-ing him, right?)? Then again it’s not my $$$!!

  10. July 11th, 2013 at 14:38 | #10

    @berkeley223
    I think you somehow missed my point. Keeping the amnesty DOES NOT give the Heat any flexibility.

    The Heat have presumably been trying desperately to trade Miller and Anthony for several weeks now. They’d gladly pay someone to take them. Give up draft picks. Etc. Nobody wants them because of their contracts.

  11. berkeley223
    July 11th, 2013 at 14:58 | #11

    I guess if the only difference using the amnesty makees this year or next makes affects Micky’s pocketbook and not our ability to add to the roster, then I am fine using it this year. But I’d rather use it on Joel than MM, who has a useful skill set. Joel is the most uncoordinated pro athlete I’ve ever seen.

  12. mswenson
    July 18th, 2013 at 05:31 | #13

    according to hoopsworld he did sign for 1.4 million with a 2nd year player option

    • July 18th, 2013 at 08:34 | #14

      @mswenson
      It’s ironic that you chose to comment when you did. You are correct. Eric Pincus at Hoopsworld just updated his numbers late last night and, having also confirmed them myself, I will do the same (as well as update this post).

  13. mswenson
    July 18th, 2013 at 05:47 | #15

    This is one other thing Ira Winderman made a mistake on as the cba doesn’t help sign and traded players get more money:

    Ira Winderman ‏@IraHeatBeat 5 Jul
    Why would Dwight meet w/ Lakers? Because sign-and-trade still possible. Heat did it with LeBron and Bosh. Dwight gets more $, Lakers picks.

    so if that is where the source came from that he is getting 1.7 , what are the chances he was off again?

  14. July 18th, 2013 at 08:47 | #16

    @mswenson
    Ira has made numerous mistakes over the course of the past several weeks. I have tried to respectfully help him out where I could but I sometimes find him less appreciative than most. In fact, when he sent the tweet you are referencing, I notified him of the issue but he insisted he was correct (which, as you know, he is not). For that reason, I only provide assistance to him infrequently.

    Most beat writers are not salary cap/CBA experts. His column, however, is excellent in my opinion, and I highly recommend it. I respect him, and his writing, very much.

  15. berkeley223
    July 22nd, 2013 at 20:36 | #17

    albert, do you correspond with Ira? I can imagine those would be interesting exchanges. I am a huge Ira fan, and you’re cap knowledge is pretty damned impressive

  16. July 22nd, 2013 at 20:44 | #18

    @berkeley223
    Not nearly as much as with other NBA journalists (and only through email). I have offered him cap-related insights and corrections at various times over the years but only vary rarely because he doesn’t seem as appreciative as most others.

    Ira is very good at reporting the news. He is not necessarily as good at predicting what will happen nor is he very good with the rules. My interests are completely the opposite. I have far more interesting, and exciting, exchanges with others. :)

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