Miami Heat Trade Joel Anthony in Three-Team Deal

The Miami Heat have traded center Joel Anthony to the Boston Celtics, as part of a three-team deal, in exchange for guard Toney Douglas from the Golden State Warriors.

The Heat also sent the Celtics $1 million in cash and a pair of draft picks to complete the deal: A 2016 second-round pick and a lottery protected first-round pick originally acquired from the Philadelphia 76ers that will become a pair of second-rounders in 2015 and 2016 if the Sixers fail to make the playoffs this season and next.

The trade isn’t about Joel Anthony and isn’t about Toney Douglas.

It’s also not about Greg Oden, who appears to be on the verge of moving into the Heat’s rotation, or about Andrew Bynum, and how money freed up from today’s trade might make such a signing more financially palatable.

The trade is, more than anything else, a continuing recognition that the harshest elements of the new Collective Bargaining Agreement will take its toll on how the Heat do business.

This past summer, it was the amnesty release of Mike Miller. Then it was declining to utilize the mid-level exception. Now it’s moving Anthony’s untenable contract off the books, a move, when accounting for his 2014-15 salary will save the Heat at least $20 million. 

Anthony is being paid $3.8 million this season, which, when including the tax, would have cost the Heat $11.8 million. By virtue of the trade, the Heat will now only be responsible for the $1.8 million in salary they’ve already paid him and, in so doing, will save the Heat the rest of its $2.0 million in salary commitments to Anthony and the full $8.0 million in tax obligations associated with the contract, less the million dollar cash payout.

Douglas, the Heat’s new addition, has a $1.6 million expiring contract. The Heat will only be responsible for the $856,471 in salary not already paid by the Warriors, as well as $2.8 million in tax obligations.

The net effect – $5.35 million in total salary and luxury tax savings for this season.

But the savings for next season are even more substantial.

Depending on the Heat’s salary situation, Anthony’s $3.8 million player option for next season, which he is sure to exercise, figured to cost the Heat between $14.3 million and $17.1 million – $3.8 million in salary, between $6.7 million (based on an assumed $1.75 per dollar, for teams between $5 and $10 million above the tax threshold) and $9.5 million (based on an assumed $2.50 per dollar, for teams between $10 and $15 million above the tax threshold) in taxes, and $3.8 million in repeater taxes. That was a financial disaster that Heat president Pat Riley and owner Micky Arison were desperate to get rid of.

Now, beyond the Heat’s Big Three – with LeBron James, Dwyane Wade and Chris Bosh all able to opt out of their contracts by July 1 – the only salaries on the books for next season belong to Norris Cole (at $2.0 million), and the player options of Udonis Haslem (at $4.6 million) and Chris Andersen (at $1.5 million). That’s a total of $69.5 million.

With the salary cap for next season currently estimated at $62.9 million, the savings produced by the Anthony trade opens no cap space.

The trade does, however, create an additional exception for the Heat. Miami has received a $2.2 million trade exception, equal to the difference in the salaries of Anthony and Douglas, as a result of the deal. The exception is good for one calendar year, and can be utilized to acquire one or more players with cumulative salaries of $2.3 million (i.e., the amount of the exception, plus $100K) in trade without having to send back salaries to match. It cannot be combined with other exceptions or players in order to acquire a more expensive player.

While it remains unclear as to whether or not the Heat will actually utilize the trade exception produced by the trade, the trade does increase the likelihood of the Heat utilizing its mid-level exception next summer. In essence, the money saved on Anthony may well be redeployed to a free agent of the team’s choosing, utilizing the mid-level exception that financial concerns would almost surely have dictated they bypass much like they have thus far this season.

The Heat also still has its upcoming 2014 first round pick in its possession, a pick which, by rule, cannot be traded, as well as the promise of talented swingman James Ennis, who is currently tearing it up in the National Basketball League in Australia, a vastly inferior league to that of the N.B.A., where he is the leading candidate for league MVP.

The Heat had been poking around for another perimeter player to add some depth to the backcourt. But with nothing of substance to offer for a player of that caliber, they got nowhere.

Douglas is the type of player who theoretically fits Miami’s system on both ends. He’s quick, and he’s a ball hawk who can jump passing lanes, pressure ball handlers, and generally run around a lot in ways the Heat’s defensive principles require. He has been a league-average 3-point shooter who could do better given open spot-up looks, and the Heat would never ask him to work as anything like a ball-dominant primary backup point guard – a role in which he failed, horribly, this season in Golden State.

But Miami already has two players who do all that stuff better in Cole and Mario Chalmers, and those two have years of familiarity with Miami’s unique way of life. Douglas therefore may not be long for this team, though he’s intriguing enough to make the Heat think about which player they’d miss least – Douglas or Roger Mason Jr., whose contract, somewhat surprisingly, was fully guaranteed last week – in the event they cut someone to open a roster spot.

The Heat could also look to re-trade Douglas to free up a spot. While he is owed less than $1 million for the remainder of the season, he will wind up costing the Heat $3.7 million in all because of their position against the tax. As an example of how he could be used in trade, the Heat could offer to pay the rest of Douglas’ salary, plus an extra $1 million in profit, to any team willing to take on his expiring contract. The Heat would still save $1.8 million in the deal.

The big question now, literally and figuratively, is whether the Heat will ship out Douglas or Mason Jr. to make way for Andrew Bynum, who was released by the Chicago Bulls last week. Bynum has a bad reputation in the N.B.A. right now, but like the team did with Michael Beasley and to a degree, Chris Andersen, Miami has a history of turning projects into productive players.

Bynum would seemingly be a nice addition for the Heat, but he is reportedly seeking more money than just a prorated minimum salary contract, which still remains all the Heat is likely to offer.

A prorated minimum salary contract would net Bynum $677,670 as of today, and cost the Heat a total of $1.3 million when including the tax.

A center rotation that could potentially have Oden, Bynum and Andersen all splitting minutes could, if leveraged properly, represent a formidable challenge in the Heat’s quest for a third consecutive N.B.A. championship, at a position which was in past seasons considered to be the team’s biggest area of need. 

Regardless of what the future will bring, the trade is official and the savings are both real and substantial.

Removing the tax component and viewing the trade on its own merits, when considering that neither of the players involved are likely to meaningfully contribute to their respective teams, the Heat essentially sold the Philly pick and its own very likely low 2016 second round pick for a net $4.0 million (i.e., the $5.0 million net difference in future salary obligations, less the million dollar cash payout) and $3.8 million of future cap space.

The quality of the trade will therefore hinge on what the Philly pick ultimately becomes. Would you sell a 2015 mid-first round pick and a low 2016 second round pick for $4.0 million in cash and $3.8 million in cap savings? Would you sell high second round picks in both 2015 and 2016 and a low second round pick in 2016 for $4.0 million in cash and $3.8 million in cap savings?

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