Miami Heat’s Great Hope Is … Josh McRoberts and Danny Granger?

The Big Three era Miami Heat were always the ideal test case for a new collective bargaining agreement designed primarily as a cash grab for owners, but also with a secondary goal of engineering greater competitive balance around the league.

The new CBA went about achieving its secondary goal in large part by implementing a far more punitive luxury tax(1). Spend a lot on players, and you’re going to face a crippling “incremental” tax penalty that gets more severe as you add payroll. Keep spending year after year and eventually you’ll tack onto it the dreaded “repeater” tax.

It’s working. Just five NBA teams paid the tax this past year; that’s tied for the fewest ever in a tax-triggered season. Competitive balance is more prevalent today than at any point in recent history. Team salaries around the league have leveled out dramatically. The spending habits on the high end are down significantly, with particular emphasis for those in smaller markets which can’t support the weight of such enormous tax bills.

No one team has felt the burden of the new tax structure more than the Miami Heat. Some would say that was always the plan – a plan brought about by the demands of envious fellow owners in the wake of the Big Three formation. The Heat have had to make several painful and wildly unpopular cost-cutting (e.g., waiving Mike Miller via the amnesty provision) and cost-controlling (e.g., not utilizing the mid-level exception this past season) moves since the lockout, as a direct consequence to the harsh realities of the new CBA.

It wasn’t all that difficult to forecast. People have been predicting the inevitable demise of the Heat, as presently constructed, for three solid years. Whether owner Micky Arison could afford to keep his team together was never in question; he’s a six-billion-dollar man. But the limitations of his market – the Heat’s designated market area is good for just 17th overall, among the league’s 30 teams; smaller than, for example, that of the Minnesota Timberwolves – have made it virtually impossible to maintain some semblance of profitability while spending deep into the tax (at least in the near-term). 

The penny-pinching approach has infuriated Heat fans. But despite Heat president Pat Riley’s laughable attempt last month to convince us all that such actions had more to do with maximizing the team’s future flexibility than saving Arison some cash, there was a tinge of truth to his message. There are basketball reasons for such stinginess. As long as there are salary cap restrictions limiting what and how teams can spend, a star player’s ability to negotiate for as much money as he can get will conflict with his team’s ability to add quality players around him.

Take what Miami has done thus far in free agency.

Heat officials initially explored their options for creating sufficient financial flexibility to make a run at Carmelo Anthony this summer. The mere concept, however, would have required the Heat’s star trio to take substantial salary reductions in order to give Miami the ability to offer Anthony a palatable first-year salary. It just wasn’t financially feasible (at least not without supremely creative maneuvering).

So the Heat quickly moved on to its Plan B scenario: Create enough cap space to make a run at a $10 million player – Kyle Lowry, Marcin Gortat or someone else. It’s not entirely clear how real that dream ever was either.

LeBron James wants the max. The Heat have to make Udonis Haslem whole. Shabazz Napier is locked into his rookie scale payout. If the Heat wanted to create $10 million of cap space, Chris Bosh and Dwyane Wade would have needed to earn something like $27 million combined for next season(2).

Bosh’s initial proposal to the Heat was reportedly in the five years for $85 million neighborhood, which would start at roughly $15 million. Wade’s initial proposal was reportedly in the $55 million range over four years, which would imply a starting point of roughly $13 million. It seemed doable.

But Lowry and Gortat are gone – gone at prices the Heat never could have afforded anyway. The Heat never even got to the point of making either an offer. The Heat organization seemed perplexed about what they even could offer, given that very little is clear regarding the intentions of James. James has apparently given no indication he will be staying in Miami.

The baffling communication breakdown between the Heat and the Big Three has apparently left the team lost in confusion. So, after half-hearted conversations with Pau Gasol and Anthony Morrow, Riley moved on to Plan C: He went out and landed commitments from the best players he could grab with as much as money as he could promise no matter what the Big Three decide.

The Heat agreed to terms with two veterans on Monday, Danny Granger and Josh McRoberts. McRoberts’ deal will be for four years and $22.7 million. Granger’s deal will be for two years and $4.2 million.

Now Riley must hope that these two moves are enough to convince the Big Three to remain in Miami. If they do, the Heat will operate as an over-the-cap team. McRoberts’ contract will slide into the Heat’s full midlevel exception. Granger’s contract will slide into the team’s biannual exception.

It’s not all that difficult to understand the logic behind the signings. These are two players who will help fill the role played by the departing Shane Battier and Rashard Lewis, as nominal power forwards who can space the floor on offense and bang with opposing bigs on defense. But Josh McRoberts and Danny Granger? Really? That’s who’s supposed to convince LeBron to stay in Miami?

McRoberts is not a bad player, but he’s not exactly a good player either. He is coming off a career-best 36 percent from 3-point range, which the Heat are hoping wasn’t an anomaly because his prior career average from beyond the arc is rather awful (31 percent). It stands to reason that with the type of spacing the Heat generate, he could actually better it. But if the Heat are expecting a Ryan Andersen type, this isn’t him. He is a stretch four, but primarily, he’s a passer. He tends to hang out along the perimeter and excels at keeping the ball moving with creative and sometimes spectacular passes, though he can put the ball on the floor and finish lobs at the rim if the situation calls for it. But he shoots only as a last resort, which allows defenders to sag away from him. And, despite his 6-foot-10 frame, he’s not a particularly good defender or rebounder. Overall, his highlight value tends to exceed his actual production. Because he doesn’t score many points, grab many rebounds, dish out many assists, block many shots, or stuff the stat sheet in any other particular category, his best descriptors are subjective: high basketball IQ, great teammate, etc. He’s a decent get, at an interesting price. While, at the midlevel, the Heat are surely paying a bit more than his perceived fair value over the next couple of years, by the time the summer of 2016 rolls around, his contract could become reasonably priced. This, along with the $5.8 million of 2016 cap space his contract would eat up, could actually make him a possible future trade candidate.

Granger hasn’t been relevant on the court in years. Heat fans expecting him to be the All-Star he was a few years ago will get a rude awakening. His quickness is gone, he struggles to penetrate, and he can’t finish at the rim. He’s a decent defender though, and is capable of playing small-ball power forward at times. It’s possible that he can see a good amount of floor time for the Heat at both forward spots this season, hit some open 3s, and spend stretches defending some star wings to spare LeBron and Wade the physical exertion. It’s also possible that he hardly ever sees the floor, becoming the latest failed reclamation project for the Heat of a big name with battered knees. The latter scenario is far more likely, making the signing at the bi-annual a shocking and highly questionable utilization of what, in the best of circumstances, would become the Heat’s second most valuable asset.

The Big Three era Miami Heat is not a team without its issues. It has flaws. Big ones. It has positional needs at each of the guard spots and at center. It has no ability to put forth any kind of resistance at the rim. It has no ability to clean up the glass. None of that would be addressed with these signings. In fact, it could be argued that these two signings address the only two positions that didn’t need to be addressed.

But the signings look even more questionable when you consider the ramifications.

The latest CBA contains a new feature: the implementation of an “apron” that is slotted $4 million above the tax line, which is projected at about $77 million for next season. That would put the apron at $81 million. Teams are prohibited from exceeding the apron, even by a single penny, if they engage in certain transactions. On that list: using the full midlevel, which the Heat have apparently just done with McRoberts, and using the bi-annual exception, which the Heat have apparently just done with Granger.

If that proves to be the case, the Heat will hard-capped at the apron for the rest of the season. Their payroll would not be able to exceed $81 million. Not for minimum salary players. Not in the event of injury. Not to complete an otherwise advantageous trade scenario. Not for anything. Under any circumstances. Whatsoever.

So let’s do some quick math: James, Wade and Bosh were slated to make $61.3 million next season before they opted out. Add McRoberts ($5.3 million), Granger ($2.1 million), Cole ($2.0 million) and Napier ($1.2 million). Factor in Haslem; he opted out of $4.6 million. If you assume he’d have earned the minimum the following year, that’d come to $6 million over the next two years. Let’s assume he’s made whole by replacing it with a two-year deal at $3 million per. So tack on another $3 million. And since the Heat is required to employ between 13 and 15 players overall, tack on six more at the minimum. You’re already at $81 million. And that’s before even thinking about what it might cost to bring back Mario Chalmers, Ray Allen and Chris Andersen – teammates who actually helped last season, and may require more than the minimum to retain.

Putting the apron in play conveniently hard-caps the Heat at just above the tax line, reducing Micky Arison’s exposure to huge tax payments. Miami can only spend so much now. The total will be less than the Heat spent last year, a year during which the team reportedly turned a small basketball profit. Was saving Arison money the motivating factor?

The Heat could have chosen to take a less frugal approach. If Miami wanted to go the over-the-cap route, they could have elected to utilize the smaller midlevel exception instead – the one apparently not good enough to snag McRoberts – like they did with Allen and Battier in years past.

That smaller midlevel exception doesn’t trigger the apron. The Heat could have given James, Wade and Bosh each as much as he wanted, given raises to each of their other free agents they wished to retain (via Bird rights), and signed as many players at the minimum salary as they desired, all in addition to utilizing the smaller midlevel. They would also have had access to a trade exception worth $2.2 million that they acquired in trading Joel Anthony to the Celtics during the 2013-14 season for potential trade scenarios, which in a hard cap scenario would almost certainly be wasted.

All of this would have been available to the Heat had they swapped out the larger midlevel for the smaller one. The per year difference: $2 million.

Sacrificing the apron-triggering biannual exception wouldn’t have been a big loss either. The difference between the $2.1 million that Granger now gets for next season and the $1.3 million he would have received had he accepted a minimum salary is a mere $760,191(3). Granger has already raked in $67 million during his nine-year NBA career.

Granger could prove to be worth it. His contract could prove to be a bargain if he performs. But it’s not a question of value. It’s a question of math. Basic math. The Heat lost $1.3 million of exceedingly valuable room below the hard cap in order to give Granger an extra $760K. That’s not only stupid, it’s just about indefensible.

Riley now has to deliver the following message to his trio of stars if he wants them to stay: “You may have to take pay cuts, and we may need to get rid of more of your friends, all because we gave Josh McRoberts an extra $2 million per year and Danny Granger $760K more than the minimum.”

After getting blown out in the NBA Finals by the San Antonio Spurs in his bid for a three-peat three weeks ago, James called for the Heat to upgrade “at every position” before next season. Granger plays small forward (James’ position) and McRoberts plays power forward (Bosh’s position). Rather than fill positions of greatest need, the Heat created redundancies at the only two positions they didn’t. That’s supposed to convince James to stay?

Many have speculated that James is already highly dissatisfied with the Heat organization. It isn’t all that difficult to imagine that James strongly dislikes Erik Spoelstra as head coach, that he despises Riley’s reign of tyranny as president, and that he is furious with Arison as owner for putting savings over friendships and titles in terminating the contract of Mike Miller via the amnesty provision. Add to all of that an aging roster of declining talent that surrounds him and it’s not all that difficult to imagine he’d be tempted to peak at what’s out there.

The Heat have long since been considered the front-runners to retain James anyway, largely because there were no realistic alternatives. But things changed dramatically on May 20th. That’s the day the Cleveland Cavaliers beat nearly impossible odds (1.7 percent) to land the first overall pick in the 2014 draft, their third such pick in the last four years. They used the pick to select Kansas star Andrew Wiggins, who is now being linked to possible trade scenarios with the Wolves involving Kevin Love. A Kyrie Irving, LeBron James and Kevin Love trio could produce the most feared offense in the NBA, one in which James becomes the aging veteran to be supported through the years that follow by the youthful ascent of those around him. If James does leave Miami, it will be to return back to Cleveland.

It now appears that the Heat — and Wade, the face of the franchise — could be utterly left in the lurch.

If James leaves, Chris Bosh could follow suit and sign with the Houston Rockets. Bosh loves Miami. Though he hopes to remain with the Heat along with James, he has reportedly secured a maximum contract backup offer of four years and $88 million from the Rockets.

That would set off a convoluted chain of events whereby Riley and the Heat – having whiffed on James – reverse course completely and pitch Bosh on the idea of putting money (and lifestyle) over rings. Riley would surely offer Bosh something the Rockets can’t: a five-year maximum contract totaling $119 million. If Bosh were to accept, the team’s two highest-paid players (excluding Wade) would both be power forwards, and the Heat will be forced to pick up the pieces from there. If Bosh were to decline, the new face of your franchise would be Joshua Scott McRoberts.

Oh, and here’s one more thing: You can’t reneg on promises in the NBA. It’s bad business. If James leaves, the Heat would still be stuck with McRoberts and Granger. But they’d no longer be slotted into the Heat’s exceptions. Instead, they’d take up valuable cap space, $7.4 million of it.  It would appear that the Heat never even considered that.

Hopefully, they won’t ever have to.

Notes:
(1) The league also imposed a far more dramatic revenue-sharing plan wherein high revenue teams can be required to forgo as much as 30 percent of their profits in excess of $5 million.
(2) This analysis assumes a Norris Cole trade.
(3) Signing Danny Granger to a contract at the biannual exception rather than the minimum salary exception will increase his payout by a mere $760K. Even more damaging, however, is that, in accordance with cap rules, it will reduce the Heat’s available room below the apron – money that could be spent to retain the Heat’s own players – by as much as $1.2 million.