Could the Miami Heat Sign Kevin Durant AND Retain Hassan Whiteside?

Note: This post was updated on 6/30/16 to reflect the updated salary cap figures, as detailed in this post, in light of reader requests.

“I believe the team that hasn’t been mentioned that much may be the dark horse in [the chase for impending free agent Kevin Durant this summer], which are the Miami Heat.

“Consider who the Heat are. You’re led by Pat Riley. You’ve got an exceptional young coach in Erik Spoelstra. You’ve got LeBron and D-Wade having captured two championships together there… Then you take into account the young guys — the Josh Richardsons, the Justise Winslows, the Hassan Whitesides… You add Kevin Durant to that equation and bring back Dwyane Wade, you’re talking instant title contention. Automatically.”

That was Stephen A. Smith, talking earlier this month about the prospect of Durant joining the Heat this summer.

Of course, he was talking theoretically.

That which seems wonderful in theory isn’t always possible in reality.

Miami will start the summer with six players under contract for the 2016-17 season – Chris Bosh, Goran Dragic, Josh McRoberts, Justise Winslow, Briante Weber ($219K guaranteed) and Josh Richardson (non-guaranteed). Those six players will cost a combined $49.8 million.

At the $94.4 million salary cap currently projected by the NBA, the Heat would have — after subtracting that $49.8 million, the cost to retain the right to re-sign Tyler Johnson to a contract that exceeds the cap, and necessary roster charges — up to $42 million or so of cap space with which to spend on free agents.

Durant’s maximum salary would be $26.6 million. Whiteside’s maximum salary would be $22.2 million. Those two figures alone total to $48.8 million. That’s way above the Heat’s $42 million of projected cap room, and that’s before even dealing with Wade, Joe Johnson and Luol Deng.

The prospect of Durant in Miami, therefore, wouldn’t be easy, and shouldn’t be considered even remotely likely. But Riley has always dreamed big. In the past decade, he’s acquired LeBron James and Shaquille O’Neal — arguably the NBA’s two greatest post-Michael-Jordan era players — and paired them with Wade to secure the franchise’s five NBA finals appearances and three titles.

Kevin Durant is the prize of the 2016 free agent crop, and Riley will surely take a shot.

But is it even mathematically possible?

Let’s take a look. 

The Heat will have $49.8 million in salary on the books to start the summer.

To that, let’s add in the cost for Durant (see this post for a detailed review of his situation).

Durant is not taking any less than his $26.6 million maximum; that much we know. So that brings us to $76.4 million.

To that, let’s add the cost of Whiteside.

Let’s assume Whiteside is going to command his $22.2 million maximum salary (despite the creative opportunities to restructure his contract for maximum Heat benefit at little cost to him, as presented in this post). So that brings us to $98.5 million.

To that, let’s add in the cost of Tyler Johnson (see this post for a detailed review of his situation).

The Heat is in a highly beneficial position with Johnson. Because he has been in the league for just two seasons, league rules dictate that all other NBA teams are limited in what starting salary they can offer him (a rule colloquially referred to as the “Gilbert Arenas provision”), all the way to a level the Heat will be guaranteed the opportunity to match.

Other NBA teams can only offer Johnson a starting salary of up to $5.6 million. If he were to sign a contract elsewhere, the Heat would have the right to match it. If he were to sign with the Heat outright, the contract could have a starting salary as high as $6.2 million. Better still, whether it signs him outright or has to match an outside offer to retain him, as long as it times everything correctly, the Heat would be able to exceed the salary cap in doing so. And to retain all of these rights, the Heat would need only to tender a $1.2 million qualifying offer in order to make Johnson a restricted free agent.

So add $1.2 million for Johnson, and that brings us to $99.7 million (but see the footnote below for an explanation as to why the Heat might not ultimately be able to retain him).

To that, let’s add in the cost of Dwyane Wade (see this post for a detailed review of his situation).

The assumptions made for Wade could be the most critical in determining whether it would be financially feasible for the Heat to pursue Durant. Even if it could free up the necessary cap space for Durant and Whiteside, it would leave virtually nothing left over for Wade.

It’s difficult to believe that Riley would do this to Wade, the face of the Heat franchise, without his consent. Is it even remotely realistic to believe Wade would accept a potential 10-figure discount at age 34, if it meant the ability to pair himself with both Durant and Whiteside for one final shot at a title before father time takes hold?

On the surface, the answer would appear to be no. Over the course of his career, Wade has already sacrificed $25 million in salary for the benefit of the Heat organization. Wade has sacrificed mightily for the Heat. He has recruited for the Heat. He has brought the Heat the only titles it has ever known. He is certainly deserving of one last large multi-year contract, one that reflects not only his abilities of tomorrow but also his contributions of yesterday.

But the idea that Wade would take massive a discount, however unlikely, can’t be totally dismissed under the right circumstances. And there are intricate salary cap rules that could potentially make it worth his while.

The salary cap is expected to explode this season, to $94.4 million. But it’s expected to explode again in 2017-18, to a record $107 million. That means the Heat could have significant cap space not only for this season but also for next season, a potential double-dip which, with equal parts skill and luck, has the potential to completely transform the franchise.

Wade’s asking price from last season’s tenuous negotiation: $50 million over three years. He already made $20 million over the first of those three. That leaves $30 million to go. If the Heat were to hypothetically renounce him this summer, it could use up all of its remaining cap space to lure Durant, and thereafter exceed the cap in re-signing him to a single-season contract at the minimum salary, giving Wade another $1.6 million, or $21.6 million total.

The Heat could then repay the favor by doling out to Wade another single-season deal in 2017, this time for the remaining $28.4 million, getting him to his desired $50 million total. Or, it could even exceed that $50 million total by offering Wade the $35.4 million projected max, or perhaps even a two-(or three-) year deal, at, say, $15 million per year – a structure that would even allow Wade to collect his payout(s) into essential retirement if he so chose.

If Wade and the Heat had the opportunity to go back a year – to a point in time when Wade was requesting one final contract to close out his career that paid out in the range of $50 million, to a time when the Heat were unwilling to offer more than $30 million or so – and realize that there was a way: (i) Wade could make as much as $67 million or more to close out his career, (ii) the Heat could retain Whiteside and (iii) the Heat could do it all while also signing Durant, would they have agreed?

But here’s the best part: Because Wade will have been playing the 2016-17 season under a minimum-salary contract, his cap hold for the summer of 2017 would be just $1.0 million. Therefore, at a charge of just $1.0 million against the cap, the Heat could then deploy all of its summer of 2017 cap space elsewhere. Then, when it is all used up, the Heat could circle back to Wade, leveraging his Bird rights to give him his huge back-end deal.

That may seem like a small ancillary benefit, but it’s a massive selling point for Durant, who may choose to sign a single-season deal this summer and sign his long-term contract the following summer, when his maximum salary is projected to rise by $10 million, to $35.4 million. That new contract would require any team other than the Thunder to have the necessary cap space, and not many teams around the league are projected to have it. The Heat, with such a structure for Wade, would be one of those teams (pending the footnote below).

So let’s assume for the sake of argument that Wade takes the $1.6 million minimum salary. The Heat could rescind his Bird rights, and dole out that contract after its cap space is all used up. He would therefore subtract nothing from the Heat’s available cap space. That, in turn, keeps us at $99.7 million.

At a $94.4 million salary cap, after accounting for necessary roster charges, the Heat are over the salary cap by $7.5 million.

How could the Heat create that additional $7.5 million in cap room?

There are three primary potential solutions:

First, the Heat could trade Justise Winslow as a package deal for a team which also takes Josh McRoberts.

Winslow would presumably have huge value on the trade market. If the Heat were able to leverage the value of his contract to entice a potential trade partner to take on the contract of McRoberts as well, it could potentially still be returned an attractive combination of future first-round draft picks as well as create an additional $7.3 million in cap space! That, in turn, would leave it just $220K short.

If both Durant and Whiteside were absolutely unwilling to take even a $220K discount from their respective maximums, the Heat could make up the rest of the difference by waiving and stretching the contract of Briante Weber, at which point his $219K partial guarantee would be stretched over five years, saving the Heat $287K and leaving it with $66K of cap room remaining (but see the footnote for an explanation as to why this step might not be necessary).

On the other hand, if either Durant or Whiteside were willing to take a $2.0 million discount from their respective maxes, or even split the difference, they could save Winslow (and see the footnote for an explanation as to why this could be reduced further, $1.3 million)!

***

Second, the Heat could trade Goran Dragic.

By trading Dragic without taking back any money in return, the Heat would save $15.3 million. That’s more than enough to bridge the $7.5 million shortfall.

In this scenario, the Heat could avoid trading Winslow and waiving Weber, and still have $8.4 million in cap room left over (potentially $9.0 million, as described in the footnote below).

The Heat could choose to give this money to Wade if he is unwilling to take the risk of the minimum salary structure proposed above. Such a contract could pay out $17.4 million over two years, $27.0 million over three years, or $37.3 million over four years (portions of which he could take into essential retirement if he were to so choose).

If, however, Wade were to be willing to take the minimum salary structure proposed above, that $8.4 million could be allocated to an outside free agent.

The Heat would, of course, be losing its starting point guard in the process.

***

Third, the Heat could trade Goran Dragic and Josh McRoberts.

By trading Dragic and McRoberts without taking back any money in return, the Heat would save $20.6 million. That’s way more than enough to bridge the $7.5 million shortfall.

In this scenario, the Heat could avoid trading Winslow and waiving Weber, and still have $13.6 million in cap room left over (potentially $14.3 million, as described in the footnote below).

The Heat could choose to give this money to Wade if he is unwilling to take the risk of a minimum salary contract. Such a contract could pay out $28.3 million over two years, $43.9 million over three years or $60.6 million over four years (portions of which he could take into essential retirement if he were to so choose).

If, however, Wade were to be willing to take the minimum salary structure proposed above, that $13.6 million could be allocated to an outside free agent.

The Heat would, of course, be losing its starting point guard in the process.

***

So… What would it take for it to be mathematically possible for the Heat to retain Hassan Whiteside AND sign Kevin Durant, each at the absolute max?

One of three scenarios:

SCENARIO #1:

1. Dwyane Wade would need to accept a $1.6 million single-season minimum-salary contract this summer, in exchange for a potential overpay contract in the summer of 2017 that could start as high as the $35.4 million projected maximum salary and have a term of up to three years (that’s as much as $114.0 million), which he would continue to receive even if he were to retire in the interim.
2. Josh McRoberts and Justise Winslow would need to be traded without the Heat taking back any salary in return, likely in exchange for future valuable draft considerations. (Or, if Whiteside or Durant could take or split a $2.0 million discount from their maxes, and perhaps as little as $1.3 million, as detailed in the footnote below, the Heat could save Winslow).
3. Briante Weber would need to be waived and stretched (see the footnote below for how Weber could be saved).

 SCENARIO #2:

1. Goran Dragic would need to be traded.
2. Dwyane Wade would need to accept either (i) a contract starting at $8.4 million and paying out a total of up to $27.0 million over three years (or potentially $9.0 million and $29.0 million, respectively, as described in the footnote below) or (ii) the minimum-salary construct described in the first option above. If he were to instead prefer the minimum-salary approach, the Heat would have an additional $8.4 million in cap room to spend on another free agent. (See the footnote below for reasons why this could increase to $9.0 million.)

 SCENARIO #3:

1. Goran Dragic and Josh McRoberts would need to be traded
2. Dwyane Wade would need to accept either (i) a contract starting at $13.6 million and paying out a total of up to $43.9 million over three years (or potentially $14.3 million and $46.0 million, respectively, as described in the footnote below) or (ii) the minimum-salary construct described in the first option above. If he were to instead prefer the minimum-salary approach, the Heat would have an additional $13.6 million in cap room to spend on another free agent. (See the footnote below for reasons why this could increase to $14.3 million.)

What do you think? Could Riley make one of these scenarios happen?

Could he then entice Durant that a Heat team featuring a Goran Dragic – Dwyane Wade (Josh Richardson)– Kevin Durant – Chris Bosh – Hassan Whiteside starting five, in a relatively weak Eastern Conference, can be an automatic NBA Finals shoe-in for years to come? Would that, and the prospect of $176.2 million over the next five years, be enough to entice him take his talents to South Beach?

Only time will tell.

Note:

Each of these scenarios were carefully constructed with the idea that Kevin Durant might choose to maximize his earning potential by signing a single-season $26.6 million maximum contract (with a $27.8 million player option for a second-season, as insurance against injury, which he would decline) and follow it up with a second maximum contract the following summer, that is currently projected to start at $35.4 million and pay out as much as $151.0 million over the following four years. In each of these cases, however, if Durant were to choose that approach, the Heat would need to relinquish Tyler Johnson in trade, either by not signing him this summer or by trade next summer (because his salary for next season would consume valuable cap space needed for Durant). That would have implications for all of the numbers presented in this post. 

 If the Heat were to not sign Tyler Johnson this summer, it would produce a $637K savings in each of the three above approaches. The net effect for each approach would be:

• Scenario 1: Briante Weber would not need to be waived and stretched, or the Heat could apply that $637K in savings to the $2.0 million discount either Whiteside or Durant would need to take to save Winslow)
• Scenario 2: Dwyane Wade’s starting salary could increase to $9.0 million, and his total payout over three years to $29.0 million
• Scenario 3: Dwyane Wade’s starting salary could increase to $14.3 million, and his total payout over three years to $46.0 million

If Wade were to choose to take the larger money in Scenarios 2 and 3, he wouldn’t be able to opt out next season and make even more money as the cap rises. That money would be devoted to Durant. Therefore, he could actually make a higher total payout by taking the minimum salary approach (followed by a massive contract next summer) in all three scenarios. In these scenarios, the Heat could save Tyler Johnson.