The Miami Heat, Creatively, Locks In Its Vision for the Future

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Pat Riley’s goal for this summer was clearly to sign Gordon Hayward. It had been that way for quite a while. He downplayed it because, well, it was always going to be exceedingly difficult to execute.

Hayward tugged at our heartstrings for a few weeks, when reports emerged that allowed us to believe it was actually possible. For a couple days in there, even likely. But, in the end, the Heat finished right where it was always going to finish. In third. Behind the two, Boston and Utah, who were always going to finish 1-2 (in whatever order).

Riley was prepared. We all were.

The non-Hayward plan: Re-sign Dion Waiters and James Johnson, and try to squeeze out some extra cap room for whatever else might come along.

Perhaps it wasn’t the most exhilarating plan, but it was grounded in something real.

Despite an exasperating 11-30 start to the 2016-17 season, the Heat pulled off an unprecedented reversal in its final 41 games, posting a 30-11 mark that was good for second-best in the league and made it the first team to ever fall more than 12 games under .500 and climb all the way back to even.

They did it by employing the most fundamental of basketball principles: drive, and kick.

The Heat drove to the basket more than any other team in the NBA last season (35.1 times per game), and no single pair of teammates did it more frequently than Dragic (11.9 per game) and Waiters (11.0 per game). Only two players in the league averaged more drives per game than Dragic (Isaiah Thomas and Dennis Schroder) and only two others more than Waiters (John Wall and Russell Westbrook).

What made the philosophy work so well for the Heat was not that they were lethal scorers at the rim. They weren’t. Waiters, in fact, shot a rather awful 42.8% when driving last season (surely an area for improvement this season). What made it work so well is that they both passed so much. When they drove, they passed the ball a combined 44% of the time.

Dragic and Waiters each became exceptionally proficient at collapsing the defense to stop their penetration, then passing back out to create open looks for teammates — which for the Heat led to numerous easy chances at the rim for Hassan Whiteside, and tons of open 3-pointers for its well-spaced perimeter shooters. 

So, with such a strategy, it would make sense that the Heat’s 3-point shooting success would correlate strongly with its overall success. Miami shot what would be an NBA-best 41.0% on 3-pointers in its 41 wins, and what would be an NBA-worst 31.7% in its 41 losses.

A full 89.1% of the Heat’s made 3-pointers last season came off assists, the second-highest percentage in the league, most of them a direct assist by Dragic or Waiters or a hockey-assist after ball rotation along the perimeter. Shocking, perhaps, for a team without a true point guard.

Dragic and Waiters developed a wonderful chemistry along the way, not only because they each took the solo burden of driving and kicking to jump start the Heat’s offense off each other but also because they each became the other’s best floor spacer. Consider this: 16% of Dragic’s shot attempts last season came from spot-up 3-point chances, which he converted at a 40.4% clip… and 22% of Waiters’ shot attempts came from spot-up 3-point chances, which he converted at a team-best 43.4% clip. And this: Dragic converted his 3-pointers at a 51.0% clip when he shared the court with Waiters and just 35.1% without him… while Waiters converted his 3-pointers at a 42.6% clip when he shared the court with Dragic and just 35.5% without him. And most of all this: Dragic shot 62.1% on his 3-point attempts after receiving a pass from Waiters… and Waiters shot 42.9% on his 3-point attempts after receiving a pass from Dragic.

Get a couple of guys who can each break down a defense and willingly and effectively space the floor for the other, pair them with a couple of sweet shooters and the league’s most imposing big, and it’s not all that hard to see how a team short on talent can still find success. That’s what happens when you create and capitalize on a perfectly spaced floor (both vertically and horizontally) on offense, and combine it with stellar defense: Dragic (0.1% below), Waiters (4.3% below), James Johnson (4.8% below) and Whiteside (2.0% below) each held the man he was guarding below his season average field goal percentage; and when they missed, Whiteside typically cleaned the glass, finishing second in the league in defensive rebounding percentage (34.9%).

But when Waiters went down with an ankle sprain in mid-March, he took the offense with him. Which taught the Heat a painful but valuable lesson – that secondary playmaker was a critical part of the formula.

Neither Tyler Johnson nor Josh Richardson proved particularly effective at it. Each struggled at times this season, as their roles transitioned from among the league’s best floor-spacing shooters last season (Richardson having led the NBA in 3-point shooting after the All-Star Break at 53%; Johnson having shot 41% on 3-pointers on the season, excluding heaves) to secondary playmakers. These are guys who excel with their feet set. They’re 3&D guys on steroids. They can ferociously attack the rim when the situation presents itself, but creating offense for themselves and others is not really part of their core skill-set.

Ultimately, the answer came from the most unlikely of places: third-string, single-season rental forward James Johnson.

In the absence of Waiters, the Heat unleashed Johnson as its supremely-versatile secondary playmaker. His reincarnation as an in-shape point-forward proved to be a severe match-up problem for opposing defenses — allowing him to effortlessly glide past bigger defenders, and power through smaller ones.

Johnson did a bit of everything for the Heat last season – he led the fast-break, dished out some slick passes, knocked down some big shots, grabbed some big boards, and played some awesome defense while guarding every position on the court. He even shot a career-best 34.0% on 3-pointers. And when Waiters went down, he adjusted accordingly — ratcheting up his basket-driving to 8.2 per game over the final 10 games to compensate, passing out of it less than Waiters but finishing more and with astounding efficiency (shooting 62.8% on his drives).

Dragic, Waiters and Johnson each provided his own brand of fireworks to spearhead the Heat offense at various points in the season. Whether it was in transition, in isolation, or in the pick-and-roll, each player’s ability to attack the paint created easy chances at the rim and open looks for teammates along the perimeter. When they knocked them down, the Heat tended to win. When they didn’t, they tended to lose.

The three didn’t actually play a whole lot together. But when they did, it was highly successful.

During the second half of the season, when Dragic, Waiters, James Johnson and Whiteside shared the floor, in 121 minutes over 20 games, the team produced a staggering offensive rating of 127.2 (points scored per 100 possessions) and a staggering net rating of 24.2 (margin of victory per 100 possessions), each far and away the team’s best four-man-unit that included long-term pieces Dragic and Whiteside. Such lineups shot a combined 53.7% from the floor, and 51.1% from the 3-point line on what would be an NBA second-best 35.7 attempts per 48 minutes. The Heat went 17-3 in those games.

Of course, during the first half of the season, when those same four players shared the floor, in 58 minutes over 14 games, the 3s weren’t falling (23.5%). As a result, the Heat offense was downright awful (84.2 rating). So there’s some risk there – particularly with Dragic, Waiters and Johnson each having shot out of his mind last season.

Which seems to suggest that a Heat team centered around Dragic, Waiters, Johnson and Whiteside can be special if they keep breaking down defenses, and keep hitting the open 3-pointers it creates, but potentially struggle if they don’t.

Which made the Heat’s sans-Hayward summer priorities rather clear – keep that four-man unit intact, and use whatever room was left over to sign the best damn shooter at the small forward position they could possibly find… preferably someone who’s tall enough to ride roller-coasters (vs. Rodney McGruder), and thick enough not to get knocked over by a stiff breeze (vs. Josh Richardson) – as an alternative to McRuder, Richardson and Justise Winslow, who, given his limited shooting abilities, is probably best suited to serve in a quasi reserve point guard role at this point.

The cap space with which to do it was going to be tight.

The Heat went into the summer capable of generating anywhere from $30.9 million to $39.5 million of cap space for Waiters, Johnson and a third — with the difference dictated by the treatment of Wayne Ellington (who had a $6.3 million non-guaranteed salary which could’ve been waived) and Josh McRoberts (who had a $6.0 million guaranteed salary which could’ve waived and stretched into a $2.0 million dead-money cap charge over the next three years). But losing Ellington – the Heat’s best and only 3-point shooter on the move – wasn’t really a viable option in a non-Hayward scenario unless doing so would bring back starter-level talent, otherwise bringing down the top end of the range to $34.1 million.

Waiters and Johnson were certain to get the bulk of that. Who the third was going to be was still a mystery.

Long-time Heat interest Rudy Gay made the rounds, but he was surely never a primary target. He’s recovering from a complete rupture of his left Achilles tendon. Those are devastating injuries. Career-enders for many. Athleticism killers for most. Particularly for 31-year-olds.

As it turns out, there were no ideal small forwards to be had. Such players who combine youth and shooting ability, even without the defense, tend to price way out of the range the Heat was able to allocate anyway.

So the Heat trudged on without one.

Waiters’ deal came first. It was reported on Wednesday that he would accept a 4-year, $52 million contract. The math dictated that such a contract could have a first-year salary as low as $12.1 million, leaving as much as $22.0 million for Johnson and whomever else to split.

Then, on Thursday, within a span of less than four hours, the Heat agreed to a series of rapid-fire transactions that would leave us all stunned and searching for answers.

In a shocking development, the Heat pounced when Hayward choosing the Celtics set off a chain of events that broke Kelly Olynyk free from restricted free agency. It all happened rapidly, and without warning. The first public indication of Heat interest in Olynyk was the reports of a final deal – a 4-year, $50 million pact that could start as low as $11.6 million. Which left as much as $10.3 million for the inevitable Johnson deal.

Riley then worked the phones to increase that total. He traded the seldom-healthy Josh McRoberts to Dallas in exchange for the seldom-used backup center A.J. Hammons, whose contract is guaranteed for $1.3 million this season and $1.5 million next season, adding an extra $1.5 million of cap room at the (shockingly high) cost of its full $5.1 million allotment of cash for the season and its 2023 second-round draft pick. Which left the Heat with as much as $11.8 million for Johnson.

When Johnson’s deal was announced, hours later, it left us all confused. He would get a 4-year, $60 million deal. The math would seem to indicate a starting point of $14.0 million.

Something was wrong. That was $2.1 million over. Which apparently suggested Ellington had to go. And there was no way in the world the Heat were going to waive Ellington to squeeze out a few extra bucks for Waiters, Olynyk and Johnson!

So how did the Heat manage to create an extra $2.1 million of cap room?

By cleverly leveraging a tool they tend to only rarely ever utilize – the performance bonus.

Performance bonuses are exactly what they sound like – bonuses that a player can earn if he achieves certain performance-related milestones (e.g., games played, points per game, rebounds per game, etc.). But how they are treated for salary cap purposes has the potential to create intricate opportunities.

Performance bonuses are classified by the NBA as either “likely to be achieved” or “unlikely to be achieved.” The distinction is critical because likely bonuses are included in the player’s salary (and thus count toward a team’s maximum available cap space), but unlikely bonuses are not.

With a bit of creativity, the Heat could therefore potentially increase its total cap space beyond the limits of the $99 million salary cap by offering players contracts that contain bonuses which are deemed by the NBA as “unlikely to be achieved.” In such a case, the bonus portion of the contract could potentially not count against the salary cap (but still be paid out if it is ultimately earned), freeing up that cap space to be spent elsewhere!

The NBA determines whether a bonus is deemed likely or unlikely to be achieved based on whether the criterion was achieved in the previous season. For example, if a player averaged 7.0 assists per game in 2016-17, then a performance bonus for 2017-18 based on 7.0 assists per game would be classified as “likely to be achieved” (and included in the player’s cap hit), but a bonus based on 8.0 assists per game would be classified as “unlikely to be achieved” (and not included in the player’s cap hit). The commissioner has the ability to re-classify the bonus at his discretion should he feel the prior season’s performance is not a credible indicator, a power which is rarely ever exercised. Therefore, it’s rather easy to structure a bonus for a guy like Waiters, who played just 46 games last season, which might be considered unlikely to be achieved but, in reality, seem imminently achievable. Just base it, at least in part, on his ability to play at least, say, 50 games.

Bonuses deemed unlikely to be achieved are limited to 15% of the base salary in each season of the contract at the time of signing. All bonuses are re-evaluated at the end of each season, to determine whether they should be reclassified as likely or unlikely.

This type of maneuverability would seem too good to be true, as if the Heat would be perpetrating a scheme that would effectively be bending (if not outright breaking) the salary cap rules. But would it be?

Absolutely not!

Despite the fact that this is rarely used in NBA circles (for various, practical reasons), it is perfectly legal.

The CBA contains detailed and explicit rules specifically designed to reduce the likelihood of this very thing. But the rules only reduce the possibility, not eliminate it. It is this weakness that the Heat exploited!

Follow the following explanation closely: NBA rules state that when a new contract is submitted to the league office for approval, the entire potential payout – including the base salary, any likely bonuses, and any unlikely bonuses – must fit within the team’s available cap room (or available exception, as the case may be). Not only that, when determining the team’s available cap room, the unlikely bonuses from all contracts signed that season are subtracted. Which, seemingly, eliminates the possibility.

But here’s the thing: the rule only applies at the point the incentive-laden contract is signed.

As long as the first-year salary – including both likely and unlikely bonuses — in any new contract(s) fits within the team’s cap room at the point the contract is officially executed, the contract is legal. The first-year salary thereafter excludes the amount of the unlikely bonus.

The Heat manipulated these rules with each of Waiters, Olynyk and Johnson:

  • Dion Waiters’ contract was publicly reported as 4-years, $52 million, but that’s not technically how it is structured. Waiters will actually receive $47.3 million in base salary, plus up to another $4.7 million in bonus money which he can earn for playing in 70 games each season. All of that bonus money has initially been deemed as unlikely to be achieved. Which means that after the contract was approved, only the first-year base salary was charged against the cap for this season; that’s $11.0 million, without the $1.1 million in bonus money.
  • Kelly Olynyk’s contract was publicly reported as 4-years, $50 million (with a player option on the final year), but that’s not technically how it was structured. He will actually receive $45.6 million in base salary, plus up to another $5.6 million in bonus money which he can earn for playing in 1,700 minutes each season. (He also has a trade bonus equal to the lesser of 5% of the remaining value of the contract and $2 million.) All of that bonus money has initially been deemed as unlikely to be achieved. Which means that after the contract was approved, only the first-year base salary was charged against the cap for this season; that’s $10.6 million, without the $1.4 million in bonus money.
  • James Johnson’s contract was publicly reported as 4-years, $60 million (with a player option on the final year), but that’s not technically how it was structured. He will actually receive $59.1 million in base salary, plus up to another $946K in weigh-in bonus money. That bonus money, unlike the others, is always counted against the salary cap. Which means that after the contract was approved, the $13.7 million first-year salary and the $220K bonus were both charged against the cap for this season; that’s $14.0 million.

So, with that, let’s retrace our steps.

The Heat started with $34.1 million of cap space. Swapping McRoberts for Hammons increased it to $35.6 million.

Waiters was signed first. His $11.0 million base salary AND his $1.1 million in unlikely bonus money had to fit within the team’s available cap space. They did. So, after the contract was approved, the Heat lost $11.0 million of cap room, reducing it to $24.6 million.

Olynyk was signed second. His $10.6 million base salary AND his $1.4 million in unlikely bonus money had to fit within the team’s available cap space (as reduced by Waiters’ bonus money). They did. So, after the contract was approved, the Heat lost $10.6 million of cap room, reducing it to $14.0 million.

Johnson’s contract came last. It had to, because it contained no unlikely bonus money. His full $14.0 million salary, including his bonus, had to fit within the team’s available cap space. The Heat used up every last penny of cap space, but they did fit it. So, after the contract was approved, the Heat lost $14.0 million of cap room, reducing it to $0.

(The Heat was very careful and strategic about how the reports of the signings were leaked to the press. It most certainly wanted to avoid this most notorious team vs. commissioner battle in NBA history.)

So here we are… Ellington is safe. And the Heat fit each of Waiters, Olynyk and Johnson within the confines of the salary cap (with no cap space remaining).

The Heat’s roster currently consists of 13 players: Goran Dragic, Dion Waiters, Josh Richardson, Tyler Johnson, Wayne Ellington, Rodney McGruder, Justise Winslow, James Johnson, Kelly Olynyk, Okaro White, Bam Adebayo, Hassan Whiteside and A.J. Hammons. Hammons will make it to training camp, but he is not a lock to make the regular season roster at this point.

The regular season maximum roster size is 15. The Heat still has a $4.3 million Room Mid-Level exception available to deploy if a compelling situation presents itself (e.g., Waiters last season). It can always sign minimum salary contracts as well. Udonis Haslem could potentially get one, paying out $2.3 million. Luke Babbitt could potentially get one as well, paying out $2.0 million. The Heat also has apparent needs at both small forward and point guard (as Tyler Johnson and Josh Richardson should really not be treated as such).

***

Notwithstanding the Heat’s brilliant salary cap maneuvering, one question needs to be asked: Did the Heat actually get better?

It’s a critical question due to the long-term nature of the contracts it gave. Barring trade scenarios, the Heat will essentially be capped out – potentially even luxury taxpayers — for at least the next three years.

What the Heat truly needed, in addition to Waiters and Johnson, was a sweet-shooting small forward. What it got was a 7-foot center.

So how is it all going to work?

Creatively.

Olynyk is effectively a guard trapped in the body of a 7-foot center. He’d rather show off his shooting, ball-handling and passing than low post moves. He’d rather defend wings along the perimeter than skulking bigs on the block. He’s probably best suited to fill the Heat’s hugely-understated need for a spacing-capable alternative to Johnson at power forward, with the versatility to shift to center in certain match-ups. (In many ways, ironically, he possesses a somewhat similar skill-set to that of McRoberts.)

Johnson is the very definition of versatility. He’s capable of playing and guarding any position on the court. He figures to continue to be highly effective both as a secondary playmaker and with his spot-up shooting inside the 3-point arc, but to regress more toward his career-long norm with his spot-up shooting outside the 3-point arc.

So how can the Heat effectively fill out its rotation without much depth at various traditional positions?

By “positionlessly” mixing and matching rotations as much as they ever have before.

Here’s what we know: Dragic, Waiters and Whiteside will start.

The rest is yet to be determined.

The starting power forward position figures to be a two-man competition.

James Johnson has to be considered the favorite to land the spot at this point. But that’s not a lock. While Johnson was superb at picking up the slack left by an ailing Waiters last season, a healthy Waiters changes the dynamic. It’s unclear as to whether he can be as effective playing off the ball when the Heat are using Dragic and Waiters as its primary playmakers. Johnson shot a career-high 38% on catch-and-shoot 3s last season, which is unlikely to be repeated. Olynyk, the far better floor spacer, would therefore seemingly be a better fit at the position, and he will compete for it. Expect the Heat to give both meaningful time in the role. Which player wins out by season’s end will be dictated by how the overall team performs in each circumstance.

The starting small forward position figures to be a revolving door.

Will the Heat play small – effectively filling its need for a sweet-shooting small forward by employing guard-heavy rotations that feature any three of Dragic, Waiters, Tyler Johnson, Richardson and McGruder? We got a bunch of it last year. We’ll definitely see it again this year.

Will Justise Winslow get his shot? You bet.

Will the Heat play big – effectively replacing its need for a sweet-shooting small forward by shifting James Johnson to small forward, inserting Olynyk as a sweet-shooting power forward, with Whiteside at center? They’ll probably try it at some point (if it demonstrates an ability to provide adequate floor spacing, and to not crush the effectiveness of the second unit).

Will the Heat identify a sweet-shooting small forward at the minimum or mid-level in the weeks and months to come? They’ll be on the lookout.

Will the Heat pursue a trade to fill the role as the season progresses? You can bet they’ll pursue such scenarios starting when December (when most free agent signings from this summer become available for trade), January (when the rest of the free agent signings become available for trade) and February (the trade deadline) roll around. Riley doesn’t have much in the way of draft picks to offer(1), but he has signed a bunch of guys to what could be considered bargain contracts for trade purposes if they have a breakout season. It’s Riley’s new version of “flexibility.”

The bench rotation will naturally depend upon the starting rotation, but it could be quite good.

Winlsow can’t shoot. And unless he can make a staggering improvement in that regard, his time as a starter in the NBA will be quite limited. His best offensive role at this point could be as a de facto backup point guard, perhaps along another de facto backup point guard in James Johnson, for a Heat team which refuses to sign a natural one. Which could yield a rather effective first three off the bench of Winslow and the brothers Johnson. And if Wayne Ellington can replicate an exceptional first season in Miami, you can be sure that he’ll get meaningful reserve time as well.

So how will it all work out?

The second half of last season was certainly encouraging. But was it replicable?

Only time will tell.

Note:
(1) I tended to dislike the Heat’s selection of Bam Adebayo with its draft pick. I tended to like Lauri Markkanen. Some also liked Zach Collins. But the Heat knew early on that neither was going to be available at pick #14. I would’ve therefore attempted to trade it for a future first-rounder. Doing so would’ve done four critical things: (i) left open a roster spot to re-sign Willie Reed (who remains a free agent at this point, with cap space dwindling around the league), (ii) created another $2.5 million in cap room, (iii) provided the Heat with a future first-round draft pick, and, perhaps most importantly, (iv) made the Heat’s 2019 first-round pick instantly tradable. That pick could’ve been a huge weapon in potential trade scenarios over the course of the coming season. Instead, it isn’t tradable until after the 2018 draft. To justify drafting Adebayo, in my humble opinion, he therefore not only needs to outperform Reed (point (i) above), but do so by enough to justify all the added flexibility provided by points (ii), (iii) and (iv) above. That’s a tall order. But I hope that, ultimately, I’m proven wrong. 

5 Responses

  1. Cesar Rodriguez says:

    Great article Albert.

  2. Shawn Khan says:

    Amazing work! Rarely have I seen an article like this with so much research and so well written.

  3. David says:

    Albert you are certainly the most amazing Heat fan in my book…. I have learn over the last few years about the NBA CBA. During the end of the season and before the draft and free agent I get on my excel computer and try out many and I mean many scenario trades and signing that sometime keep my up all night….. Thanks for all those articles….

  4. Zac says:

    Great work! Breaking it all the way down!

  5. Ian says:

    Fantastic breakdown!

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