Could the Miami Heat Land Jimmy Butler?

The Miami Heat aggressively pursued a trade for Philadelphia 76ers unrestricted free agent forward Jimmy Butler last season, while we was a member of the Minnesota Timberwolves. Ultimately, they came up short.

But, according to Tim Reynolds of the Associated Press, Butler recently told confidants that he would certainly – and happily – listen, if Miami expressed a similar interest this summer.

Are the Heat interested? Can they get a meeting? Would it simply be a courtesy meeting (as it apparently was for LaMarcus Aldridge in 2015, Kevin Durant in 2016, and perhaps even Gordon Hayward in 2017)? Or is it realistic?

Butler will be eligible for a projected max salary of $32.7 million next season.

The Heat don’t have a realistic path toward creating anywhere near that kind of cap room. They’ll enter the summer with 14 players set to earn a combined salary in excess of $144 million. That’s $35 million over the projected $109 million salary cap. Which means they’d need to clear $60 million-plus to get in the ballpark. That’s not happening.

If they want Butler, the Heat will need to convince the Sixers to engage in a potential sign-and-trade scenario, which comes with its own set of challenges to overcome.

First, Butler would need to communicate his intention to leave Philadelphia. That’s no guarantee. The future of the Sixers is inextricably tied to their ability to re-sign both Butler and Tobias Harris this summer. Losing one would be painful, both a disaster. The Sixers will therefore be aggressive in attempting to re-sign Butler, and have the financial tools to back it up. They can offer him a full five-year, $190 million max deal. That’s far more than the four years, $141 million that any other team can offer.

Second, to entice them to agree to a Butler sign-and-trade scenario, the Heat would need to offer the Sixers quality pieces in return, pieces Philadelphia would deem preferable to simply letting him leave for nothing. Consider this: If Butler does leave, the Sixers could still build around a Ben Simmons and Joel Embiid core, with a potentially re-signed Harris and still another $37 million of cap room with which to work. Retain Harris and J.J. Redick, and it’s still over $21 million. Lose all three and it’s $58 million. That’s flexibility they won’t easily forgo.

Third, the Heat would need to trade-match to Butler’s new salary. By rule, they’d need to send out at least 80% of the salaries they take back. With Butler at the $32.7 million max, that works out to at least $26.1 million – of salary that the Sixers would actually want.

Fourth, if the Heat were to acquire Butler in a sign-and-trade, they would be hard-capped for the rest of the season at the apron ($138.3 million). Even if they were to waive Ryan Anderson ($21.3 million) to capitalize on his partial guarantee ($15.6 million), as is expected, they’d still be more than $3 million over the hard cap. So they’d actually need to go down in salary, whether as part of the sign-and-trade or in conjunction with it.

Finally, the Sixers could face potential Base Year Compensation (BYC) issues with such a deal. BYC only applies in one circumstance – during sign-and trade-transactions. If a team re-signs its free agent to a contract with a greater than 20% raise ($24.5 million, for Butler) in order to trade him in a sign-and-trade transaction, and the team is at or above the cap immediately upon the signing, then the player’s outgoing salary for trade purposes is either his previous salary ($20.4 million) or 50% of his new salary (up to $16.4 million), whichever is greater (which, for Butler, would be $20.4 million). The team receiving the player always uses his new salary.

BYC can make a sign-and-trade scenarios very challenging, it not outright impossible. To see why, let’s walk through a quick example. Let’s assume Butler gets his $32.7 million. For the Sixers, it’d be like they were trading away a $20.4 million player. For the Heat, they’d be receiving a $32.7 million player. Here’s the rub: a team sending out $20.4 million player can only take back up to $25.7 million in return, while a team receiving a $32.7 million player must send back at least $26.1 million in return; there’s no common ground between those two figures!

In other words, if BYC triggers, there would be no legal way that a two-team sign-and-trade for Butler can be executed (for the Heat, or anyone else), unless he takes less than max money or Philadelphia adds more players.

But even if a legal sign-and-trade scenario could be structured, BYC transactions effectively require the receiving team to take back far more salary than they send out. Which is highly problematic for the Heat, considering its lack of flexibility with respect to the hard cap.

BYC can be the single biggest deal killer in any two-team sign-and-trade scenario, but there are various ways to counteract its effects. Lowering Butler’s salary would certainly help (the further away from his $32.7 million and closer to his $20.4 million previous salary, the better). Involving a third team with the means to swallow additional salary from the receiving team could help even more.

The problem could be avoided altogether if Philadelphia signs him into cap room, at which point BYC wouldn’t even apply. Given the flexibility in their cap situation, that’s certainly possible, even if they retain Bird rights to Tobias Harris, T.J. McConnell, and various others. But not if they want to retain rights to both Harris and J.J. Redick. Or if they want to use the NT-MLE ($9.2 million) and BAE ($3.6 million) (or, depending upon how their summer plays out, possibly the T-MLE ($5.7 million) variant), rather than just the Room MLE ($4.8 million).

Of course, if they get back a shooter, maybe they don’t need Redick too. Maybe they’d rather pair the shooter with the ton of left over cap room. So any trade proposal presented to Philly must contemplate the implications for how they plan to structure it.

OK. Taking all of that confusing stuff into account, could the Heat even structure a Jimmy Butler sign-and-trade scenario that might actually work?

Let’s take a look.

Let’s throw out all of the cap-related issues for a moment, and first just focus on what makes sense.

If you were the Heat organization, what might you offer to entice the Sixers to help you out? If you were the Sixers organization, what might you demand?

Philadelphia has Ben Simmons (PG), Tobias Harris (F, with full Bird rights), and Joel Embiid (C) around which to build. That’s a strong core, but with glaring holes at both the shooting guard and forward positions. Shooters and defenders preferred.

How about, say, Josh Richardson and Kelly Olynyk (the package Miami reportedly offered the Wolves for Butler last July)? Or Richardson and Justise Winslow?

Would either work for both sides? If so, there’s still the cap machinations to work through.

Richardson and either Olynyk or Winslow are set to earn $22.8 million and $23.1 million, respectively, next season.

Neither is not enough for the Heat to trade-match for Butler at the $32.7 million max (they’d need to send out at least $26.1 million). It’s not enough to alleviate BYC concerns (no scenario would be, with Butler at the max). And it’s not enough for the Heat to duck the hard cap (we’d be talking about adding $9.5 million in salary, which only exacerbates the issue).

A full max is a hefty price to pay for a 30-year-old who has been utilized so exhaustively throughout the course of his career anyway. So what could the Heat offer?

Let’s work backwards.

The hard cap is projected to be $138.3 million.

Miami currently projects to have 14 players under contract (including first-round pick Tyler Herro), at $146.3 million (the hard cap calculation of player salaries is slightly different). Waiving Ryan Anderson and replacing him with KZ Okpala would reduce it to at least $141.5 million. Stretch Anderson’s $15.6 million dead-money cap charge to $5.2 million for each of the next three years: $131.1 million.

That’s the starting point.

Now, subtract Richardson ($10.1 million) and either Olynyk (up to $13.1 million, if he gets all of his bonuses) or Winslow ($13.0 million), the two guys hypothetically being traded. That takes Miami from 14 players to 12 players, two short of the league-mandated minimum. Let’s assume one is the cheapest possible free agent – a minimum salary; which takes team salary to $109.6 million.

So how much is left for Butler?

Hard cap at the apron ($138.3 million) – Heat’s team salary before adding him ($109.6 million) = $28.7 million.

Let’s forget about whether that’s reasonable or not for a second, and just push forward.

So…

We’ve got the key players locked down: Richardson and either Olynyk or Winslow, in exchange for Butler.

We’ve got Butler’s contract locked down: Starting salary no higher than $28.7 million. Up to $123 million over four years total.

We’ve got the hard cap issues squared away: The Heat could slide just below it, without any outside assistance.

Now let’s clean the trade up, to make it work for salary-match purposes.

To take in Butler at $28.7 million, the Heat would need to send back at least $22.9 million.

Richardson and Olynyk make $22.8 million. That’s just short. As silly as it sounds, the extra $100K needs to be accounted for. But it’s not all that hard to do. Butler could take ever so slightly less, or the Heat could throw in Yante Maten ($1.4 million, with a $100K guarantee), Duncan Robinson ($1.4 million, with a $250K guarantee), or Kendrick Nunn (who would need to agree to have his $1.4 million salary at least $100K guaranteed, which would happen automatically on August 1 anyway). All of it works. And since the trade additions would be minimum-salary players, which would be replaced in cost-neutral fashion, none would have any impact on the Heat’s hard cap situation.

Richardson and Winslow make $23.1 million. That works as is.

Mutually agreeable? Done. Butler’s salary? Done. Hard cap? Done. Trade match? Done.

So, finally, a quick check on BYC: If it were to apply, in exchange for receiving Butler ($28.7 million), the Heat could send back as little as $22.9 million. In exchange for sending out Butler ($20.4 million), the Sixers could take back as much $25.7 million. Which means that if the Heat sends the Sixers back anywhere from $22.9 million to $25.9 million in salaries, BYC issues would be satisfied. That’s a workable window.

The Heat’s combination of players – either $22.8 million (Richardson and Olynyk) or $23.1 million (Richardson and Winslow) – falls right in the middle of those two figures. Done.

So we have a potentially viable two-team trade. No outside help needed. But is it acceptable to all parties?

How about the Sixers?

They get their targeted players (if those indeed are their targeted players), in exchange for someone they were about to lose for nothing.

They also get to remain above the salary cap, which comes with key benefits – retaining Bird rights to all of their free agents, as well as access to the full NT-MLE ($9.2 million) and BAE ($3.4 million) (which could possibly shift to the T-MLE ($5.7 million), depending upon how expensive they get).

How about the Heat?

They get their man. But they lose a couple key players, and incur an ugly three-year, $5.2 million cap charge, to get it done.

Tyler Herro replaces Richardson at shooting guard. Butler (and Okpala) and replace Olynyk or Winslow at forward.

Projected cap room for next summer (to build around a Herro, Butler, Winslow or Olynyk, Okpala, Bam Adebayo and 2020 first-round draft pick core): $22 million-plus.

If they defer until the summer of 2021 (with the same roster): $43 million – $55 million (depending upon whether Winslow’s $13 million team option is exercised).

But is it too much for the Heat to give up? Would, say, Richardson alone be enough?

If so, Richardson alone is not enough outgoing salary to trade-match. That’s where the idea of adding a third team comes in.

How about just sending Richardson to the Sixers and then sending a less desirable contract (perhaps Dion Waiters, James Johnson or Hassan Whiteside) into another team’s cap room?

It’d cost some future assets to get done. But the Heat would be strong as a team for it. And, better still, if it’s Johnson or Whiteside, it’d create more room under the hard cap to increase Butler’s salary.

If it’s Johnson, Butler could get another $2.3 million (to $31.0 million total).

If it’s Whiteside, Butler could get another $3.6 million (up to $32.3 million total, just shy of his max) AND the Heat wouldn’t need to stretch Anderson’s $15.6 million payout. Noo more ugly $5.2 million dead-money cap charges over the next three years.

How about Butler?

OK. Back to the original deal, as a starting point, to answer that question — Richardson and either Olynyk or Winslow, for Butler.

Butler would be accepting a starting salary of $28.7 million – $4.0 million less than his max, but still very competitive.

A four-year deal built off a $28.7 million starting salary could still pay out up to $123 million in total – substantially less than his $141 million max, but substantially more than the $101 million extension he turned down from the Wolves last July.

Perhaps a fair price. But free agency isn’t a fair process. It’s all about leverage. What if Butler demands more? What if he were to demand the $32.7 million max?

The Heat would need to engage in a side (or combined) salary-dump trade scenario.

But here’s the thing: We’re talking about a mere $4.0 million. The Heat wouldn’t necessarily need to find a team willing to take on a full bad salary for nothing, just a team that is willing to send out a contract that’s slightly less bad.

Think $27+ million. The Heat could take back Jimmy Butler at the max ($32.7 million) in most three-team sign-and-trade scenarios you can think of, if they send out $27+ million net (excluding minimum salaries).

But it would still leave that $5.2 million stretched, dead-money cap charge for Ryan Anderson — you know, the one that extends all the way out through 2021-22 — that sucks as much for the Heat as the $4.0 million discount sucks for Butler.

To get rid of that too, the Heat would need to save another $10.4 million ($15.6 million without the stretch, less $5.2 million with the stretch). So, for that, think $38 million+. The Heat could take back Jimmy Butler at the max ($32.7 million) and avoiding having to stretch Anderson’s payout in most three-team sign-and-trade scenarios you can think of, if they send out $38+ million net (excluding minimum salaries).

You can bet that if the Heat have an interest in acquiring Butler, and believe it’s possible, that they’ll be burning up the phone lines trying to dump salary.

Notes:

By the way, I didn’t even write about the possibility that Jimmy Butler exercises his player option to facilitate a trade. It’s $19.8 million. That’s $12.9 million less than the $32.7 million max. Why would he give that up? And how would the Heat pay him back? And how crazy would his cap hits become if they did (e.g., giving him a 35% max in two years)?  

2 Responses

  1. Alex says:

    Fantastic write up. Thank you

  2. Karris says:

    I think this is great, I thought it would be hard for them to pull off Jimmy Butler, but having a good friend Dwayne Wade helps.

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