Heat Continue to Prove Its Scouting and Development Prowess

The Miami Heat started the summer way over the luxury tax line, lacking in high-end talent, and seemingly unable to do much to improve but hope to attract a star in 2021.

But a phenomenal string of success in identifying and developing younger and underappreciated talent has transformed the Heat’s prospects for the future.

Over the past four-plus years, the Heat has drafted Tyler Herro, Bam Adebayo and Justise Winslow in the middle of the first round; drafted KZ Okpala in the second round; signed Kendrick Nunn, Chris Silva (two-way), Duncan Robinson and Derrick Jones Jr. as undrafted free agents; and traded for Meyers Leonard. Each has developed beyond expectations. As a result, this Heat team is quite suddenly really good, and building a core that can actually attract a star.

Better yet, the Heat have put themselves in ideal position to retain just about all of them, and still have enough flexibility add such a star.

Here’s a look at the contract situations of each of the Heat’s younger and underappreciated contributors:

Bam Adebayo is a budding star who was drafted out of Kentucky by the Heat with the No. 14 pick in the 2017 draft.

He signed a four-year, $14.0M rookie-scale contract that pays out $3.5M this season and $5.1M in 2020-21. The Heat will retain his full free agent Bird rights in the summer of 2021, at the cost of a $15.3M cap hold. The Heat can make him a restricted free agent, by extending a qualifying offer of either $7.1M or, if he meets starter criteria, $7.7M.

Adebayo will become eligible to sign a rookie-scale extension at any point between July 1, 2020 and the start of the 2020-21 NBA season. The extension could potentially start at any amount up to the 25% max (or 30% max, if he meets the “5th Year 30% Max Criteria”) and cover up to five years (if he is offered a “Designated Rookie Scale Extension”). Doing so, however, would come at a cost, since his first-year salary will surely be greater than what would otherwise be his $15.3M cap hold, which would reduce the Heat’s potential cap room as it plans to make a big slash in free agency that summer (2021).

Summer of 2021 Impact: Expect the Heat to bypass an extension next summer, and instead re-sign him as a restricted free agent in the summer of 2021, using $15.3 million of the Heat’s valuable cap room (despite a first-year salary that could potentially reach all the way to the max). 

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Tyler Herro, whose dominance in the preseason has people looking to him as a potential rookie of the year candidate, was drafted out of Kentucky by the Heat with the No. 13 pick in the 2019 draft.

He signed a four-year, $17.2M rookie-scale contract that pays out $3.6M this season, $3.8M in 2020-21, $4.0M (team option) in 2021-22 and $5.7M (team option) in 2022-23. The Heat will retain his full free agent Bird rights in the summer of 2023, at the cost of an $18.8M cap hold. The Heat can make him a restricted free agent, by extending a qualifying offer of either $7.9M or, if he meets starter criteria, $8.5M.

Herro will become eligible to sign a rookie-scale extension at any point between July 1, 2022 and the start of the 2022-23 NBA regular season. The extension could potentially start at any amount up to the 25% max (or 30% max, if he meets the “5th Year 30% Max Criteria”) and cover anywhere up to five years (if he is offered a “Designated Rookie Scale Extension”).

Summer of 2021 Impact: Expect the Heat to exercise its $4.0M team option.  

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Derrick Jones Jr. is among the most athletic players in the whole of the NBA. He initially went undrafted out of UNLV in 2016. He was then signed by the Phoenix Suns in September 2016, but was waived in December 2017. Later that month, the Heat signed him to a two-way contract. In July 2018, the Heat signed him to a two-year, $3.2M minimum-salary contract.

Jones is earning $1.6M this season, in the second year of that contract, after which he will become an unrestricted free agent this summer. The Heat will have his full Bird rights, at the cost of a $1.7M minimum-salary cap hold.

He is ineligible to sign an extension before hitting free agency next summer.

Summer of 2021 Impact: The Heat might be challenged to re-sign him if he receives significant multi-year offers, as a strong member of a relatively weak free agent class next summer. However, if both sides are motivated, the Heat does have create alternatives it can potentially utilize to keep him in Miami for the long-term, without significantly compromising its 2021 cap room. For example, Jones could accept a significant one-year deal next summer and then another one-year deal at up to the single-use Room Mid-Level Exception ($5.5M), after which the Heat would retain his full Bird rights in the summer of 2022.  

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Kendrick Nunn, college basketball’s No. 2 scorer behind Trae Young in 2017-18, was initially signed to an Exhibit 10 contract by Golden State Warriors as an undrafted free agent in the summer of 2018. They cut him during training camp, and directed him toward their G-League affiliate. He remained an unrestricted free agent for the entire 2018-19 season, until the Heat signed him to a three-year, $3.1M minimum-salary contract on the very last day of the season.

He made just $4,737 for his one day under contract last season, but that day gave him a full year of NBA service – which, for him, means big money. Had he instead signed with Miami this summer, his minimum salaries for this and next season would’ve paid $664K less ($2.4M total), and he’d be an Arenas restricted free agent in the summer of 2021. (The extra year of service will continue to serve him well throughout the rest of his NBA career.)

Instead, Nunn is now set to earn $1.4M ($300K guaranteed) this season and another $1.7M (non-guaranteed) in 2020-21. The Heat will then have his full Bird rights in the summer of 2021, and can make him a restricted free agent by issuing a qualifying offer (and incurring a cap hold) of either $2.1M or, if he meets starter criteria, $4.7M.

Nunn would qualify to sign an extension on April 10, 2021, which is just a few months before what would otherwise be his restricted free agency in July. The extension could start at up to 120% of next season’s estimated average salary, currently projected at $12.1M, which would translate to as much as $54M over as many as four years. Doing so, however, would come at a cost if his first-year salary is greater than what would otherwise be his up to $4.7M cap hit (which could be lowered to $1.9M if an agreement is reached by July 13, which would enable Miami to rescind its qualifying offer without sacrificing his Bird rights), reducing the Heat’s potential cap room as it plans to make a big slash in free agency that summer (2021).

Summer of 2021 Impact: Expect the Heat to bypass an extension, and instead potentially re-sign him as free agent in the summer of 2021, using as little as $1.9M of the Heat’s valuable cap room (despite a first-year salary that could potentially reach all the way to the max).

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KZ Okpala was drafted out of Stanford by the Indiana Pacers on behalf of the Heat with the No. 32 pick in the 2019 draft, who then traded him to Miami in exchange for three future second-round picks – in 2022, 2025 and 2026.

The Heat had previously acquired the No. 44 pick from the Hawks in exchange for $1.88M in cash and their conditional 2024 second-round pick (which Miami keeps if it’s 31-50, sends to Atlanta if it’s 51-55, and sends to Cleveland if it’s 56-60). As a result of the Okpala trade, Miami no longer needed the No. 44 pick, and therefore traded it to the Denver Nuggets (who used it to draft Bol Bol) in exchange for $1.2M in cash and a low 2022 second-round pick (the less favorable of Denver and Philadelphia).

The Heat have now traded their second-round picks in 2020, 2021, 2022, 2023, 2025 and 2026. They have just two remaining (for use or trade) over the next seven years – in 2022 (the less favorable of Denver and Philadelphia) and 2024 (but only if it’s 31-50).

Okpala was signed to a three-year, $4.2M fully guaranteed minimum-salary contract that will pay out $898K this season, $1.5M in 2020-21, and $1.8M in 2021-22. The Heat will then have his full Bird rights in the summer of 2022, and can make him a restricted free agent by issuing a qualifying offer (and incurring a cap hold) of either $2.2M or, if he meets starter criteria, $4.9M.

He could potentially qualify for an extension as soon as July 7, 2021, which would start with the 2022-23 NBA season. The extension could start at up to 120% of the 2021-22 estimated average salary, currently projected at $12.5M, which would translate to as much as $56M over as many as four years.

Summer of 2021 Impact: He will be under contract for $1.8M. 

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Duncan Robinson is, according to head coach Erik Spoelstra, “one of the best shooters on the planet.” The Heat initially signed him to a two-way contract as an undrafted free agent from the Michigan Wolverines in the summer of 2018, before coming to agreement to replace it with a three-year, $3.1M minimum-salary contract on the second to last day of the season.

Robinson is set to earn $1.4M ($1.0M guaranteed) this season and another $1.7M (non-guaranteed) in 2020-21. The Heat will then have his full Bird rights in the summer of 2021, and can make him a restricted free agent by issuing a qualifying offer (and incurring a cap hold) of either $2.1M or, if he meets starter criteria, $4.7M.

Duncan would qualify to sign an extension on April 9, 2021, which is just a few months before what would otherwise be his restricted free agency in July. The extension could start at up to 120% of next season’s estimated average salary, currently projected at $12.1M, and pay as much as $54M over as many as four years. Doing so, however, would come at a cost if his first-year salary is greater than what would otherwise be his up to $4.7M cap hit (which could be lowered to $1.9M if an agreement is reached by July 13, which would enable Miami to rescind its qualifying offer without sacrificing his Bird rights), reducing the Heat’s potential cap room as it plans to make a big slash in free agency that summer (2021).

Summer of 2021 Impact: Expect the Heat to bypass an extension, and instead potentially re-sign him as free agent in the summer of 2021, using as little as $1.9M of the Heat’s valuable cap room (despite a first-year salary that could potentially reach all the way to the max).

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Chris Silva is the Heat’s latest development project. Miami signed him to a two-way contract as an undrafted free agent from the University of South Carolina this summer. He can spend up to 45 days with the Heat.

The 45-day clock begins on Monday (with the start of G-League training camp), and includes all days in which he is on the Active List for an NBA game, or days he engages in practice, drills, conditioning, workouts, etc. between Monday and March 28 (the end of the G-League regular season). Starting March 29, he would then be able to stay with the Heat until the end of the NBA regular season on April 10, but wouldn’t be eligible to play in the playoffs unless his contract is converted to a standard NBA contract.

Silva is being paid $5,075 per day spent with the Heat and $560 per day spent in the G-League, for a potential combined total of up to $411K if he stays on his two-way contract for the duration of the season. The Heat would then be able to make him a restricted free agent this summer, by issuing a qualifying offer (assuming he’s on the Heat’s active roster or inactive list for at least 15 days this season, which I guarantee he will). The qualifying offer would be an offer of another two-way contract for 2020-21, with $50K guaranteed.

The Heat could instead convert his two-way contract into a standard NBA contract. They can do so unilaterally if it’s for the rest of the season, or for up to four years if they get his consent.

But while the Heat do currently have an open roster spot to accommodate him, they can’t yet convert his contract because they’re just $855K below the hard cap.

As things currently stand, the Heat will be able to sign a 15th player below the hard cap as soon as: (i) January 5, if it’s a 10-day contract, or (ii) January 14, if it involves either (a) a prorated rest-of-season contract to a player with two or more years of service or (b) a first-year salary of $855K or less for a rookie or sophomore (e.g., Silva), on a contract that could potentially extend up to four years in length.

Summer of 2021 Impact: The Heat remain in very strong position to retain him. Expect them to stretch out Silva’s 45-day clock so that he can remain with the Heat on his two-way deal until at least mid-January (if not until after the February 7 trade deadline), at which point they could negotiate to re-sign him to a long-term summer-of-2021-friendly minimum-salary contract that is similar to that of Robinson and Nunn, which would use just $1.8M of the Heat’s valuable cap room. 

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Justise Winslow, a dominant defender with emerging offensive talents, was drafted by the Heat with the No. 10 pick in the 2015 draft.

It was a highly scrutinized selection. Devin Booker, widely regarded as the best shooter in the draft, was still on the board. As was, shockingly, Winslow, who had been projected by many to go as high as No. 5. With both available, the Heat would be assured of one with its pick. Until, of course, the Boston Celtics, huge Winslow believers, offered the Heat four first-round draft picks to give it up: Atlanta’s No. 15 pick (which would have been acquired by Boston in a prearranged contingency deal with the Hawks), Boston’s own No. 16 pick, Brooklyn’s 2016 first-round pick, and a future first-round pick from Memphis (which will likely convey in 2020).

The Heat were seemingly choosing between three choices: (i) select Winslow, (ii) select Booker, or (iii) take the four first-round picks (though a particularly savvy idea would’ve been to prearrange to try to take the four picks, trade away two (or three) of them to move back up into the round to select Booker, and still retain two (or one) first-round picks for the future). The Heat chose Winslow.

Winslow is in the first year of three year, $39.0M rookie-scale extension that pays out exactly $13.0M each season and is subject to a team option for 2021-22. The Heat will have his full Bird rights, at the cost of a $19.5M cap hold when it’s over. What summer that will be depends on whether Miami exercises the option.

Winslow will be eligible for a veteran extension starting on October 12, 2020, which would start in either the 2021-22 season (if his option is declined) or the 2022-23 season (if his option is exercised). The extension could start at up to $15.6M, and add up to four (if his option is declined) or three (if his option is exercised) new seasons.

Summer of 2021 Impact: His status is somewhat uncertain. The Heat have the power to retain him, simply by exercising its $13.0M team option. But if they prefer the cap room, they could choose to decline it (and/or trade him).

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The Heat are in a strong position to retain most or all of their young talent, and still have enough cap room left over to make a run at a star free agent in the summer of 2021.

That summer could be historically loaded with unrestricted free agents potentially attractive to the Heat, including: Kawhi Leonard, LeBron James, Giannis Antetokounmpo, Anthony Davis, Paul George, Gordon Hayward, Otto Porter, and Julius Randle, among many others. Considering fit, age and current team status, Giannis would appear to be a particularly attractive target.

The salary cap is projected to reach $125M that summer, against which the Heat currently has:

  • Guaranteed Salary: Jimmy Butler ($36.0M), KZ Okpala ($1.8M), dead-money cap charge ($5.2M)
  • Team Options: Justise Winslow ($13.0M), Tyler Herro ($4.0M)
  • Cap Holds: Bam Adebayo ($15.3M), Kendrick Nunn ($1.9M – $4.7M), Duncan Robinson ($1.9M – $4.7M)
  • Others: Chris Silva (TBD: maybe ~$1.8M minimum), 2021 first-round pick (TBD: maybe ~$3M)
  • Uncertain: Goran Dragic, Dion Waiters, Derrick Jones Jr., James Johnson, Udonis Haslem, Kelly Olynyk, Meyers Leonard

Factoring in everyone but those who remain uncertain, the Heat could generate up to about $38M of cap room. Bypassing Winslow’s team option jumps it to $50M-plus.(1)

Projected max salaries would range from $31.3M for players with 0-6 years of service, $37.5M for players with 7-9 years of service (e.g., Giannis, Davis), and $43.8M for players with 10+ years of service (e.g., Kawhi, LeBron). Which puts the Heat in range for all but the most expensive max salary tier players, even after potentially retaining its entire group of youngsters.

And, after all cap room is used up, the Heat would still have the $5.5M Room Mid-Level Exception (to potentially offer to Dragic, Jones, Olynyk, Leonard, or someone else).

Could the Heat add a star in 2021, to this suddenly already strong core?

Notes:

(1) This is where that $5.2M dead-money cap charge really hurts.

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