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What could have been, if only

July 16th, 2010 13 comments
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Pat Riley had a plan. He executed upon it with deadly precision. He has put together what could very well be the best trio in NBA history. That’s the stuff of legends.

But even the legends make mistakes. And sometimes, they can prove costly.

Here are three bad decisions over the past nine months which never should have been made:

1. Picking up Daequan Cook’s Option.

It’s October 31, 2009. We are four days into the final season before the highly anticipated summer of 2010. Pat is deep within his strategy to maximize cap space, a strategy that had influenced nearly every decision he has made for nearly three years. He is now contemplating how to handle his latest two decisions – whether to pick up the 2010-11 options on Michael Beasley and Daequan Cook.

The choice on Beasley is obvious. Yes, he has been an underperformer. And yes, his $5.0 million salary would cut deeply into the Heat’s precious cap space. But Beasley has an undeniable trade value. He can always be moved in the offseason, if the need arises, in favor of the cap room. There’s simply no risk, therefore, in picking up the option. And if he goes on to have a breakout season, the range of possibilities for Riley in his attempt to build a championship roster in the offseason to come would increase exponentially.

The situation with Cook is completely different. Since winning the three-point shooting contest the year before, he has been completely non-existent. His career numbers are atrocious: 37.8 FG% and 36.7 3P FG%. His place in this league is tenuous at best. He will certainly never be a meaningful contributor for the Heat, not with Dwyane Wade ahead in the rotation. His option would count $2.2 million against the cap. He has negative trade value, so a mistake could prove costly. The choice is obvious, right? Wrong. In a decision that shocked everyone, even Cook himself, Riley chose to pick up his option – violating his own strategy to maximize cap space to make a run at three max contract free agents.

The Heat paid a steep price for the error. On June 23, Riley traded away the team’s 2010 first round draft pick — No.18 overall – to the Oklahoma City Thunder in order to rid himself of the Daequan Cook contract he had opted into just eight most earlier, and were returned the No. 32 pick in the second round.

The Thunder went on to trade Miami’s first round pick to the Clippers for a 2012 top-10 protected first round pick.

The Heat was apparently never destined to utilize its 2010 first round pick, choosing to conserve the cap space rather than seek out widely-recognized favorite for the pick Eric Bledsoe, who was available. And so, as it turns out, had Riley not picked up Cook’s option, he could have flipped the Heat’s No. 18 overall pick for a potential lottery pick in 2012. Or selected Bledsoe.

2. Not Trading Dorell Wright at the Trade Deadline.

It’s February 19, 2010. We’re less than five months away from the summer of 2010. Pat has another decision to make. The season is over in two months. It’s the trade deadline.

The Heat isn’t playing well. It doesn’t matter. It’s all about the offseason. The team is $2.8 million over the luxury tax threshold. Dorell Wright has a $2.9 million salary. Trading Dorell could save the Heat (i) the $1.2 million remaining to be paid on from his $2.9 million salary, (ii) a $2.8 million luxury tax bill, and (iii) an estimated $3.7 million luxury tax check distributed to all teams below the luxury tax threshold. That’s $7.7 million!

The Memphis Grizzlies reach out to the Heat. They are interested in acquiring Wright. They are offering a 2011 first round draft pick in return.

What do you do?

Dorell is the final year of his contract. He will become a free agent in the offseason no matter what decision Riley makes.

So… Is having Dorell Wright on the roster for the final 26 games of the season, for a team going nowhere while it awaits the offseason to come, worth $7.7 million and a first round draft pick?

Pat decided it was. Riley rejected the Grizzlies’ proposal. Memphis went on to acquire Ronnie Brewer from the Jazz in exchange for its 2011 first round pick.

The Heat was eliminated from the playoffs by the Celtics in the first round. Dorrell Wright is no longer part of the Heat’s future.

3. Sacrificing all those draft picks for LeBron James and Chris Bosh.

It’s July 10, 2010. The miracle has come true. LeBron James, Dwyane Wade and Chris Bosh have all agreed to play for the Miami Heat. It’s time for Heat fans to celebrate. But not for Riley. He has a decision to make. The Big Three have committed. Now they need to be signed.

For Wade, it’s easy. The Heat holds his Bird rights. Riley can sign him whenever he wants.

For James and Bosh, it’s not as easy. Riley has two alternatives to offer each player:

  • A six-year $110 million contract, which pays out $88 million over the first five years: this alternative requires that Riley pursue a sign-and-trade for each player, with the not altogether rational Cavalier and Raptors organizations
  • A five-year contract, which pays out $92 million: this alternative can be executed immediately

Bosh contracts will have opt out rights after four years. Both James and Bosh are surely going to exercise it. If things are going well, they’re going to opt out in order to sign a new, maximum contract deal while they’re still young. If things aren’t going well, they’re going to opt out in order to test the free agent market. So the question needs to be asked: Which alternative would you choose?

Of course, there is more to consider than just the salaries of James and Bosh. The first alternative, while less attractive, allows the Heat to add both Udonis Haslem and Mike Miller to the mix. The second alternative requires the Heat to add only Miller. And that’s unfortunate.

But here’s the thing: The Heat would have six – yes, six! – more draft picks to deploy over the next seven years. Among the six would be four first round draft picks, including a first rounder from the Raptors which is lottery protected from 2011 to 2014 and completely unprotected in 2015 – making it a potential No. 1 overall pick from in 2015 NBA Draft.

That’s not a bad way to start the 2015 offseason — with the potential No. 1 overall pick in the draft a week after the contracts of James and Bosh expire!

So the question needs to be asked: Is Udonis Haslem truly worth four first round draft picks and two second round draft picks over the next seven years?

***

Why does it matter?

The Heat now finds itself in the following situation from a draft pick perspective (picks acquired from other teams in parenthesis):

2011: No first round picks; one second round pick (Minnesota)
2012:
 One first round pick; one second round pick (Memphis; Top 55 protected)
2013:
 No first round pick; one second round pick
2014
: One first round pick; two second round picks (Minnesota)
2015
: No first round pick; one second round pick

This is the situation the Heat could have found itself in had different decisions been made in the three scenarios presented above (picks acquired from other teams in parenthesis):

2011: Three first round picks (Memphis and Toronto lottery-protected through 2014); two second round picks (Minnesota)
2012:
 Two first round picks (LA Clippers); two second round picks (Memphis; Top 55 protected)
2013:
 One first round pick; one second round pick
2014
: One first round pick; two second round picks (Minnesota)
2015
: One first round pick; one second round pick

That’s Dwyane Wade, LeBron James, Chris Bosh, Mike Miller, eight first round draft picks, and eight second draft picks over the next five years.

If only!

Note: 
The math in regards to the contracts of LeBron James and Chris Bosh under a scenario where they were not signed-and-traded assumes the Heat would build out a contract for James, Bosh and Dwyane Wade that pay out identical average salaries over the first five years of their contracts (though Wade, because the Heat own his Bird rights, would be receiving a sixth year guarantee). 

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Matt Barnes to decide today

July 16th, 2010 18 comments
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Orlando Magic forward Matt Barnes is close to finalizing a contract that could send him to South Florida for next season.

Barnes said yesterday that he’ll announce his decision at some point today.

He posted the following message to his Twitter account yesterday afternoon: “2maro is the day. I will let my fans know where I’m going to sign. Its gonna SURPRISE you!!!! Keep it locked.”

Barnes, 30, has played for seven teams during his seven-year career and was initially looking for a long-term deal after opting out of his contract with the Magic. He had stated publicly in recent weeks that his first preference would be to return to Orlando, but that is now a practical impossibility with Magic general manager Otis Smith’s decision to match Chicago’s 3-year, $19 million offer sheet to guard J.J. Reddick. Orlando’s team payroll now exceeds $90 million.

Boston and Miami are the presumed favorites for his services, with Dallas and the L.A. Lakers also in the mix. The Mavericks could offer Barnes up to a full mid-level exception contract; the Lakers could offer a contract starting at $1.8 million; the Celtics and Heat could offer minimum salary contracts.

The Heat could certainly utilize Barnes’ skill set. Barnes is a scrappy, experienced combo forward who has found a home in the NBA thanks to the aggressive mentality he brings to the floor. He is lockdown perimeter defender capable of manning the two, three and four positions. He’s also evolved into an underappreciated but effective scorer from in close, who could provide an alternative source of scoring for the second unit. While he has the reputation for being a three-point shooting threat, his conversion rate has never been spectacular. Last season, he shot just 31.9% from distance.

The addition of Barnes along with the possible signing of three-point specialist James Jones would shore up the team’s need for depth at the small forward spot, and allow Pat Riley to focus on areas of greater need.

Barnes averaged 8.8 points and 5.5 rebounds in 26 minutes of action for the Magic last season, starting 58 games.

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Erick Dampier to the Heat?

July 15th, 2010 12 comments
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The Miami Heat currently has a grand total of zero centers under contract.

The team does have a commitment from the oversized Zydrunas Ilgauskas as well as a right-of-first-refusal on the undersized restricted free agent Joel Anthony, but either is hardly a definitive answer to the team’s needs at the position. And the free agent options are dwindling.

The Heat is one of five teams currently pursuing Bulls’ free agent Brad Miller, a list that also includes Atlanta, Boston, Chicago and Houston.

Miller appears to be fairly accommodating to the Heat’s financial situation. “I’m in a good situation and realistic about my worth. I’m not worried about having to chase money. I’ve had security for a long time,” Miller said. “I can go to the situation that’s best for me. A very big thing is location and the team.”

While his name has been mentioned as a possibility in South Florida over the past couple of weeks, if the Bulls make the right offer the veteran big man would probably take it. He loves the team, the team loves him, and the Bulls have the cap room to offer substantially bigger dollars that the two years and $2.5 million the Heat can shell out.

But there could be another, and potentially more intriguing, alternative for the Heat: Erick Dampier. Read more…

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Raja Bell signs $10 million deal with the Jazz

July 15th, 2010 3 comments
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Raja Bell has agreed to a three-year deal with the Utah Jazz worth nearly $10 million.

Bell, who will turn 34 in September, played in only six games last season with the Bobcats and Warriors before undergoing surgery for a torn ligament in his left wrist. But he is a career 41.1% three-point shooter still capable of solid on-ball defense.

It was anticipated that he would play a big part on the Heat’s second unit next season.

Bell’s departure is certainly a loss. The Heat could use a floor-spacing shooter at the two guard spot, particularly someone also capable of playing strong perimeter defense. He is certainly aging and his athleticism is declining, but he nevertheless remains solid at what he does best. He figured to play significant minutes for the Heat as a potential as the only true reserve shooting guard on the roster behind Dwyane Wade.

The decision to join the Jazz is quite confounding in some respects.

Bell presumably wanted to play for a good team. With his track record, good teams certainly wanted him. That much is evident from the list of clubs after him, a list which reportedly included the Bulls, Heat, Lakers, Spurs, Trail Blazers and Jazz. If you’re 34 years old and looking to win your first championship before you hang it up, you can’t do much better than either the two-time defending champion Lakers or the future perennial favorite Heat. The Jazz doesn’t seem to offer the ten-year veteran an opportunity to win. Read more…

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Dwyane Wade the Victim of Salary Cap Maximization Issues By His Agent and Team

July 15th, 2010 No comments
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Miami Heat general manager Pat Riley and salary cap expert Andy Elisburg have been widely praised not only for their ability to recruit LeBron James, Chris Bosh and Mike Miller to join Dwyane Wade and Udonis Haslem in South Florida but also for their ability to structure their contracts to fit within the confines of a $58.044 million salary cap.

Wade, however, has reason to be less than thrilled.

Wade, James and Bosh were all eligible to receive maximum contracts with a starting salary of $16,568,908. However, in order to accommodate the contracts of Miller and Haslem, each took less. The first year salaries in the contracts of James and Bosh have been finalized at $14,500,000, while the first year salary for Wade has been finalized at $14,200,000.

Wade’s $300,000 shortfall will wind up costing him $2,272,500 over the life of his deal.

Wade took less than his Big Three cohorts in order to accommodate Haslem. But part or even all of that sacrifice was unnecessary. The Heat had the ability to create the necessary room to allow Wade’s contract to match that of James and Bosh, with room to spare, through the utilization of some creative maneuvering.

Understanding how this would have been possible necessitates an understanding of certain league rules.  Read more…

A Story of Sacrifice for the Miami Heat

July 15th, 2010 No comments
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The contracts are all signed. The final numbers are all in.

We now know exactly how much each member of the Big Three sacrificed, why exactly they sacrificed, and where exactly the savings went.

Each member of the Big Three was eligible for a maximum salary of $16.6 million in the first year of any new contract signed, whether it was with their prior teams or with anyone else. But while the starting salary was to be the same no matter where they signed, the NBA’s Collective Bargaining Agreement gives the home team a financial advantage when it comes to re-signing its own players. The home team is eligible to offer his player one more year (six instead of five) and bigger annual raises (10.5% of the first year salary instead of 8%).

Sign-and-trade transactions capitalize on this concept, in that they allow the to-be-traded player to be technically signed by his home team, and then be immediately traded to his new team. Pat Riley structured sign-and-trade transactions with both the Raptors (for Bosh) and Cavaliers (for James). No maneuvering for Wade was necessary because the Heat is already his home team.

The Heat’s trade partners were willing to accommodate the Heat, but only at a very steep cost. To the Raptors, the Heat sent its 2011 first round pick and returned the first round pick previously acquired from the Jermaine O’Neal trade in February 2009. To the Cavaliers, the Heat sent its 2013 and 2015 first round picks, gave Cleveland the option to swap first round picks in 2012, as well as a pair of second round picks. In total, the Heat surrendered four first round picks and two second round picks over the next five years to make the sign-and-trades happen.

The sign-and-trade approach increased the total potential value of the contracts of each of Bosh and James. Without the sign-and-trade approach, each would have been eligible for a five-year contract, starting at $16.6 million with annual raises of up to 8% of the starting salary, totaling $96.1 million. With the sign-and-trade approach, each player, and Wade, became eligible for a six-year contract, starting at $16.6 million with annual raises of up to 10.5% of the starting salary, totaling $125.5 million.

Each player then gave back a portion of that increase to accommodate the contracts of Miller, Haslem and other such things. The Big Three took discounts in order to accommodate the following:  Read more…

Miami Heat Completes Mike Miller Signing

July 15th, 2010 4 comments
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The Miami Heat has taken another major step forward in its attempt to build out its championship-caliber roster, by securing the services of Washington Wizards free agent swingman Mike Miller.

The 6-foot-8 three-point-shooting specialist agreed in principle nearly a week earlier to a five-year deal worth $29 million, but actually signed his contract today.

Miller is considered a vital part of Miami’s offseason plan, which started with the re-signing of Dwyane Wade and the additions of LeBron James — Miller’s close friend — and Chris Bosh. James said he wanted Miller to play with him, even talking the former University of Florida Gator into passing up higher-paying deals for a chance to sign with Miami.

Miller had been heavily pursued, reportedly receiving a five-year contracts from the Los Angeles Clippers and New York Knicks, each worth approximately $50 million, as well as interest from the Chicago Bulls and Cleveland Cavaliers.  But Miller’s future has hinged on LeBron’s, and he graciously took what appears to be a $20 million discount to make it happen.

James, Wade and Bosh did the rest, reducing their starting salaries by $3.5 million to accommodate Miller’s contract, which will start at exactly $5 million. They split the discount evenly, with each player reducing his starting salary by around $1.2 million, which equates to a $9 million sacrifice per player over the course of their six year deals.  Read more…

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Reviewing the Miami Heat’s Forgone First Round Draft Picks

July 14th, 2010 No comments
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The Heat have traded away multiple first round draft picks in the sign-and-trade transactions that enabled them to acquire LeBron James and Chris Bosh. The years in which those picks will be conveyed are rather straightforward in practical terms. However, literally speaking, there are various rules and protections in place that make it impossible to determine with certainty.

The trading of N.B.A. draft picks is restricted by a series of intricate rules that have been put in place in order to protect teams that are trading away the picks from themselves. History suggests that teams need these protections so as not to unwittingly destroy their own franchises.

No one N.B.A. personality is more historically-renown and nationally infamous for his incompetency than Ted Stepien, former owner and de fact general manager of the Cleveland Cavaliers. In 1980, Stepien parlayed his minority stake in the Cavs into full control of the franchise. After purchasing the club, Stepien thought he could quickly assemble a competitive team, but he proved to be a horrendous judge of basketball talent. He spent ludicrously lavish sums of money on marginal players and made a series of controversial and, to outsiders, ludicrously one-sided player trades.

His first big move happened two months before his purchase of the team went through: He flipped backup guard Butch Lee and a 1982 first-round pick to the Los Angeles Lakers in exchange for backup forward Don Ford and a 1980 first-round pick (needless to say, not a great pick considering the Lakers were competing for titles). Two years later, Los Angeles picked future Hall-of-Famer James Worthy first overall with Cleveland’s pick.  Read more…

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The Result of Winning Over Money, Friendship Over Fame

July 13th, 2010 18 comments
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One has to wonder if the enormous salaries the NBA offers has caused players to forget the reasons why they play the game. Or that it is a game. The concept of playing because it was a childhood dream, or the dream of hitting the game-winning shot as time expires to take home the NBA title seems largely gone.

The game has changed. It has changed from being played on the court to being played in the owner’s office. Players seem to care only about one thing: money.

What Pat Riley is doing in South Florida is unprecedented. Sure, there have been isolated cases where the magnanimous nature of an individual athlete enables him to sacrifice dollars for the benefit of his team. But never has such an attitude fostered a culture that has permeated throughout an entire organization.

What has resulted should be a model for everyone to follow – on generosity, on the desire for team success, and, most importantly, on the value of friendship.

Free agency obviously depends on a number of factors. One, clearly, is money. For some, priorities two, three, four and five are also money. That will not be the case for any of the next fifteen players to wear a Miami Heat jersey. Read more…

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A fresh look at the roster…

July 13th, 2010 8 comments
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The Miami Heat’s roster is beginning to round into shape.

Head coach Pat Riley has secured commitments from, or is in advanced discussions with, the following 9 players:

PG: Mario Chalmers
SG: Dwyane Wade
SF: LeBron James, Mike Miller, James Jones
PF: Chris Bosh, Udonis Haslem, Juwan Howard
C: Zydrunas Ilgauskas

The Heat is at a point where it has more veteran applicants than remaining roster spots. Of interest to the Heat, or rumored to be so, include the following 19 players:

PG: Carlos Arroyo, Jason Williams, Keyon Dooling and Patrick Beverley
SG: Raja Bell, Eddie House, Jerry Stackhouse and Kenny Hasbrouck
SF: Matt Barnes, Tracy McGrady, Rasual Butler and Da’Sean Butler
PF: Shavlik Randolph and Jarvis Varnado
C: Joel Anthony, Jamaal Magloire, Brad Miller, Kwame Brown and Dexter Pittman

A roster can consist of no more than 15 players during the regular season.

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