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NBA Owners Approve Advertising on Jerseys Starting in 2017-18

April 15th, 2016 No comments
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The NBA board of governors on Thursday approved a three-year pilot program to allow teams to sell advertising space on their jerseys. The program will begin with the 2017-18 season, and extend through the 2019-20 season.

Each team will be responsible for selling its own sponsorships. The sponsorships, in the form of patches that will measure approximately 2.5-inches by 2.5-inches, will be placed on the front left of game jerseys. Teams can now start engaging with potential advertisers, giving them enough lead time to secure contracts.

The value individual teams could hope to generate from such jersey ad sales could range widely, from perhaps as low as $1 million per year for smaller-market or lower-profile teams such as the Memphis Grizzlies or Charlotte Bobcats to more than $15 million per year for larger-market or higher-profile teams such as the New York Knicks, Los Angeles Lakers, Golden State Warriors or Cleveland Cavaliers, which could equate to at least $150 million per year in total.

Individual teams will keep 50 percent of the ad money they generate, and contribute the remaining 50 percent to the revenue-sharing pool for the benefit of smaller-market, lower-revenue-generating teams.

The new revenue would be counted as basketball-related income in accordance with the terms of the 2011 Collective Bargaining Agreement and, therefore, split with the players. It would also, in turn, increase future salary cap levels.

Based upon the currently negotiated split of revenues, players would be in line to receive 51 percent of the new revenues, which equates to $77 million of a potential $150 million total.

Based on the current salary cap calculation methodology, the new revenues would increase future cap levels by at least $2.2 million (excluding any associated adjustments).   Read more…

Miami Heat Signs Guard Briante Weber to Three-Year Deal

April 10th, 2016 No comments
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The Miami Heat ultimately got its man.

The Heat signed Briante Weber to a three-year, $1.9 million minimum-salary contract on Sunday.

The contract will pay out a guaranteed $12,355 for the rest of the season. The second year, at $874,363, will initially be 25 percent guaranteed while the third year, at $1.0 million, will initially be non-guaranteed.

Miami leveraged a small portion of its remaining taxpayer mid-level exception to complete the long-term signing (in much the same way as it previously did with second-round draft pick Josh Richardson).

The Heat quickly identified Weber, a defensive-minded guard in the mold of former Heat guard Patrick Beverley, as an attractive prospect after he went undrafted in June because of reconstructive surgery following a devastating right knee injury in which he tore the ACL, MCL and meniscus in his right knee in January of last season at Virginia Commonwealth.

Despite going undrafted, Weber attracted interest from more than half the league. But he kept close ties with the Heat organization. In September, he failed a physical with the team prior to the start of its training camp. However, the Heat nonetheless signed him to a training camp contract on October 19, then waived him five days later so that it could direct him to its D-League affiliate.  Read more…

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Josh Richardson is Very Much A Part of Miami Heat’s Future

March 19th, 2016 4 comments
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The Miami Heat scouting and development machine continues to amaze, having churned out yet another talented prospect at a point in time in which the team needs it most.

With the Heat handcuffed in its ability to execute any roster-building trade scenarios for more than a year by a lack of tradable assets, and possessing just three total draft picks over the next six years (the bare minimum possible under NBA rules), Josh Richardson, its 2015 second-round pick, has transformed himself into a crucial roster component, validating the first-round grade placed upon him by general manager Pat Riley.

Richardson was rated 24th on the team’s draft board. The Heat snagged him with pick No. 40.

Richardson is the latest in a string of unlikely success stories that also includes undrafted guard Tyler Johnson and banished former second-round draft pick Hassan Whiteside. The prospect for success on players selected at such levels across the NBA is notoriously low, yet the Heat appears to have converted an unprecedented triple play which has the potential to lead it to a promising future.

Richardson’s story has been particularly unlikely. Not highly touted out of high school in 2011. An adequate four-year college career at Tennessee, after which most draft analysts had him being selected late into the second-round if at all. The victim of a roster crunch with the Heat that could very easily have left him without NBA work. An uninspiring first half of the first year of his pro career, during which he shot just 25.9 percent from the floor while being shuffled back and forth between Miami and Sioux Falls.

His emergence was borne primarily out of necessity. After the trade of Mario Chalmers and subsequent injuries to Tyler Johnson and Beno Udrih, Richardson’s minutes have started to soar. He now ranks seventh overall among rookies in minutes played since the All-Star break, 395, and first among second-round draft picks.

Still, to get those minutes in the game’s best league, one has to earn it.

Richardson has done just that — leading all NBA players in three-point shooting since the All-Star break at 64.1 percent, including an 83.3 percent mark versus tight defense and 60.6 percent when open. He’s hit at least one three-pointer in each of the last 10 games.  Read more…

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NBA and NBPA Agree to Shorten July Moratorium by Five Days

March 17th, 2016 No comments
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The NBA and National Basketball Players Association have agreed to shorten the league’s moratorium period by five days for next season, according to a memo sent from the league office to its member teams on Thursday evening.

It will now last six days, from July 1 to July 6, with free agency beginning on July 7.

Both the NBA and the union had to agree to the change, since the moratorium rules fall under the Collective Bargaining Agreement, an agreement which, as the name states, was collectively bargained. The agreement had called for the moratorium period to run from July 1-11 in 2016.

While teams can still sign their first-round draft picks and players to minimum salary contracts of up to two years in length, and make a few other specific moves that are not impacted by the salary cap, most transactions are prohibited during the moratorium period, including trades and most free-agent signings.

The change was surely inspired by DeAndre Jordan’s notorious free-agent flip-flop last summer that saw the center commit to sign with the Dallas Mavericks on July 3, only to renege on the verbal deal five days later and instead choose to re-sign with the Los Angeles Clippers. Clippers ownership, management and players converged on Jordan at his family’s home in Houston and helped change his mind, then stayed with him for the final hours until the signing could be made official at 12:01 am on July 9, effectively blocking the Mavericks organization from re-gaining access to him.

Technically, even verbal agreements aren’t allowed during moratorium. In theory, then, Jordan didn’t renege on the Mavericks. In practice, however, such verbal agreements are commonplace as early as July 1.

The rule change for next season allows players and teams to execute agreed-to deals faster, and is designed to help reduce second-guessing scenarios such as that with Jordan.

It does, however, come at a minor potential risk.  Read more…

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Is Avoiding the Tax Worth Watching Quality Free Agents Pass By?

March 11th, 2016 No comments
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This post is not a reflection of how I personally feel. I tend to agree with the approach the Miami Heat has taken. But I have been asked numerous times by frustrated fans as to why the Heat is so concerned about avoiding the luxury tax, and whether it is truly worth waiting so long to fill out the roster as quality free agents choose to sign elsewhere. This post is simply meant to address those questions, so that you can decide for yourselves. 

Pat Riley proclaimed in the days following the All-Star break that the Miami Heat’s trade deadline dealings in no way impacted the team’s competitiveness in its quest to make and advance through the playoffs.

He was right.

The Heat was $11.3 million over the NBA’s $84.74 million luxury tax threshold on July 10th. It rather brilliantly executed five trades over the course of the following eight months, two at the trade deadline, in achieving a season-long goal to fall below it.

In accomplishing that goal, the Heat managed to trade away just one rotation player (Mario Chalmers(1), but even at that, trading him, through a series of subsequent developments, also led to the emergence of newly-minted rotation player Josh Richardson) and just three future second-round draft picks.

And when the Heat did have the opportunity to materially improve its competitiveness, when Joe Johnson became available, it did not hesitate, not even for the mere eight additional days that would have prevented it from vaulting right back into the same tax territory it had spent eight months to avoid. Riley took care of that problem by asking Beno Udrih to accept a small discount in conjunction with his waiver, a request Udrih graciously granted.

The result? The Heat is now $46,108 below the luxury tax threshold, despite perhaps being in better shape competitively than it was to start the season.  Read more…

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Miami Heat Complete Buyout Agreement with Beno Udrih

February 29th, 2016 3 comments
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Miami Heat point guard Beno Udrih is out of commission for three months after undergoing surgery on Thursday to repair a torn plantar plate in his right foot. Apparently, however, that doesn’t mean he can’t still contribute.

The Heat has been locked in a seemingly endless on-again, off-again battle with the luxury tax thus far this season. On July 10th, it was $11.3 million over the threshold. Eight months and five trades later, Miami accomplished its season-long goal to drop below the tax threshold at the trade deadline, by a mere $218,000.

Then, on Thursday, Joe Johnson was released from his contract by the Brooklyn Nets. He cleared waivers two days later. Just over an hour after that, he was an official member of the Heat, signing a rest-of-season minimum salary contract. The $261,894 salary cap hit associated with the contract vaulted the Heat right back over the tax line, by $43,894. 

Earlier today, the Heat waived Udrih in conjunction with a buyout. According to Eric Pincus, Udrih agreed to give up $90,000, which again takes the Heat below the tax threshold, presumably this time for good. The Heat now officially stands at $46,106 below the tax level. The roster currently stands at 13, two players below the 15-player maximum.  Read more…

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Miami Heat Sign Joe Johnson to Rest-of-Season Minimum Salary Deal

February 28th, 2016 No comments
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Pat Riley wanted to add what could very well be a core piece to the Miami Heat roster, and he apparently wasn’t willing to wait to do it.

Just days after extolling the virtues of cleansing his team of its repeater tax issues, Riley officially signed coveted guard-forward Joe Johnson to a rest-of-season minimum-salary contract just an hour or so after he cleared waivers on Saturday night.

The move vaults the Heat right back over the luxury tax threshold.

If Riley had instead signed Johnson a mere eight days later, on March 6th (or thereafter), Miami would have instead remained below the tax threshold.

Johnson will earn $414,481, of which the Heat will owe just $261,894. The rest will also be paid out by the Heat but be reimbursed to the team by the league office at the end of the season.

The true cost of the Johnson signing for the Heat could be significantly higher, however, if Riley doesn’t take action to drop the team below the tax threshold by April 13th. That’s the final day of the regular season, the day in which the Heat’s team salary will be locked in for the purposes of the tax calculation.

Crossing the tax line would impact both this and future seasons.

The Johnson signing puts the Heat $43,894 over the line, which would trigger a tax payment of $109,736. Crossing the line would also disqualify the Heat from receiving a tax distribution – a pro rata payout given to non-taxpaying teams totaling 50 percent of the payments made by tax teams – currently projected at $2.6 million.

The cost of Johnson’s contract would therefore effectively become: $262K in salary + $110K in luxury taxes + $2.6 million in tax distributions forgone = $2.9 million.  Read more…

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Miami Heat on the Verge of Signing Joe Johnson

February 26th, 2016 2 comments
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With the NBA trade deadline now behind us, buyout season is in full swing.

Players such as Anderson Varejao, David Lee, J.J. Hickson and Steve Novak have already secured their releases from their prior teams and signed with new ones. Others, such as Joe Johnson and Andre Miller, have reached buyout agreements and are in the process of being waived, and will become free agents shortly. Still others, such as Kevin Martin and Ty Lawson, are rumored to be negotiating buyout agreements with their existing teams and, if successful, would become free agents thereafter.

Buyout season is a frenetic time because it represents the last real opportunity for significant player moment. It can be loosely defined as the period of time that starts after the trade deadline expires, and ends on March 1st. Players must be waived by their existing teams by March 1st (whether in conjunction with a buyout or not) to be eligible for the playoffs with another team.

A buyout is essentially an agreement between a player and his team wherein the team agrees to terminate the player’s contract in exchange for a reduction in the remaining guaranteed salary he is owed.

Technically, a buyout constitutes an amendment to an existing player contract in which: (i) the team will request waivers on the player, and (ii) if the player clears waivers, the remaining portion of his guaranteed salary will be reduced or eliminated.

“Waivers” are a temporary status for players who are released by their teams. A team initiates the waiver process by “requesting waivers” on the player it is releasing. The player stays “on waivers” for 48 hours, during which time other teams may claim the player.

If a team makes a successful waiver claim, it acquires the player and his existing contract, and pays the remainder of his salary. Any negotiated buyout is nullified, and the waiving team is relieved of all responsibility for the player.

Waiver claims are rare, particularly for players with large contracts, for two primary reasons.

First, they require: (i) a claiming team to either have room below the salary cap to fit the player’s entire salary, a trade exception for at least the player’s salary, a disabled player exception for at least the player’s salary and that the player be in the final season of his contract, or (ii) that the contract be initially executed for two seasons or fewer at the minimum salary.

Second, they require a claiming team to pay out the remaining salary obligations under the contract in full.

If no team has claimed the player before the end of the waiver period, he “clears waivers.” The player’s buyout (if any) takes effect, his contract is terminated, and he becomes a free agent.

The Miami Heat has taken dead-aim at Joe Johnson.

Johnson is assured to clear waivers because no NBA team has enough room, or a large enough exception, to claim his $24.9 million salary.

According to Zach Lowe, Johnson, who reportedly agreed to give up a whopping $3.0 million of the $6.7 million remaining to be paid on his expiring contract in order to secure his release from the Brooklyn Nets, is expected to sign with the Heat, and will do so after he clears waivers on Saturday.

But Miami has a problem.  Read more…

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Did the Brooklyn Nets Structure the Andrea Bargnani Buyout Correctly?

February 24th, 2016 3 comments
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This is a temporary post which I may remove because it has nothing to do with the Miami Heat. I just found it interesting enough about which to write. However, it is such a minute issue that it may well be interesting to nobody else.

On July 17, 2015, Andrea Bargnani signed a two-year minimum salary contract with the Brooklyn Nets. The contract called for a payout for this season of $1,362,897, and for next season, which was subject to a player option, $1,551,659 if the option were to have been exercised.

Unfortunately, things didn’t go as planned. Bargnani proved to be something of a disappointment in Brooklyn, averaging just 6.6 points in 13.8 minutes per game over his 46 games.

On Saturday, the Nets waived Bargnani under the terms of a buyout.

A buyout is an agreement between a player and his team wherein the team agrees to terminate the player’s contract, granting the player his freedom, in exchange for a reduction in the remaining guaranteed salary he is owed.

Technically, a buyout constitutes an amendment to an existing player contract in which: (i) the team will request waivers on the player, and (ii) if the player clears waivers, the remaining portion of his guaranteed salary will be reduced or eliminated. If the player is claimed off waivers, the buyout does not take effect; the player is awarded to the claiming team, along with his existing contract.

When Bargnani cleared waivers on Monday, the buyout took effect. According to Eric Pincus, Bargnani’s salary cap hits for this and next season after applying the buyout will be $1,039,298 and $323,599, respectively.

Subtract those figures from his original salary payouts and you get this: Bargnani agreed to give up $1,551,659.

That’s not a random figure. Look up the page. You will notice that Bargnani essentially sacrificed the exact amount of his would-be salary for next season.

But if Bargnani agreed to give up his salary in full for next season, why did the Nets incur a dead-money cap charge for that season?

According to salary cap rules, the amount of the buyout is allocated to team salary pro rata over the then-current and each remaining season covered by his contract on the basis of the remaining salary to be paid in each such season.

On the day he cleared waivers, Bargnani was still owed $408,869 (30 percent) of his salary for this season and the full $1,551,659 for next season.

The prorated amount of the buyout applicable to next season was therefore: $1,551,659 (buyout amount) x $1,551,659 (salary for next season) / ($408,869 + $1,551,659) = $1,228,060.

The dead-money cap charge for next season was therefore: $1,551,659 (salary for next season) – $1,228,060 (buyout allocation) = $323,599.  Read more…

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Miami Heat Drop Below the Luxury Tax With Two Trades

February 18th, 2016 3 comments
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The Miami Heat completed a pair of trades prior to the 3 p.m. NBA trade deadline, achieving their season-long goal of dropping below the NBA’s $84.74 million luxury tax threshold.

As a result, Heat fans will almost surely not hear the words “repeater tax” again until at least the 2020-21 season.

The Heat were $11.3 million over the luxury tax threshold only July 10th. The path to tax avoidance was long and twisted, and included five trades.

On July 27th, the Heat executed two trades, sending Shabazz Napier and $1.1 million in cash to the Orlando Magic in exchange for a 2016 top-55 protected second-round draft pick, and Zoran Dragic, $1.6 million in cash and its 2020 second-round draft pick to the Boston Celtics in exchange for a 2019 top-55 protected second-round draft pick.

On November 10th, the Heat traded Mario Chalmers and James Ennis to the Memphis Grizzlies in exchange for Beno Udrih and Jarnell Stokes.

On February 16th, the Heat traded Chris Andersen and two second-round picks (the first is Miami’s 2017 pick if it lands in the top 40 or its 2018 pick if not, and the second is Boston’s 2019 top-55 protected pick acquired in the Dragic trade) in exchange for Brian Roberts.

The Andersen trade was critical, as it set the stage for today’s accomplishment. Pat Riley and the Heat organization knew that trading the injured Andersen’s $5.0 million salary in exchange for nothing in return would be rather difficult. So, at the cost of essentially one second-round draft pick, Miami mitigated the burden for a potential trade partner by swapping his salary for the more palatable $2.9 million salary of the capable veteran backup point guard Roberts, in the process saving $6.2 million even if things didn’t play out as planned. That left the Heat just $3.5 million over the tax threshold.

The rest was rather easily predictable, if not necessary inevitable.

Earlier today, the Heat traded Jarnell Stokes along with $721,300 in cash to the New Orleans Pelicans in exchange for a 2018 top-55 protected second-round draft pick. The cash payout is enough to cover the $273,401 remaining balance on Stokes’ $845,059 salary for the season, and net the Pelicans a $447,899 profit.

Later in the day, the Heat traded the newly acquired Roberts and their 2021 second-round draft pick to the Portland Trail Blazers in exchange for $75,000 in cash. Because the Blazers had a team salary below the salary floor(1), in addition to receiving a second-round pick from Miami, Portland also saved $1.9 million by taking on the $924,657 remaining to be paid on Roberts’ $2.9 million salary.

In accomplishing their goal, the Heat utilized their full $3.4 million allotment of cash for the 2015-16 season, but traded away just one rotation player (Chalmers, and they received back a rotation player in Udrih in return) and three of their second-round draft picks. Miami has now dealt away every first and second round pick available for trade through the 2021 draft.

The result? The Heat are now $218,000 below the luxury tax threshold.  Read more…