After two days of agonizing delay over the particulars of the contract of swingman Mike Miller, a period during which it was speculated that the career 40.5% three-point shooter may have been backing off the idea of joining the Heat, Miller officially signed a five-year contract with the Miami Heat yesterday.

The Heat now has Chris Bosh, Dwyane Wade, Lebron James, Mike Miller and Udonis Haslem under contract.

The Miller used up just about every last dollar available to the team under the salary cap. Every contract added from this point forth will cause the Heat’s team salary to exceed the cap, and therefore rely upon an exception to execute.

There are two exceptions which the Heat can now utilize to acquire new roster players.

The first is via “Bird rights”.

This provision applies to the one, and only one, unsigned player to whom the Heat still retains Bird rights – Joel Anthony. This exception gives the Heat the ability to re-sign Joel to a contract as long as six years in length and as big as $103.0 million in value. Of course, that’s ridiculous. Joel will likely be back in South Florida, but at a much more reasonable contract which adequately reflects the value of his services.

The second is the minimum player salary exception.

Every player other than Joel whom the Heat acquires from this point forth throughout the off-season, whether he be the team’s second round draft pick from last month or whether he be a 20-year veteran, needs to fit within the confines of this provision. Read more…

Note: David Stern has dismissed the notion that any tampering has occurred in the recruitment of the Big Three. Said Stern, “The three players are totally, as our system has evolved, within their rights to talk to each other. That is not tampering or collusion that is prohibited. That’s our rule, right now.”

Each of the Big Three is now officially a member of the Miami Heat.

Questions are now beginning to surface about how they got here, and whether or not it would constitute tampering. At issue are supposed meetings, both face-to-face and telephonically, prior to the July 1 start of free agency, to discuss the possibility of playing together.

Tampering is when a player or team directly or indirectly entices, induces or persuades anybody (player, general manager, etc.) who is under contract with another team to negotiate for their services. The NBA takes tampering very seriously and may impose stiff penalties if it is discovered. However, the league will not typically investigate unless the team that for which the player is under contract files tampering charges.

Although each member of the trio was set to become an unrestricted free agent at the end of the season, and unrestricted free agents have no such restrictions, each was technically still under contract to his existing team until June 30. Read more…

The following was reported today in the South Florida Sun Sentinel:

Should the Heat be able to pull off the maneuver, it would give Heat President Pat Riley unlimited resources to re-sign remaining current Heat free agents such as Udonis Haslem, Dorell Wright and Quentin Richardson — whichever are not included in such a sign-and-trade — without having to make those agreements work within the confines of the NBA’s “soft” salary cap.

In addition, such a maneuver would allow the Heat to retain its mid-level salary-cap exception for 2010-11, which it then could utilize to complete its planned signing of Washington Wizards free-agent swingman Mike Miller.

For the benefit of any dual readers who would certainly be confused and prematurely excited, allow me to clarify this ridiculous and impossible scenario.

Read more…

Well, I didn’t get many readers yesterday. So today I will offer this somewhat less stimulating post on the impact of trade bonuses for the technically savvy few who happen to care. After all, in my heart I enjoy helping to explain the intricacies of the salary cap most.

There seems to be a common perception floating around that Turkoglu, after a forgetful season in Toronto, is washed up. The perception is that he is an aging malcontent, whose inflated salary will be a boon the Raptors for the next four seasons. For a man over thirty years of age with just one solid regular season under his belt, it’s reasonable to understand why. But perhaps it’s just a little harsh for man who produced such a wonderful 2009 NBA Finals.

When Turkoglu arrived in Toronto, having turned away the Trail Blazers in his wake, he received a hero’s welcome. And for good reason. He had just completed an NBA Finals run during which he averaged 15.8 points, 4.5 rebounds, 4.8 assists, not to mention his crunch-time leadership, game-winning shot-making and one impressive block from behind on Kobe Bryant. He even the Heat’s own Dwyane Wade pushing to grab him for mid-level money.

Things soured quickly. Turkoglu showed up to training camp overweight and out of shape, and never seemed eager to do much of anything. By the end of the season, he finished with just 11.3 points per game, far and away his fewest over the past six seasons, on just 41% shooting. Turkoglu was unhappy, the fans were booing him, and management was left with the shame at having grossly overvalued him on the free agent market.

The end result wasn’t necessarily an indication of what Turkoglu may be able provide a team next season, if he were to be put in the right situation. But for any of us holding out any lingering hope of acquiring the 6’10″ point-forward, I would have you consider his contract. Read more…

Christopher Reina, executive editor of RealGM, published this article yesterday – suggesting that free agency will cost each member of Wade/James/Bosh trio millions of dollars.

Huh?

If it didn’t shock the heck out of you, it should have. Because it’s wrong!

The minute Wade becomes a free agent, deciding against exercising his player option with the Heat in order to sign an extension, he will be leaving money on the table. This is true. But only in the first year, and only in the amount of $580,335. Every year thereafter, this number begins to shrink. Until year four, when it vanishes completely.

There is no mysterious $1.9 million cost. It doesn’t exist. Forget you ever read it.

I’m guessing most of you don’t care why. But if you’re curious, click away… Read more…

We’ve all been operating under the assumption of a $56.1 million projected salary cap, which was provided by Commissioner Stern prior to the playoffs. How did he come by that figure?

During July Moratorium, the league will project both basketball-related revenues (“Projected BRI”) and player benefits for the upcoming season. They will then look at the previous season’s Projected BRI to see if it was below the actual results (“BRI”). They will use these two data points to calculate the salary cap.

The league will take 51% of Projected BRI, subtract projected benefits, and make adjustments if the previous season’s BRI was below projections. They will then divide the result by the number of NBA teams to arrive at the cap.

( Projected BRI * 51% – Projected Benefits – (Projected BRI – BRI from last season, only if positive) ) / 30

This season’s BRI is almost certain to fall below original projections. I estimate that last July the league projected BRI growth of 1.6%. At the same time, they issued a warning that BRI could fall as much as 5%-10%, leading to original salary cap forecasts of $50.4 million to $53.6 million. The revised BRI decline of 0.5% then led to a bump in forecasts to $56.1 million.

Why would the league forecast BRI growth of 1.6% and issue a warning it could fall by as much as 10% at the same time?

The answer lies in how Projected BRI is determined. Read more…

Given the constraints imposed by the number $56.1 million, we’re all searching for ways in which the collective bargaining agreement would allow the Heat to exceed the salary cap.

Most of us understand that a team’s free agents continue to count against the salary cap. The charge is called a “free agent amount,” or more commonly a “cap hold.” To release such cap holds and free up additional cap space, a team only has to renounce its free agents. A renounced player no longer counts toward team salary.

One astute reader has brought up a perhaps little-known fact. After renouncing a player, a team can still trade the player in a sign-and-trade agreement.

So can the Heat simply renounce all of its free agents, utilize the resulting cap space to sign outside free agents, and thereafter exceed the cap pursuant to sign-and-trade agreements with renounced players?

As you might expect, the answer is no. By renouncing a player, a team gives up its right to use the Larry Bird exception to re-sign that player. The Heat would therefore have no mechanism, other than via cap space, to pursue a sign-and-trade of a renounced player.

There are four primary mechanisms which the Heat will be able to utilize in order to exceed the cap. Read more…

The following question to Ira Winderman has piqued some interest from my shockingly tiny reader base:

“In all your posts, you are undermining and flat out discarding one very real possibility for the Heat to round out the roster. That is, for veterans like U.D., J.O. and Q, and even possibly Dorell, to sign a one-year minimum deal and keep their Bird Rights.”

It is easy to understand the connotation behind this question, though it is not explicitly stated. The concept would be for the Heat to sign any or all of the players mentioned to one-season minimum contracts. Doing so would allow the Heat to maximize cap space this summer and, with Bird rights intact, exceed next year’s salary cap to grant them significant raises for their troubles.

While this is quite a creative concept, the premise is inherently flawed.

This approach is illegal. Teams are not permitted to make direct agreements with a player that are not reported to the league. If they do, the penalties can be severe. Such a violation is considered by the league to be among the most serious a team can commit. A violation can result in a fine of up to $5.0 million, forfeiture of draft picks, voiding of the player’s contract, and/or the suspension for up to one year of any team personnel who were involved. In addition, the player himself can be fined up to $100,000, and prohibited from ever signing with that team.

You might be saying to yourself that the easier solution would be to report the agreement to the league in order to avoid any allegations of wrong-doing. Future contracts, however, are also illegal.

You might also be saying to yourself the league would never find out. This is very risky business – particularly for complementary players – with the penalties being so severe.

In the summer of 1999, the Minnesota Timberwolves tried this approach with Joe Smith. Smith left the Philadelphia 76ers to sign with the Timberwolves. The two sides made an under-the-table agreement that Smith would play under three consecutive one-year contracts at below market value ($1.75 million, $2.1 million and $3.6 million), and the Timberwolves would reward him by using their Bird rights to sign him to a much larger contract beginning with the 2001/02 season (reportedly worth between $40 and $86 million over seven years, dependent on performance clauses).

The league discovered the arrangement the following season, and responded by fining the team the maximum (at the time) $3.5 million, taking away their next five draft picks (two were later returned), and voiding Smith’s then-current contract. Owner Glen Taylor and GM Kevin McHale also agreed to leaves of absence (in lieu of suspensions). Most interestingly, the league also voided Smith’s two previous, already-completed contracts. This essentially stripped the Timberwolves of any Bird rights to Smith.

If Riley were to be found in violation, leniency would not be something that would be afforded. Pat has a history of violations of league rules. Read more…

You may not realize that the Miami Heat will start the offseason with a team salary in excess of the new salary cap threshold. This is caused by intangible charges, called “cap holds,” created by the Heat’s own free agents.

The Heat can very easily get rid of these cap holds in order to create the huge cap space we’ve all been reading about, but does it want to?

While teams with cap space can only spend up to the amount of the salary cap, teams that are over the cap are virtually unlimited in what they can spend through trade.

But the Heat only has two players, Michael Beasley and Daequan Cook, under contract. It doesn’t really have anybody to trade.

Enter the concept of the sign-and-trade.

You may have heard local beat writers discussing the possibility of sign-and-trade agreements as a means for the Heat to increase the total amount of dollars it can spend. They’re right. And they’re wrong. Let me explain. Read more…

A lot of columnists have been focusing on all the roster charges and holds that reduce the maximum available cap space for teams like the Heat, which will have significant room to work with to sign free agents in the offseason. However, many of these columnists – even the most experienced cap gurus – have been making big mistakes in their analyses.

When a team elects to use its cap space in the offseason, it has four primary non-cash charges to worry about: cap holds, exceptions, roster charges for carrying fewer than 12 players, and the scale amount for unsigned first round draft picks:

1. Cap Holds. Most of us understand by now, assuming you’ve been reading my posts, that when players become free agents they have cap holds attached to them which count against their current team’s cap. To release such cap holds and free up the cap space, a team only has to renounce its free agents. That’s easy enough to do. Therefore, cap holds do not reduce the calculation of maximum available cap space. (The one exception, of course, is if the team intends to re-sign one of its free agents – at which point the lesser of (i) the cap hold or (ii) the amount for which the team intends to re-sign him should be incorporated.)

2. Exceptions. If a team ever falls below the salary cap, it automatically loses any of its unutilized Mid-Level, Bi-Annual, Disabled Player and Trade Exceptions. Exceptions are meant as a means for teams to operate above the cap; if a team is below the cap, they wouldn’t be applicable. Once a team loses its exceptions, it can never get them back – even if the team eventually gets above the salary cap. Therefore, exceptions do not reduce the calculation of maximum available cap space.

Read more…