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…

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…

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…

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…

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…

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…

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 10^th. The path to tax avoidance was long and twisted, and included five trades.

On July 27^th, 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 10^th, the Heat traded Mario Chalmers and James Ennis to the Memphis Grizzlies in exchange for Beno Udrih and Jarnell Stokes.

On February 16^th, 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…

The Miami Heat has traded big man Chris Andersen and two future second-round draft picks and received back point guard Brian Roberts, as part of a three-team trade that includes the Memphis Grizzlies and Charlotte Hornets.

Shooting guard Courtney Lee will go from the Grizzlies to the Hornets, with small forward P.J. Hairston heading from Charlotte to Memphis, Andersen from Miami to Memphis, and Roberts from the Hornets to the Heat.

The Grizzlies will also receive four second-round draft picks in the trade, with two coming from the Hornets (Charlotte’s 2018, and one it got from Brooklyn in 2019) and two from the Heat.

The first of the two second-round picks the Heat will surrender will be in either 2017 or 2018. If the Heat’s 2017 pick lands in the top 40 (i.e., one of the first 10 picks of the second round), it will be conveyed to the Grizzlies and the Heat’s 2018 pick will be sent to the Atlanta Hawks as part of the James Ennis trade. If the 2017 pick does not land in the top 40, it will be conveyed to the Hawks, and the Grizzlies will receive the Heat’s 2018 pick.

The second of the two second-round picks the Heat will surrender will be the 2019 pick acquired from the Boston Celtics as part of the Zoran Dragic trade. That pick, however, is of limited value. It is top-55 protected, meaning the Heat will only get it, and thus will only be obligated to convey it, if the Celtics finish the 2018-19 regular season with one of the five best records in the NBA.

The financially-motivated trade will save the Heat $6.2 million — $719,226 in payroll savings and $5.5 million in forgone luxury tax payments.

The deal leaves the Heat $3.5 million above the NBA’s $84.74 million tax threshold. At that level, Miami is facing a projected tax bill of $8.7 million.  Read more…

The foundation of the Miami Heat’s future championship aspirations was supposed to rest largely on the shoulders of point guard Goran Dragic and center Hassan Whiteside.

Dragic was supposed to be a catalyst for the Heat offense, as he was for a Phoenix Suns offense that ranked eighth in the NBA in 2013-14 and seventh through the All-Star break last season before being traded to Miami. He was supposed to allow the Heat to play at pace, having flourished in transition with the Suns. He was supposed to be a force in the pick-and-roll, having been, statistically speaking, the best pick-and-roll ball-handler in the NBA two seasons ago.

Whiteside was supposed to rampage through the NBA with reckless abandon, utilizing his massive 7-foot, 7-inch wingspan to wreak havoc on both ends of the court. His superior shot-blocking, shot-altering and rebounding were supposed to make him the dominant defensive anchor the Heat has long-since coveted. His undeniable potential in the pick-and-roll and developing low-post game were supposed to make him an emerging offensive threat.

Things haven’t necessarily gone as planned.  Read more…

The Miami Heat announced Tuesday night that it has traded veteran guard Mario Chalmers to the Memphis Grizzlies.

The Heat, in a four-player swap, sent Chalmers and forward James Ennis to the Grizzlies in exchange for guard Beno Udrih and forward Jarnell Stokes.

The financially-motivated trade will save the Heat a projected $7.8 million.

The Heat had a team salary of $92.4 million coming in the trade, which put it $7.8 million over the NBA’s $84.74 million luxury tax threshold. Exceeding the tax threshold could prove very costly for the Heat.

If the Heat exceeds the tax threshold, it would become the NBA’s first team to ever pay the “repeater tax,” which adds an extra $1 for every dollar by which a team is over the luxury tax threshold, over and above the incremental tax rates that would apply.

For every dollar by which the Heat exceeds the tax level this season, it will need to pay at least $2.50 in taxes. That rate increases to $2.75 per dollar for any incremental amount by which the Heat exceeds the tax by $5 million, increasing further to $3.50 per dollar for any incremental amount by which the Heat exceeds the tax by $10 million, increasing further to $4.25 per dollar for any incremental by which the Heat exceeds the tax by $15 million, and increasing an additional $0.50 for each $5 million increment thereafter.

The final tax tally is calculated based upon the Heat’s team salary as of the start of its last regular season game, which prompted months of speculation that Pat Riley would attempt to shed Chalmers’ $4.3 million salary to reduce the team’s burden. Chalmers was reportedly made available in trade throughout the summer, with the Heat asking for essentially nothing in return.  Read more…