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Posts Tagged ‘Free Agency’

Miami Heat of the Future Beginning to Take Shape

July 9th, 2015 No comments
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I have a request. I write posts which I believe are unique, more in depth and more insightful than I can otherwise find elsewhere. I hope you agree. I therefore ask that you please not simply copy my ideas without proper sourcing. It feels rather awful to see my work being exploited. If just you ask, I am more than willing to help out anyone and everyone. 

The NBA announced on Wednesday that the salary cap for the 2015-16 season has increased by 11.0 percent to an all-time high of $70 million. The tax level for the 2015-16 season has increased by 10.3 percent to an all-time high $84.74 million.

These are substantial increases from the league’s previous projections issued just last April – $67.1 million for the salary cap, $81.6 million for the tax level – predicated on the basis of exploding revenues.

What does this mean for the Miami Heat? In terms of flexibility, not a whole lot.

But it does mean huge savings for owner Micky Arison.

The Heat will likely be a taxpayer next season. And that will carry with it severe consequences.

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 a team is over the luxury tax threshold, over and above the incremental tax rates that would apply. The repeater tax is triggered when a team has paid the tax in four of the previous five seasons. The Heat has paid the tax in three of the last four years.

For every dollar by which the Heat exceeds the tax level next 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 Heat entered the summer with two primary, and in many ways conflicting, objectives: Field a competitive yet cost effective team for the 2015-16 season, and maximize cap space for a 2016-17 season during which the salary cap is expected to explode higher on the strength of a new national TV rights deal.

The measure of success in those objectives was to be predicated on the Heat’s dealings with three men: Luol Deng, Goran Dragic, and Dwyane Wade.  Read more…

Dwyane Wade and Luol Deng Player Option Decisions Loom

June 28th, 2015 3 comments
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Update (7/1/15): Luol Deng has exercised his player option. Dwyane Wade declined his option but his return is all but assured. The larger question is to what type of contract the Heat will sign him.

Ken Berger at CBS reported yesterday that the 2015-16 salary cap could jump as much as $2 million higher than the league’s latest projection of $67.1 million, which was made some time ago. Such an increase could have a meaningful impact on the Heat’s plans for Wade.

If the 2015-16 salary cap increases from $67.1 million to as much as $69.1 million, the tax threshold would increase from $81.6 million to as much as $83.8 million.  

How much would a $2.2 million increase in the tax threshold help the Heat? If it were to offer Wade a one-year contract at the $22 million max, its payroll would reach into the neighborhood of $100 million. With an $100 million payroll, the tax obligation would fall from $58 million to $49 million. That’s a savings of $9.4 million! 

Layer in a potential trade of Josh McRoberts, Chris Andersen or Mario Chalmers and Heat’s total payroll obligations, including repeater tax obligations, could fall to $12X million. 

And since the luxury tax is calculated as of the last day of the regular season, any potential trades don’t need to happen now (though the clarity would certainly be reassuring). Trading, say, the $1.6 million in salary obligations remaining on the $5.0 million expiring contract of Andersen at the trade deadline — for which the Heat could offer up to $3.4 million in cash and/or a possible 2018, 2020 or 2021 second round draft pick — would save a whopping $18.4 million in taxes for a team with an $100 million payroll (plus the $1.6 million in salary savings, less any cash sent). However, the Heat would need to find a trade partner with enough cap room (or a large enough trade exception) to take on Andersen’s $5.0 million cap hit without sending anything back in return, and that gets harder to find as more time passes.

Winding up with total payroll obligations of $12X million is a hefty some of money, to be sure – a would-be all-time record in total payroll obligations for the Heat – but this is not your typical spending problem. It would be just a one-time issue. The Heat will become very affordable next year, all but assured not to cross the tax threshold. Which would guarantee it does not pay “repeater tax” rates again until at least the 2019-20 season (pending rule changes). Also bear this in mind: the new TV deal, which starts in 2016-17, will itself instantly increase owner PROFITS by an average of $18 million per year, and rising annually. So, would Arison be willing to endure the cost of giving Wade the max for one year?

What would offering Wade a one-year contract at the $22 million max mean for the Heat? The Heat could enter the summer of 2016 with Dragic (PG), Winslow (SG/SF) and Bosh (PF) under contract, and up to $42 million of cap space to spend on Whiteside (C) and another player (assuming a McRoberts trade and an $89.1 million salary cap). Of that $42 million, Whiteside’s max would be $21 million but, at this point, one could reasonably suspect he would command far less. Which leaves enough room for…

That has to be math that the Heat organization itself is doing, right? Would they offer Wade one-year at the max? Would Wade accept?

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The wait is almost over.

NBA free agency officially begins at 12:01 am on July 1. But for the Miami Heat, the uncertainty starts to be clarified 23 hours and 58 minutes before that.

Heat guard Dwyane Wade and forward Luol Deng have until 11:59 pm on June 29 to decide whether to exercise the player options – for $16.1 million and $10.2 million, respectively – on their contracts. If the deadline passes and the Heat has not heard back, both players by default will have chosen to join guard Goran Dragic in opting out and becoming unrestricted free agents.

If Wade and Deng both opt out, the Heat would start the summer with as much as $19 million of room below the projected $67.1 million salary cap. But, realistically, it won’t have any cap room at all.

That’s because the Heat is expected to quickly resolve the free agency status of Dragic.

Dragic has indicated that he enjoys Miami, and will remain with the Heat if his financial goals are met. The Heat paid a steep price to get him, headlined by two future first round draft picks, which tells you everything you need to know about how willing they will be to pay him his money. Dragic will be eligible to receive a five-year deal, with a total payout of as much as $108 million. If he gets it, his contract would start at $18.9 million, and rise to $20.2 million for the 2016-17 season.

For a player entering his age 29 season, however, it could prove to be an overpay, even with the cap due to rise dramatically next year. A smaller deal that pays out the max in the first year, declines by the max in the second year, before again maxing out for the final three years would be a nice concession by Dragic, in that it would give the Heat more flexibility for the summer of 2016 but still pay out a lofty $97 million. That may still seem like a hefty sum, but it would represent a 10 percent discount from a max contract, and a whopping 30 percent discount from a potential max contract a player of his tenure could sign the following summer. If he acquiesces, his contract would still start at $18.9 million, but his 2016-17 salary would fall to $17.4 million.

If the Heat re-signs Dragic, it would still be capped out even if Wade and Deng decline their options. Utilizing cap space, therefore, is not a realistic option for the Heat this summer.  Read more…

Miami Heat 2013 Offseason Primer

July 1st, 2013 No comments
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Over the past three offseasons, the Miami Heat has constructed, augmented and refined.

Three summers ago, it was uniting LeBron James, Chris Bosh and Mike Miller with Dwyane Wade and Udonis Haslem as a team that would reach the NBA Finals.

The following offseason, one delayed by a lockout, glue guy Shane Battier supplemented the mix to help the Heat win the 2012 NBA championship.

And last summer, Ray Allen and Rashard Lewis were added to help turn the 2012 title into a 2013 repeat.

Because of the team’s ongoing success, as well as the 2013-14 contract options of Allen, Lewis, James Jones and Mario Chalmers all leading them back for another season, there doesn’t figure to be much heavy lifting this time around.

The NBA’s free agency period officially began Monday morning at 12:01 EDT.

While teams can start negotiating immediately, most free agent signings, and all trades, cannot be officially executed until July 10, allowing the league time to compute revenues for the now-expired 2012-13 season and finalize the salary cap and luxury-tax calculations for 2013-14.

However, signings that do not rely in any way upon the specific value of the salary cap can be executed with the start of the new salary cap year on July 1. Such signings include minimum salary deals for up to two years in length.

For the Heat, still basking in a second consecutive championship, the concerns are limited, with 12 players already under guaranteed contract for next season: James, Wade, Bosh, Chalmers, Haslem, Battier, Allen, Lewis, Jones, Miller, Joel Anthony and Norris Cole. In addition, neophyte power forward Jarvis Varnado has a non-guaranteed contract in place that becomes $250,000 guaranteed if he is on the opening-night roster.

That’s 13 regular-season rosters spots potentially filled. Teams can have as many as 20 players under contract in the offseason, in addition to players involved in summer-camp and summer-league tryouts, but need to reduce to between 13 and 15 by the start of the regular season.

While virtually the entire championship core from last season has already committed to return, there is still work to be done:  Read more…

The Wait is Over!

July 1st, 2010 3 comments
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This is the moment we’ve been so desperately awaiting for three long and painful years.

July 1. The official start to the 2010-11 NBA season.

And so begins the most highly anticipated free agency period in league history. With it comes the potential to reshape the NBA’s power structure for the next half decade.

The free agent class of 2010 is now official. It includes names such as: Amare Stoudemire, Brendan Haywood, Carlos Boozer, Chris Bosh, David Lee, Dirk Nowitzski, Dwyane Wade, Joe Johnson, LeBron James, Paul Pierce, Ray Allen, Rudy Gay, and – for old times sake – Shaquille O’Neal.

Five teams enter the off-season with the necessary cap space to acquire a maximum contract free agent. All five of them have LeBron James at the top of their wish list and will meet with him in or near his home in Ohio, starting this morning.

Two teams figure to have enough for two maximum contract free agents. But only one – the Miami Heat – has a legitimate opportunity to clear the required cap space for three.

Speculation has run rampant. Stepehen A. Smith got our hearts racing on Tuesday when he oh so casually mentioned that Dwyane Wade, LeBron James and Chris Bosh would each be signing free agent contracts to play in what is now Miami-Wade County. Dan Lebetard raised the bar yesterday when he suggested a deal to acquire Chris Bosh had already been structured. All of it sounds so intoxicating. Who doesn’t understand how the mere prospect of the Heat landing the trifecta should overtake the sports world?

Most of the speculation has been categorically denied by players and coaches alike. And for good reason. Teams were unable to officially talk to free agents, other than their own, until this moment.

But for those of you who have been waiting up until the stroke of midnight in the hopes of acquiring some life-altering news, go back to bed. Deals can now be struck, but nothing can be signed – and therefore nothing is official – until July 8. In fact, teams won’t even know exactly how much room they have to work with until the salary cap figure for the coming year is officially released on or about July 7.

So don’t expect the veil of secrecy to be lifted just yet. The last thing a general manager wants to do is broadcast a game plan and then, for whatever reason, have it blow up in his face. Nothing good can come of it. It enrages fans. It alienates potential second options. And it makes them look foolish.

Plan for another agonizing seven days. And hope for fewer.

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How Teams on the Brink Fared at the Trade Deadline

February 19th, 2010 No comments
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Earlier this month, I reviewed the teams that were attempting to position themselves to be able to make one or more maximum free agent offers. The trade deadline has now passed.

Dwayne Wade, LeBron James and Chris Bosh remain the prized free agents for the summer of 2010.

Wade will surely stay in Miami if he can recruit one of the other two.

Bosh is leaving Toronto.

James is the mystery. Many argue that he needs to be in a major market (namely New York or Los Angeles) from an endorsement standpoint. They often argue that a sponsor like Nike may be pulling strings to land James in a market where they can make more money. But does a superstar really need to be in a major market? Wade seems to be doing just fine in Miami.

Can you imagine James getting significantly more media attention if he’s in New York or Los Angeles? Probably not. If you’re a star you need to be in a big market. If you’re a superstar, they come to you.

So will James decide it’s time to leave the Cavs? The decision may come down to where he thinks he has the best chance to win. In Cleveland he will continue to have Antawn Jamison, Mo Williams, Anderson Varejao, Daniel Gibson and J.J. Hickson alongside him.

Shaquille O’Neal and Delonte West will be free agents, and may return. The Cavs will also have the midlevel exception to add additional talent. But is that enough? If the Cavs lose in the playoffs again this year, how long will it take James to decide that they may never win a title as constructed?

Rumors persist that James was disappointed that the team acquired Jamison at the trade deadline rather than Amare Stoudemire. The biggest transaction for Miami therefore, ironically, is one that didn’t happen for Cleveland.

The Heat, in their own right, took no action at the trade deadline. They turned down suitors for Dorell Wright, even though future first round picks were being offered. They weren’t able to unload James Jones or Daequan Cook.

Miami’s team salary remains as it has been. Its pursuit of three maximum contract free agents remains the same.

Here’s a look at how everyone else fared (assuming a $54 million cap):  Read more…

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