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Posts Tagged ‘Udonis Haslem’

Miami Heat Create NBA-Record $55 Million in Potential Cap Space

June 29th, 2014 5 comments

Many years from now, Saturday, June 28, 2014, could be remembered as a critical day in Miami Heat history. It marks the day when guard Dwyane Wade and forwards Chris Bosh and Udonis Haslem declared their intentions to join LeBron James and Chris Andersen in opting out of their contracts. It could ultimately mark the day in which the destruction of the Big Three era was initiated in earnest, or the day in which the remodeling of Pat Riley’s two-time championship-winning creation received a major boost.

Agent Henry Thomas, who represents all three players, has reportedly informed Heat president Pat Riley of their choices. Wade will exercise his Early Termination Option for the remaining two years and $41.8 million on his contract, Bosh will do the same for the two years and $42.7 million remaining on his contract, and Haslem will not exercise his player option for the lone season remaining on his $4.6 million contract.

Technically, there is no mechanism to notify the league that an option or ETO will not be exercised. Since the contracts of Wade and Bosh contain ETOs for this summer, they are required to inform the league of their intentions. Since Haslem’s contract contains a player option, he need do nothing but wait.

These actions, particularly in the wake of James, Wade and Bosh meeting last week on Miami Beach, make it rather clear that the Heat’s stars, as well as its supporting players, have decided to work together to provide the Heat the salary-cap flexibility with which to add additional components to a roster that earlier this month lost in the NBA Finals to the San Antonio Spurs, cutting spectacularly short the Heat’s bid for basketball immortality – four straight NBA Finals appearances and three straight NBA titles, a feat which has only been accomplished once in league history.

Without the opt-out decisions, the Heat would have gone into the offseason far in excess of what is projected to be a $63.2 million salary cap for the 2014-15 season, and without much ability to materially improve. Instead, the moves enable the Heat to create as much as an all-time NBA-record $55 million in cap space with which to reconfigure the roster(1).  Read more…

Did the Heat Turn Down An Evan Turner for Udonis Haslem Offer?

February 27th, 2014 No comments

It has been suggested that the Miami Heat were engaged by the Philadelphia 76ers with an interesting proposition at the Feb. 20 NBA trading deadline. It has been suggested that Sixers general manager Sam Hinkie proposed a trade to Heat general manager Pat Riley of Evan Turner, in exchange for Udonis Haslem and a future first round draft pick.

Riley reportedly rejected.

Did he do the right thing? Well, that’s for you to decide.

The Mechanics

Let’s get a couple things out of the way before we begin.

First, the rumored trade, as described, doesn’t work. It violates salary cap rules.

Taxpaying teams like the Heat can only take back up to 125% of their outgoing salaries, plus $100K, no matter how much salary the team is sending away.

Haslem makes $4.3 million this year. He can therefore only be traded for a player(s) who makes as much as $5.5 million. Turner makes $6.7 million.

When trades are rumored about, oftentimes only the vital components are leaked. The technical details are often either not yet established or not considered vital, and are therefore not leaked alongside the rest of the trade. If indeed this rumor is true, that may be what’s happened here, particularly because the solution is simple. If the Heat were to add an expiring contract to the deal – say, for example, Rashard Lewis – the trade would be legal.

Second, there’s the matter of the draft pick. The concept of including a first round draft pick is quite vague. When would that pick be conferred? What protections would be attached to it?

The Heat’s current predicament answers these questions, and quite nicely.  Read more…

Categories: Commentary Tags: ,

Everything is Done: How Did It All Happen?

July 17th, 2010 5 comments

The Miami Heat finished last season with 16 players under contract and a team salary far in excess of the salary cap. They then created enough salary cap room to sign everyone who is on the roster today. Now they are far in excess of the salary cap once again.

So how did it all happen? How did they manage to get so far below the salary cap and then above it again all in the same season? With creative financing!

Everything has now been finalized. It’s done. Here’s a step-by-step breakdown.

(Note: The actions below, in some cases, may be out of order. They have been structured so as to make evident the Heat’s thought process along the way, as well as to promote ease of reader comprehension. Full comprehension also requires an understanding of cap holds and roster charges, which are described in detail here.)

This is a snapshot of the Heat’s salary cap situation at the end of last season:

Read more…

Udonis Haslem Re-Signs with Miami Heat

July 12th, 2010 11 comments

Udonis Haslem is staying with the Miami Heat.

Haslem signed a five-year, $20 million contract on Monday, roughly $13 million less than he could have received if he accepted more lucrative offers elsewhere.

Haslem had been heavily pursued in recent days. The Denver Nuggets and Dallas Mavericks each reportedly offered him a five-year, $33 million mid-level exception contract over the weekend, and the New Jersey Nets offered three years and $20 million last week. He also received interest from the Utah Jazz, New York Knicks and Atlanta Hawks. But every team that showed interest in him did so with pessimism that he could be lured away from Miami.

A week ago, Haslem expected he would sign elsewhere, but then the combination of a $58.044 million salary cap ($2 million more than expected) and the decisions by Dwyane Wade, LeBron James and Chris Bosh to take less money made it possible for him to stay where he wanted.

The salary cap maneuvering which allowed for the possibility was orchestrated by Wade, when he approached Bosh and James to suggest they all take less money, specifically to re-sign Haslem.

The three had already agreed to reduce their starting salaries by $3.5 million to accommodate the contract of Mike Miller. They split the discount evenly, with each player reducing his starting salary by around $1.2 million, which equated to a $9 million sacrifice per player over the course of their six year deals.

Wade requested that they reduce their starting salaries by another $3.0 million to accommodate the contract of Haslem. James and Bosh obliged, with Wade taking a disproportionate share of that discount. Wade reduced his starting salary a further $1.2 million ($9 million over six years) to accommodate Haslem, while James and Bosh reduced their salaries a further $900K ($7 million over six years).

The sacrifices of Wade, James and Bosh enabled the Heat to create an extra $3.5 million of cap room, which the Heat then offered to Haslem as a full five-year contract with maximum allowable raises, totaling $20 million. Haslem then finished it off by agreeing to the deal with Miami that will pay him $13 million, or nearly 40%, less than he could have earned elsewhere.

“I would be changing my DNA if I left just for money,” he said.  Read more…

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Getting Creative With Udonis Haslem

July 10th, 2010 No comments

You may know that on Wednesday, the league announced the salary cap for the 2010-11 NBA season was set at $58.044 million.

What you may not know is that the Miami Heat entered the summer with a team salary of $89.7 million.

That’s because, according to league rules, all of a team’s free agents continue to count against the salary cap, at predetermined levels called “free agent amounts.”

Free agent amounts are designed to address a salary cap loophole whereby a team utilizes all of its cap space to sign outside free agents and then circles back to its own free agents utilizing their Bird rights, which allow teams to exceed the cap to re-sign their own players.

The rules use a player’s current status (type of free agent, whether coming off a rookie contract, and previous salary) as a rough guideline to predict the amount the player is likely to receive in his next contract, and sets that amount aside in the form of a cap hold. The cap holds for players on minimum salary contracts are equal to the minimum salary for the upcoming season, but for all other players are between 120% and 300% of their previous salary (though they can never be greater than a player’s maximum salary).

Free agents continue to be included in team salary until one of the following three things happens:

  • The player signs a new contract with the same team. When this happens, the team salary reflects the player’s new salary rather than his cap hold.
  • The player signs with a different team. As soon as this happens, the player becomes his new team’s problem, and his salary no longer counts against his old team.
  • The team renounces the player. A renounced player no longer counts toward team salary, so teams use renouncement to gain additional cap room. But it comes at a cost. By renouncing a player, a team gives up its right to use the Bird exception to re-sign that player. Teams are still permitted to re-sign renounced players, but only with cap room or an exception other than Bird rights.

To create the cap space necessary to acquire the contracts of LeBron James and Chris Bosh, each with a starting salary at $14.5 million, the Heat had to reduce its team salary from $89.7 million all the way down to at least $29.0 million below the $58.044 million cap. Anticipating that need, the Heat on Wednesday renounced most every free agent on the roster.  Read more…

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It’s Official!!!

July 10th, 2010 15 comments

With 13,000 Heat fans anxiously waiting in AmericanAirlines Arena to welcome its newest trio of superstars, Dwyane Wade, LeBron James and Chris Bosh were upstairs finalizing their contracts. Minutes later, they emerged through a cloud of smoke… along with some unexpected news. Not only is Mike Miller joining the party, as was expected, but Udonis Haslem too.

How is all of this possible?

In short, while the Heat had the necessary cap space to offer the Big Three full max contracts, they each agreed to take less. Riley then turned around and utilized the recovered cap space to secure the beloved power forward Haslem, as well as newcomer sharpshooter Miller.

Why would they so drastically reduce their salaries?

Well, pure generosity. Miller and Haslem are friends of the Big Three, and the Big Three did right by their friends in their desire to put together not only a championship-caliber roster but also a close-knit team.

How much did they sacrifice?

Each member of the Big Three was eligible for a max 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 have sacrificed four first round picks and two second round picks over the next five years.

The sign-and-trade approach increased the total potential value of the contracts of each of Bosh and James. They each, then, along with Wade, gave back a portion of that increase to accommodate the contracts of Miller and Haslem.  Read more…

Q&A: Under-the-table-agreements

May 27th, 2010 No comments

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…