Reduced revenue makes roster management tougher
Even with the NBA planning to restart the season, there’s still so much unknown about how this pandemic will impact NBA economics, including the salary cap for years to come.
But with the likelihood that fans won’t be able to fill arenas well into the future — thus dramatically dropping NBA revenue — a few things have become clear with regard to the Heat:
If preserving cap space for a max free agent in 2021 remains the goal (and there’s no reason to believe that will change), signing any 2020 Heat free agent to a deal longer than one year now appears highly unlikely.
It’s no longer assured that Miami will have max cap space in 2021, though the Heat could survive the cap dropping $10 million from projections and still achieve max space.
This summer, the Heat could face a fascinating either/or option with regard to keeping some of its own free agents or plucking a player from a free agent class that could have some surprise names if the NBA grants teams another onetime amnesty option.
Let’s take those one at a time:
On the issue of re-signing its own free agents this summer, Pat Riley’s recent comment that he’s “very optimistic about moving forward in the future with these players” reinforces the likelihood that instead of using cap space this summer (potentially north of $20 million), the Heat instead likely will operate above the cap and use the Bird Rights of Goran Dragic, Jae Crowder and Meyers Leonard and possibly Derrick Jones Jr. to surpass the cap to re-sign some or all of them, with the use of a mid-level exception to add a player from outside if possible without crossing the luxury tax threshold. (More on this in a minute.)
Of that group, I won’t be surprised if Dragic, Crowder and Leonard were amenable to one-year deals with Miami because they like it here and because there might be no appealing longterm deals elsewhere amid a new NBA economic landscape.
But the expectation — before this pandemic — was that Jones would seek a multi-year deal, and it’s becoming increasingly clear that the financial impact of the pandemic has left the Heat in no position to offer one, unless the second year is at the Heat’s option.
Former Memphis Grizzlies executive John Hollinger, in a piece for The Athletic, noted recently that the “Heat may get squeamish about paying [Jones] past next summer, when they’re trying to keep their cap space powder dry for a run at an elite free agent (notably, Giannis Antetokounmpo). That could provide an opportunity for another team to swoop in and grab Jones.
“Uptempo teams in need of help at either forward spot should be digging on Jones, especially since his best years should still be ahead.”
A report in the Chicago Sun Times mentioned the Bulls’ affection for Jones, and a two-year offer from Chicago wouldn’t be the least bit surprising.
“A 24-year-old hybrid forward coming into his prime years, this guy is much more than just a dunker,” Hollinger wrote. “Most notably, [Jones] is a freak at the top of Miami’s 2-3 with his length and mobility, but he also offers surprise rim protection (2.9 percent block rate, the league’s second-best among perimeter players) from a non-center. …
“Jones has shooting questions that may make his market more tepid than otherwise. He only shot
27.0 percent on threes and is at 27.6 percent for his career. But that’s OK when you shoot 67.0 percent on twos. Read that number again — 67 percent! From a 6-6 forward! Jones is very effective finishing plays from the dunker spot or off cuts to the rim, and he’s a whirlwind in transition.”
As I’ve noted — except for Antetokounmpo and Anthony Davis — no NBA forward has permitted opponents to shoot a lower percentage from the field than Jones this season.
Former Nets executive Bobby Marks, ESPN’s front office insider, told the New York Post he expects only one-year deals for free agents this summer. So perhaps the Heat could persuade Jones to take a one-year deal.
But all it takes is one team to offer a two-year deal in the $15 million to $20 million range. If that were to happen, the Heat would likely need to walk away.
With regard to keeping max cap space in 2021, here’s what is known:
Before coronavirus, the cap was projected to rise from its current $109 million to $115 million in 20202021, and then to as much as $125 million in 2021-22.
Because of a dramatic decrease in league revenues caused by the pandemic, the cap almost assuredly will drop. To what extent, and over how many years, remain undetermined.
If the league and players union work to smooth over cap drops over several years instead of enduring a precipitous one-year decline, then the 2021-22 cap could end up well below the initial $125 million projection.
If the Heat declines
Andre Iguodala’s $15 million option for 2021-22 (which would be expected), Miami’s cap commitments for 2021-22 include Jimmy Butler ($36 million), Tyler Herro ($4 million), Bam Adebayo (eligible for restricted free agency that summer, but his cap hit in 2021-22 will be $15.3 million, regardless of what he’s paid that summer), Kendrick Nunn and Duncan Robinson (each likely carrying $4.7 million cap hits regardless of what they’re paid), $4 million or so due Miami’s 2020 first-round pick, $1.4 million for both KZ Okpala and Chris Silva (non-guaranteed), Ryan Anderson’s $5.2 million hit and about $4 million in cap holds to fill out a roster.
That adds up to cap commitments of $80.7 million. If the 2021-22 cap is $115 million instead of $125 million, that would leave the Heat with $34.3 million.
And coincidentally, if there’s a $115 million cap in 2021-22, Antetokounmpo’s first-year max would be $34.5 million, essentially giving the Heat enough room to sign him. That would be the same firstyear max number for Victor Oladipo and other potential 2021 free agents with fewer than 10 years of service.
Remember, players with seven to nine years of experience are eligible for a max contract worth 30 percent of the salary cap, so the max number for free agents would fall if the cap does.
Even if the cap were to fall below $115 million in 2021-22, the Heat likely would find a way to add a max player if there’s one who wants to be here. After all, Miami added Butler last summer without any cap space.
But $115 million appears to be the cap number that would allow the Heat to achieve this without much or any payroll-purging beyond declining Iguodala’s option.
Though the Heat is expected to try to re-sign Dragic and likely Crowder this summer, there could be tempting alternatives with the Heat’s mid-level exception, which would have been $9.75 million with a $115 million cap but would decrease a bit if the cap decreases.
Using that exception — and re-signing all four among Dragic, Crowder,
Jones and Leonard — would seem very difficult to achieve without surpassing the tax threshold, and it’s highly unlikely Miami would do that.
Before coronavirus shut down the sport, the NBA was expected to have a $115 million cap and $139 million tax threshold for 202021. Let’s say the 2020-21 cap and tax are what they were this season: $109 million and $132.6 million.
Presuming Kelly Olynyk doesn’t opt out of $12.2 million, that means the
Heat would have $85 million committed to 10 players for 2020-21, including the cap charge for its firstround pick and the $5.2 million cap charge for Ryan Anderson.
Let’s say Dragic took a one-year deal at $17 million, about $2 million less than he’s earning this year. That brings Miami’s number to $102 million.
So if the tax is $132.6 million — again, just a hypothetical — the Heat would essentially have $30 million to spend among Leonard, Jones, Crowder and an outside free agent using its mid-level, while staying below the tax line.
And the mid-level scenario could be tempting if the NBA were to approve an amnesty provision that would allow teams to release a player to clear his cap hit. (The player would still be paid.)
Marks reported last week that some league executives want the one-time amnesty avenue restored; it was part of the NBA’s labor deal in 2011, allowing teams to dump a single albatross contract and remove that player from its cap.
If the Heat could re-sign Dragic, land a quality rotation player with the midlevel — and then sign two among Crowder, Leonard and Jones — without surpassing the tax threshold, that would be a productive summer.
Somehow signing all of those players — and using the mid-level — would be exceptional though the rotation would need to be thinned eventually.