CLEVELAND
The objective to improve a roster that needs more size, more shooting and more depth isn’t the Heat’s only motivator as the Feb. 9 trade deadline approaches.
There’s another reason why the Heat needs to do something significant with its roster either during the next 10 days or sometime in the next 13 months:
The financial consequences of inertia would be significant.
Heat owner Micky Arison historically has expressed willingness to pay a luxury tax only if his team is a legitimate championship contender. He has paid the tax seven times, with a $52.9 million total payment over his nearly three decades of ownership.
This year’s team is less than $200,000 below the tax, and very likely will remain under it. With its current roster construction, the Heat cannot add a 15th player and stay below the tax line until late March, about 10 days before the final day of the season.
But a tax bill - an enormous one - looms next season if the Heat doesn’t substantially trim payroll and if Miami intends to either 1) keep at least two among Max Strus, Gabe Vincent, Victor Oladipo and Omer Yurtseven or 2) replace them with players earning more than the minimum.
And it’s difficult to envision ownership authorizing a big tax bill if this team exits in the first or second rounds of this year’s playoffs.
A few points to consider:
▪ The NBA, in September, projected the 2023-24 salary cap at $134 million and the luxury tax at $162 million.
If Oladipo opts into his $9.4 million player option next season, the Heat would have $171 million committed to eight players in 2023-24. With cap holds and a first round pick factored in, Miami would be about $16 million over the tax line, potentially more, before addressing Strus, Vincent, Yurtseven or adding anyone over the minimum.
If Oladipo opts out - a good possibility if he continues playing well - the Heat would still be at least $6 million over the tax line and would have only these seven players under contract:
Jimmy Butler ($45.2 million), Bam Adebayo ($32.6 million), Kyle Lowry ($29.7 million), Tyler Herro ($27 million), Duncan Robinson ($18.2 million), Caleb Martin ($6.8 million) and Nikola Jovic ($2.4 million). An eight player would be under contract if the Heat exercises its $1.9 million team option on Haywood Highsmith.
The Heat assuredly will decline the $4.3 million team option for Dewayne Dedmon if he isn’t traded in the next week.
So Miami - without trimming payroll - would be in line to pay about a $10 million tax bill if its keeps its current roster but does not re-sign Oladipo, Strus, Vincent and Yurtseven and replaces all of them with inexperienced, minimum salary players and a 2023 first-round pick. That’s not realistic.
If the Heat decided to spend $12 million to keep Oladipo - but not Strus, Vincent or Yurtseven - that would result in a tax bill topping $40 million. That’s not realistic, either.
So something must change.
What if Oladipo opts in (a possibility if he’s injured again) and the Heat kept this same roster intact and re-signed Strus but not Vincent or Yurtseven?
If Strus signed a deal starting at $7 million next season, the Heat’s luxury tax next season - with all of its other players under contract, including Oladipo opting in - would mushroom to more than $50 million.
What if Oladipo opts out and the Heat gives him $12 million, Strus and Vincent $6 million apiece and Yurtseven $3 million?
That would be a tax bill in the range of $94 million. There’s a better chance of a snowstorm by Miami-Dade Arena than the Heat paying that kind of tax bill for a non-championship team.
That’s why the Heat must trim payroll if it has any intention of keeping even two among Oladipo, Vincent or Strus and avoid paying a big tax. Even if the Heat parts with all of those players, signing anyone above the minimum to replace them would result in a large tax bill.
How did the Heat get itself in this situation? By agreeing to pay four players between $27 million and $45 million next season, and by giving Robinson a deal that pays him $18 million next season.
Keep in mind that the tax becomes increasingly onerous based on the extent to which a team is over the threshold.
For teams between $0 and $4,999,999 over the tax line, the tax rate is $1.50 for every dollar over the tax threshold.
For teams $20,000,000 over the tax line or above, the tax rate is $3.75 for every dollar over the tax threshold and increases $0.50 for each additional $5,000,000 over $20,000,000.
So what could get the Heat out of this mess and give them the flexibility to sign Strus or Oladipo (if he opts out) this summer -- or sign replacements at decent money?
Trading Duncan Robinson, in the next nine days, for an expiring contract - something the Heat likely couldn’t achieve without adding a first-round pick as a carrot.
Trading Lowry for an expiring deal would give Miami significant room under the tax line, but finding a taker might be difficult, with Lowry at his lowest scoring average and worst shooting percentage since early in his career.
A Lowry deal to a team with cap space could be a June option, with Miami taking back much less 2023-24 salary than it is sending out with Lowry. But even finding a deal then would be tricky.
Here’s another option: If the Heat concludes before the Feb. 9 trade deadline that it cannot trade Robinson - or chooses not to sacrifice a first-round pick to facilitate a trade - Miami could try to add a power forward or a shooter by using a combination of Strus and other assets (a first-round pick and/or Jovic), plus Dedmon’s contract.
That could be the most realistic course if Miami determines that it doesn’t want to go ever higher above the tax to re-sign Strus this summer, or if it determines that it wants to prioritize Oladipo over Strus if he opts out this summer.
With the Heat playing better recently, making a trade that would shed salary but worsen the team seems less appealing than it did a month ago.
If the Heat, hypothetically, dumped Lowry for an expiring contract, Miami would have substantial space under the $162 million tax line this summer to re-sign at least one of its own free agents and use an $11.4 million mid-level exception as well as perhaps a $4.4 million bi-annual exception.
Impending unrestricted free agents who could command part of a mid-level exception next summer include Kevin Love, Harrison Barnes, Mason Plumlee and perhaps Lonnie Walker, Jae Crowder and TJ Warren. Brook Lopez’s play this season puts him in position for bigger money than $11.4 million.
Impending unrestricted free agents who figure to command more than that include Kyrie Irving and Jerami Grant, Christian Wood, D’Angelo Russell, Nic Vucevic, Kelly Oubre, Dillon Brooks and Jakob Poetl.
Kyle Kuzma has a $13 million player option that he will likely decline.
A taxpaying team that makes a sign-and-trade would be hard capped at about $168 million in 2023-24 and could not exceed that number all season.
Something, assuredly, needs to be done, not only because another impactful rotation player is needed, but also because the 2023-24 financial consequences of the status quo are likely unpalatable.
Shedding Lowry or Robinson are the most obvious way to achieve that flexibility, if the Heat can exchange them for players earning much less or players on expiring deals.
Because a team’s tax bill isn’t set until the end of that season, Miami has 14 months to figure this out. But it’s a lot easier to achieve it before the looming trade deadline; any deal done in June or beyond would help Miami only if its trade partner has the cap space to absorb a lot more money than it’s sending the Heat.
This story was originally published January 31, 2023 8:48 AM.
