The Miami Heat are in salary cap hell. There’s really no other way to put it. They’re paying through the nose for several players who are borderline starters at best and will have to pull another parlor trick in order to duck the luxury tax this year. As the summer starts, they’re $11.5 million into the tax, though that number will come down significantly after a few cuts are made. Still, they’ve got a ways to go before they’re entirely out of the tax and it’s not as if they’re a competitive team for the sort of payroll they have; they didn’t make the playoffs in the East last year and are not in a good position to add significantly to their team going into next year.
Their current tax predicament is a bit overstated, as they’ll be able to cut ties with Ryan Anderson, Yante Maten, Duncan Robinson, and Kendrick Nunn and shave their team salary down to about $134.4 million, just a whisper away from getting under the projected tax threshold of $132 million. However, waiving all those players will leave them with just ten under contract, including No. 13 in this year’s draft, so they’ll have to add players on the fringes of their roster to reach the league’s minimum roster requirements, which will add money to their payroll.
Anderson’s $15.6 million guarantee can be stretched across three years in order to cut their team salary further. That’s a move they’ll have to think about very strongly if they can’t find a new home for him before his deal fully guarantees on July 10. The most recent rumor tied Anderson to J.R. Smith, who is the last remaining player from the pre-2017 CBA to have non-guaranteed money on his contract. Smith’s $15.7 million salary is guaranteed for just $3.87 million until June 30, making him a very attractive trade candidate for teams looking to cut salary, as the Heat clearly are. On the other hand, Cleveland is in a similar boat, as they have their own tax problems and aren’t just going to take on an extra $12 million in salary to do the Heat a favor. Given how much money it would save Miami and what it would tack onto Cleveland’s luxury tax bill, a first-round pick may be in order to send Anderson for Smith, which would be a hell of a price to pay purely for salary relief.
Perhaps a more tenable path for the Heat is to find a new home for Goran Dragic, who seems likely to opt into his $19.2 million contract for next season. Dragic is still a starting point guard capable of leading an offense and defending his position, but it’s unlikely that he’d be able to cash in well enough this offseason to make up that $19.2 million should he decline the option. However, if he has intel that he can find a deal that extends further into the future and gives him more total guaranteed money, it would absolutely be worth considering, as the Slovenian point guard is already 33 years old and may want to sign one last contract before the true twilight of his career. Is a deal out there for him that will pay him like a starting point guard at his age and with his injury issues last season? I’m skeptical that deal exists, which would lead me to assume he’s opting in.
Even taking into consideration the age, injury, and declining level of play concerns, Dragic is their best tradeable asset among players making more than $12 million next season – Hassan Whiteside’s $27.1 million player option is among the worst single-year contracts in the league, James Johnson still has two years and more than $31 million left on his contract, Justise Winslow is just about to begin a three-year, $39 million extension that has the chance to be a good contract but isn’t there yet, Kelly Olynyk has two years and nearly $24 million in base salary due to him, plus another $2.8 million in earnable bonuses, and Dion Waiters has $25 million in base salary due to him over the next two years to go with $2.2 million in earnable bonuses. All told, Dragic is their best option for a trade, since he’s the player closest to actually providing on-court value equal to his contract. He’s not a high-end starter anymore, but he’s not nearly as overpaid as some of his Heat teammates.
There are a few teams out there who will be looking for point guards, and as I covered in my free agent Point rankings, there aren’t necessarily a lot of starter-level point guards available. From that perspective, Miami may be able to extract some value for Dragic from a team like Chicago, Phoenix, or Orlando, or find another team with a point guard they’d like to move who makes less money per year but more money overall than Dragic.
Without a trade over the summer, the Heat are looking at needing to make that move at some point before the February deadline, as they can plan on being somewhere between $7 million and $10 million over the tax at the end of the season with their current roster and a handful of minimum contracts to fill out the last few spots. Simply stretching Anderson would get the job done, though they’d have to make that choice when they cut him loose, rather than waiting on the decision until after the trade deadline next February. With Whiteside and Dragic coming off the books after this season, adding an additional ~$5 million to their cap for 2020-21 and 2021-22 wouldn’t be the end of the world and it would make things easier with respect to a midseason tax-avoidance trade no longer being absolutely necessary. They got out of the tax in 2018-19 by the skin of their teeth when they cut Rodney McGruder and hoped that someone would pick him up on waivers. The Clippers fulfilled Miami’s wish and the Heat got out of the tax as a result, but it was very close and came down to literally the last few days of the year. Avoiding that next year would be nice and the added cost of putting two-thirds of Anderson’s contract on their future books wouldn’t be a huge penalty to pay for it.
Miami’s financial situation isn’t pretty. They’ve got a lot of money owed to players who haven’t lived up to their contracts, from Whiteside on down, and just have to be patient as these contracts come off their books and they are able to retool around Winslow, Josh Richardson, Bam Adebayo, and their picks in the next two drafts. They have no draft pick in 2021, which lines up with the contract expiration of Johnson, Olynyk, and Waiters, so they’ll do their best to put a competitive team on the floor for the next two years without impacting their long-term financials and really start to rebuild after that pick conveys and they are only left with their younger guys. It’s a long road to 2021 but Miami dug themselves into such a hole in 2016 and 2017 that it was always going to take time to climb out.