Now that LeBron James has returned to Cleveland, the Miami Heat are scrambling to make the best use of their salary cap, now and in 2016. With very little young (rookie contract) talent, the Heat must make superb use of their exceptions.
I wrote a few weeks ago about how Miami should use their exceptions, but now LeBron James has gone to Cleveland, most of the cap projections are no longer applicable.
The list of exceptions the Heat will be looking to utilize are: Bi-annual, Mid-level, Veteran’s minimum, Rookie and Larry Bird exceptions. Since Miami plans on using the full Mid-level exception the team will have a hard salary cap of $81 million for the 2014-2015 NBA season.
To utilize those exceptions the Heat must reach the $63 million salary cap. To get to the $63 million cap without handicapping the team the general manager and team president must finagle cap holds. When a player enters free agency a placeholder amount is levied on the team’s salary cap. When that player signs or a team renounces their rights to that player, the cap hold is removed.
Miami's cap holds
For the Heat the list of cap holds is long. Dwyane Wade has a cap hold of $20.6 million and so does Chris Bosh. Mario Chalmers has a cap hold of $7.6 million. Udonis Haslem, a cap hold of $8.246 million. For every player who hit free agency this year, Miami has a cap hold.
For most of the players the Heat will, or already have, renounced rights to those players to free up cap space. Players like James Jones and Greg Oden are not going to sign for more than the veteran’s minimum.
Other players the Heat have re-signed and thus removed their cap holds. Wade and Bosh are shoo-ins. Chalmers has agreed to a two year $8 million contract. Chris Birdman Andersen has committed to a two year $10 million contract.
The best method for maximizing the salary cap is to sign free agents in an order which lets the team use as many exceptions as they can fit under $81 million. For instance, if the Heat sign Josh McRoberts prior to reaching $63 million in salary then the Heat must pay McRoberts without using exceptions and their Mid-level exception (the size of contract he signed) must be used on another player.
The players with the largest cap holds should be signed first. Add Dwyane to the team for $12 million annually, removing his $20.6 cap hold, freeing up over $8 million in cap space. Sign Bosh to his maximum contract, $20.6 million annually, canceling out his cap hold. Sign Udonis Haslem for the veteran’s minimum, about $1.5 million freeing up $6.7 million. Add Chalmers for $4.25 million and free up $3.35 million.
Ray Allen to join LeBron?
Of the other players the Heat have cap holds for, only three should not be renounced; Ray Allen, Birdman and rookie Shabazz Napier. All three have cap holds which are less than the annual salary which they would likely sign with the Heat, making each player a prime candidate for salary cap exceptions.
Ray Allen has already been linked to the Cavaliers, but Miami’s only chance to re-sign Allen is to pay more than other teams. Once the Heat have $63 million in salary commitments the Heat can offer Allen about $3 million by using the Larry Bird exception. By all indications $3 million isn’t enough to change Ray’s mind about joining LeBron in Cleveland.
Birdman has already committed to a two year $10 million contract or about $5 million annually. Since Birdman’s cap hold is less than a million dollars, the difference ($4 million) can be added above the NBA’s salary cap, using the early Bird exception.
Shabazz cap hold
Shabazz will be a rookie and the NBA has an exception which allows a team to exceed the cap to sign their first round draft pick. The trick with draft picks is their cap holds are equal to the salary they will be paid (NBA rookie wage scale). For Napier to be added above the cap the Heat must spend their entire $63 million before signing him.
For the other exceptions, the Mid-level and Bi-annual, the Heat have already committed to free agents. The Heat gave Josh McRoberts a deal which could be used for a Mid-level exception and Danny Granger has committed to a deal which is structured to be used for a Bi-annual exception. For the Heat to maximize those two contracts Miami must be at or above $63 million in salary.
Getting to $63 million while still having players to use exceptions on is the skill of manipulating the salary cap.
If the Heat use all of the exceptions I have mentioned in this article, Miami will only have about $50.5 million of its salary cap used. This is good news because this likely means the Heat can sign another $10 million player but is risky because the Heat have to leave many in contractual limbo to pull it off.
The break down
Chris Bosh | $20.6m
Dwyane Wade | $12m
Luol Deng | $10m
Mario Chalmers| $4.25m
Norris Cole | $2.1m
Udonis Haslem| $1.5m
| $50.45m total
Josh McRoberts| $5.35m | Mid-level
Chris Andersen| $5m | Early Bird
Ray Allen | $3m | Larry Bird
Danny Granger| $2.2m | Bi-annual
Shabazz Napier| $1.1m | Rookie
NBA Salary Cap| $63m
Luxury Tax | $77m
NBA Hard Cap*| $81m
The NBA’s hard cap is applied when a team used the full mid-level exception.