As the NBA waits on Kawhi Leonard's decision, the Heat continues to work to get below the $138.9 million hard-cap threshold in order to complete the sign-and-trade acquisition of Jimmy Butler.
The team receiving the player in the sign-and-trade (the Heat, in this case) cannot be above the hard-cap line at the conclusion of the deal. That means before the trade is fully consummated and announced, the Heat needs to shed additional money to get its team salary below $138.9 million and then must stay under that threshold for the rest of the season.
Miami has a few days to achieve this, with trades unable to become official until the end of the NBA moratorium Saturday at noon. The deal could technically even be delayed further if the Heat needs more time to get below the hard-cap line and the other teams in the trade are willing to wait.
While Leonard is reportedly choosing between the Lakers, Clippers and Raptors, his decision could end up affecting the Heat.
Here's how ...
The Heat comes out of the four-team trade with 14 players on its roster: Butler (a 2019-20 salary of $32.7 million), Ryan Anderson ($21.3 million), Goran Dragic ($19.2 million), James Johnson ($15.3 million), Kelly Olynyk ($13.1 million), Justise Winslow ($13 million), Dion Waiters ($12.1 million), Meyers Leonard ($11.3 million), Tyler Herro ($3.6 million, but has not signed contract yet), Bam Adebayo ($3.5 million), Derrick Jones Jr. ($1.6 million), Yante Maten ($1.4 million), Duncan Robinson ($1.4 million) and Kendrick Nunn ($1.4 million).
The Heat's team salary stands at a little more than $150 million committed to 14 players. Waiters' unlikely bonus represents an additional $1.1 million, which needs to be included when calculating payroll for hard-cap purposes.
In order to get under the $138.9 million hard-cap apron, the Heat could be forced to use the "stretch provision" when waiving Anderson unless it is able to shed additional salary in coming days.
Only $15.6 million of Anderson's $21.3 million salary is guaranteed if he's released by July 10. But waiving and stretching Anderson would reduce his cap hit to an annual $5.2 million over the next three seasons to create an extra $16.1 million in room from his full $21.3 million salary and is believed to move the Heat just below the hard-cap threshold.
The downside of using the "stretch provision" when waiving Anderson is the Heat will incur an annual $5.2 million cap hit over the next three seasons, which will eat away at some of its 2020 and 2021 cap space, rather than just dealing with a single $15.6 million cap hit this upcoming season if Miami simply released him.
One way the Heat can avoid having to "stretch" Anderson is to shed additional salary.
This is where the Kawhi effect comes into play.
Trading the final year of Dragic's contract ($19.2 million) into another team's cap space or by taking back a player who earns a good amount less would help Miami avoid using the "stretch provision" on Anderson. Dragic's name was involved in discussions to complete the sign-and-trade transaction, but he was left out of the final deal.
The Lakers, Clippers and Mavericks still have enough cap space to take in Dragic's contract without having to trade the Heat salary, according to ESPN's Bobby Marks.
But the Lakers' offseason plans have been put on hold, with Leonard still considering them. If Leonard chooses to join LeBron James and Anthony Davis, shedding substantive salary by making a trade with the Lakers would seem to be off the table for Miami because their open cap space would be gone.
The same goes for the Clippers, which are also still in the race for Leonard. While the Clippers don't necessarily need another point guard in Dragic after re-signing Patrick Beverley, they could use their open cap space to trade for another Heat player they covet if Leonard goes elsewhere.
As for the Mavericks, they were involved in the initial version of the trade that sent Butler to the Heat. But Dallas removed itself from the deal after a misunderstanding with Miami.
The Mavericks reportedly said they agreed to become the third team in the Butler sign-and-trade transaction with the belief they were getting Jones and Olynyk as part of the deal. This came after reports indicated Dragic was the one going to Dallas in the trade, but the Mavericks said they were not interested in the Slovenian point guard because it wanted salary-cap flexibility to make additional moves this summer.
With the free-agent market drying up, could Dallas come back to Miami and actually use its open cap space trade for Dragic?
Or would the Heat rather keep its current roster together and simply opt to stretch and waive Anderson to solve the hard-cap issue?
Aside from all of those factors, Leonard could possibly even sign a short-term contract this offseason that would put him back on the free-agent market in 2021. That's worth noting for the Heat, which is still expected to have enough cap space for a max player that summer.
Whatever the Heat chooses to do to get below the hard-cap threshold over the next few days, it could be forced to use minimum contracts to fill out its 15-man roster because it will still be up against the $132.627 million luxury tax line and $138.9 million apron. The two two-way contract players Miami is allowed to sign do not count against the roster limit or salary cap.
Miami currently holds a $5.7 million taxpayer mid-level exception it can use on one player or split between multiple players. But because the Heat is already above the tax threshold and also hard-capped, there's a chance it could opt not to use this exception unless considerable salary is shed and also move forward with a 14-player roster (one shy of the NBA regular-season maximum of 15 players).
None of these calculations include second-round pick KZ Okpala or veteran Udonis Haslem, who are both likely to sign minimum contracts with the Heat. Haslem is still deciding whether to return for a 17th NBA season or retire.
