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Offseason moves for the Miami Heat: With up to $27 million in cap space, changes are coming
After the loss to the Los Angeles Lakers in the NBA Finals last October, Miami Heat president Pat Riley made it clear that change was not coming.
"I think we'll stay the course with our picks, stay the course with our young players," Riley told the media at the time.
With the exception of Jae Crowder, the entire core that pushed Miami to the NBA Finals in the bubble returned for 2020-21. But now the last team standing in the Eastern Conference playoffs a year ago is the first eliminated from this year's playoffs, which will likely lead to a far different offseason..
After seeing this team get swept by the Milwaukee Bucks, you can guarantee that change is coming. So what moves should Miami make this summer after an early exit from this year's postseason?
Retooling the roster
Miami has made nearly every roster move over the past 18 months with one goal in mind: maintaining cap flexibility heading into this summer.
Outside of Bam Adebayo's max extension, every player Miami has signed or acquired in a trade, starting with Andre Iguodala at the 2020 trade deadline, has either been on a contract that expired following this season or had a team option for the 2021-22 season.
That cap flexibility -- originally intended to pursue the top players in a free-agent class that has since seen most of its big names (Giannis Antetokounmpo, LeBron James, Paul George) sign extensions with their current teams -- will now allow the Heat to retool the roster around the five players who have guaranteed contracts for 2021-22: Adebayo, Jimmy Butler, Tyler Herro, Precious Achiuwa and KZ Okpala.
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Although the Adebayo extension sliced $12.1 million into their projected room, the Heat could still have $21 million to spend in free agency. That number could increase to $27 million if Miami pulls qualifying offers for restricted free agents Kendrick Nunn and Duncan Robinson, decreasing their cap holds from $4.7 million each to $1.7 million (though the Heat would only make that move if they had assurances both players would re-sign in Miami after the Heat had used their cap space).
However, creating that much cap space would be costly when it comes to retaining the veterans already on the roster. The Heat would need to decline the team options on Iguodala and Goran Dragic by Aug. 1, in addition to renouncing the free-agent rights to Trevor Ariza and Victor Oladipo.
In that scenario, after using its cap space, Miami would have the $4.9 million room midlevel exception and the minimum exception to fill out the roster.
The alternative for the Heat is operating as an over-the-cap team, which would give them the full $9.5 million midlevel exception and allow them to bring back Dragic and Iguodala (or use their contracts in trades). They could also decline the team options but retain the cap holds for the duo, pursuing sign-and-trade options for both, as well as Ariza and Oladipo.
Acting as a team over the cap does come at a risk when it comes to future spending. Factoring in new contracts for Robinson and Nunn, plus the max salaries of Butler and Adebayo, would put the Heat near the salary cap in 2022-23.
However, as the Heat demonstrated with the Butler sign-and-trade in 2019, there are other resources to build your roster outside of cap space.
The restricted free agents
When Nunn and Robinson signed three-year contracts at the end of the 2018-19 season, no one expected that they'd become two of the top free agents in 2021. In fact, portions of the contracts weren't guaranteed, and the salary structure reflected that of developmental projects, not core pieces.
Fast-forward two years and it is fair to say Nunn and Robinson have far outplayed the combined $6.2 million that the Heat invested in them.
Nunn finished second in Rookie of the Year voting in 2019-20 when he averaged 15.3 points per game and started all 67 regular-season games he played. While his scoring took a slight dip this season, his efficiency was way up, as he shot 48.5% from the field and 38.1% from 3-point range. In the 28 regular-season games after the All-Star break, Nunn averaged 14.9 points on 50.9% shooting and 39.8% from 3, with only 1.1 turnovers per game.
However, like the entire Heat team, Nunn has struggled in the playoffs against Milwaukee, averaging just 7.7 points per game while shooting 35.7% from the field and 25% from 3 in the first three games. After starting the first two games of the series, he came off the bench in Game 3.
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For the second consecutive season, Robinson shot better than 40% from 3-point range while not missing any time due to injuries. He attempted 717 shots during the regular season, 613 of which came from 3, accounting for 79.6% of his points scored. Robinson also showed improvement as a playmaker, with 22 games this season of at least three assists, after posting just 16 last year.
The easy part for Miami is tendering each player a $4.7 million qualifying offer by Aug. 2, making both Nunn and Robinson restricted free agents. The Heat would then be able to match any offer sheet either player signs with another team.
The harder part is figuring out what a long-term deal looks like for both Nunn and Robinson. Does Miami take an aggressive approach or let the teams with cap space dictate each player's salary?
It is fair to say that both players will see a substantial raise from their almost $1.7 million contracts this season. However, Nunn is hampered in that the free agent guard class is deep with players such as Chris Paul, Mike Conley, Kyle Lowry, Spencer Dinwiddie, Lonzo Ball, Derrick Rose, Tim Hardaway Jr. and Norman Powell.
If a player like Dinwiddie signs with a team that has cap space, it would shrink the market of teams available to sign Nunn to an offer sheet.
Miami could also look to add a point guard from outside the organization, like Lowry, which might limit how much the Heat would be willing to spend on Nunn. There are also questions about whether Nunn can become a permanent fixture in the Heat's starting lineup. After starting 67 regular-season games as a rookie, he was replaced in the lineup for the playoffs by Dragic. The same scenario repeated itself midway through the first round against the Bucks this year, and head coach Erik Spoelstra has been more reliant on veteran Dragic down the stretch in close games.
As for Robinson, we saw last offseason with Joe Harris (four years, $72 million) and Davis Bertans ( five years, $80 million) what the going rate is when it comes to shooting. However, the difference is that Harris and Bertans were not restricted free agents and Brooklyn and Washington essentially had to overpay because of their respective cap situations, an issue Miami doesn't face this year.
Butler's extension
After a slow start, Butler rebounded to have one of his best individual seasons in 2021. As Zach Lowe said recently on The Lowe Post: "If you look at Jimmy Butler's stats, they are off-the-charts good. He has better advanced stats than Kawhi , defensively we know what he is, his assists, passing and all that. I said it last week: He's had the most underappreciated, under-the-radar, great season in the NBA. If he doesn't make an All-NBA team of some stripe there's a problem."
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In the games that Butler played, Miami was 33-19, a mark that would've put them on par with Brooklyn, Philadelphia and Milwaukee for the full season.
The postseason however proved to be a different story.
Butler had a minus-22.7 net rating in the first three games of the series and shot a career playoff low 30.6% from the field and 30.8% on threes. The Heat allowed 120.5 points per 100 possessions when he was on the floor (during the regular season his defensive rating was 106.9).
Now entering the offseason, Miami has a decision on whether to extend Butler, though there is no offseason deadline to get a deal done.
Although he is under contract through 2022-23, Butler is eligible to sign a four-year, $181 million extension.
2022-23 | $40.5M | 33 years old
2023-24 | $43.8M | 34 years old
2024-25 | $47.0M | 35 years old
2025-26 | $50.3M | 36 years old
This would replace his $37.6 million player option for 2022-23 with a new deal starting at $40.5 million, a first-year bump of nearly $3 million. Cap rules prevent Butler and the Heat from negotiating an extension that has a lower starting salary than his existing player option in 2022-23.
The Heat will have to keep in mind the cardinal rule when it comes to a player who is extension eligible: Do not solely reward a player on past accomplishments but what the future holds. If you live in the past, you could get stuck with a dead weight contract on the back end.
In the third and fourth years of this potential extension, the Heat would be paying close to $100 million to Butler during seasons when he turns 35 and 36 years old. Butler has already played more than 20,000 minutes in his career, and hasn't played more than 65 games in a season since 2016-17, his final one with the Chicago Bulls (when he was 27 years old).
To be fair, the longest stretch of games that Butler has missed in his career was 17, after he had right knee surgery in February 2018. Butler is also known for his uncanny work ethic.
One compromise on an extension is a first-year salary of $40.5 million but having either flat or declining salaries for the remainder of the contract, which would reduce Miami's risk as Butler ages (and the salary cap starts going back up in the post-pandemic years).
Team needs
Deciding on the cost (if any) for Oladipo
Prioritizing RFAs Robinson and Nunn
Depth across the board (if team options are declined), including at the point guard position
Resources to build the roster
Possible cap space: up to $27 million
Own free agents: Oladipo, Bjelica, Robinson and Nunn
Exceptions: $4.9 million room midlevel or $9.5 million midlevel and $3.7 million biannual
Cash: $5.8 million to send or receive in a trade
Dates to watch
• It will be a mere formality, but Nunn and Robinson will each receive a one-year, $4.7 million qualifying offer by Aug. 1. The two players averaged 34.25 starts over the past two seasons and met the criteria that saw their qualifying offer increase from $2.1 million to $4.7 million. They will both become free agents and the Heat have the right to match an offer sheet.
• Adebayo's max extension has All-NBA language that would increase his starting salary to 28.5% of the salary cap, but only if he is a first-team All-NBA selection, which is unlikely.
• The Heat have until Aug. 1 to exercise the team options on Dragic ($19.4 million), Iguodala ($15.0 million) and Omer Yurtseven ($1.5 million). If the options are declined, Dragic and Iguodala will become unrestricted free agents, but the Heat will still retain their Bird rights.
Restrictions
• The Heat cannot trade a first-round pick until the new league year, when their 2028 first-round pick will become available to trade.
• The poison pill restriction on Adebayo's gets lifted on the first day of free agency.
• The three players with team options -- Dragic, Iguodala and Yurtseven -- cannot be traded until their team option is exercised.
Extension eligible
• Besides Butler, former second-round pick Okpala is the lone Heat player who is extension eligible. After spending most of his rookie season in the G League, Okpala started nine games this season with the Heat. He had a career-high 17 points in the last game of the regular season against the Detroit Pistons.
The draft
The Heat do not have a first or second round pick in the July draft.
Their first was sent to Phoenix in 2015 as part of the Dragic trade, and has moved multiple times since then, eventually landing with the Oklahoma City Thunder (who have the rights to swap it for the Houston Rockets' pick as long as Houston doesn't land in the top four in the lottery).
The Heat also owe Oklahoma City a future first-round pick that has top-14 protection in 2023, 2024 and 2025 (it becomes unprotected in 2026). That pick was originally sent as a sweetener to the LA Clippers to take on the $11 million contract of Maurice Harkless (from the Portland Trail Blazers), then moved to OKC in the George trade.
As a result, the Heat cannot currently trade a future first-round pick unless they remove the protections on the 2023 pick, which would allow them to trade a pick two years after that pick conveys. Once the league year rolls over, Miami will be able to trade its 2028 first-round pick.
The Heat have been active when it comes to draft-night trades. In 2019, Miami made three separate trades, including sending the Indiana Pacers a 2022, 2025 and 2026 second for the rights to Okpala (the No. 32 pick).
The Heat have only their own 2024 second-round pick (if 31-50 is available) to use in a trade. Their 2028 second-round pick will become available in the new league year.
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