Salary-cap gymnastics behind the Heat’s pursuit of Carmelo Anthony

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The NBA just ratified a new Collective Bargaining Agreement that, among other things, limits a team’s ability to acquire multiple highly paid stars.

Yet, the Heat might chase Carmelo Anthony to join LeBron James, Dwyane Wade and Chris Bosh in Miami.

How can that happen?

There infinite ways the Heat could make room for Melo, but let’s examine a few baseline scenarios. Let’s begin with Miami’s starting position.

Heat’s current 2014-15 situation

Miami has seven players who might be under contract for next season: LeBron, Wade, Bosh, Udonis Haslem, Chris Andersen, Norris Cole and Justin Hamilton.

LeBron ($20,590,000), Bosh ($20,590,000) and Wade ($20,164,000) have early termination options, which are functionally similar to player options. Haslem ($4,620,000) and Andersen ($1,448,490) have player options. Cole’s salary ($2,038,206) is fully guaranteed, and Hamilton’s ($816,482) is fully unguaranteed. The Heat also have two draft picks – Nos. 26 and No. 55.

Hamilton is good as gone. Miami could easily dump Cole and its first-round pick, which comes with a guaranteed salary, without taking back salary. If Andersen and Haslem opt in, I believe the Heat could also trade them without returning salary – perhaps attaching the first-round pick to Haslem as a sweetener if necessary.

Free agents continue to count against the cap, but other than LeBron, Bosh and Wade – who would terminate their contracts in almost any plan –  Miami could easily renounce everyone else.

Essentially, if required to sign Melo, I believe the Heat could fairly easily pare their roster to just LeBron, Wade and Bosh.

There might be some emotional attachment to casting off Haslem and even Andersen and Cole. But remember, Pat Riley practically gave away Michael Beasley in 2010, just two years removed from Miami drafting Beasley No. 2 overall and one year from him making the All-Rookie team, in order to pursue LeBron and Bosh. I think Riley would overcome any internal dilemma based on nostalgia if it meant getting Melo.

So, the rest of this post will suppose the Heat clear their roster to just LeBron, Wade and Bosh.  It also uses the latest projected salary cap, $63.2 million with a $77 million luxury tax, for 2014-15 and predicts the cap will continuously rise by the same amount it’s projected to increase this year.

How much money would everyone sacrifice?

Once Miami’s roster is down to just LeBron, Wade and Bosh – all of whom terminated their contracts in this scenario – cap holds will leave the Heat over the cap. LeBron, Wade and Bosh would each count at 150 percent of their previous salary, and Miami would have nine roster charges (equal to the rookie minimum salary) to reach the minimum roster of 12.

Once LeBron, Wade and Bosh re-sign, though, their 2014-15 salaries would replace their free agent amounts. Then Miami could use its remaining cap room to sign Melo.

Under that scenario – if everyone wants to get paid the same amount, which we’ll call the equality plan – each of the now-big four would make $14,658,494 in 2014-15.

If LeBron, Wade and Bosh re-sign first, they could get higher raises (7.5 percent vs. 4.5 percent) and longer contracts (five years vs. four years) than Melo, so maybe Miami’s original big three would take lower starting salaries and arrange to be on par with Melo over the long run. But for now, we’ll focus on matching salaries only next season.

Of course, $14,658,494 is much less than any of the four could make next season.

Here’s:

  • Max for Melo – both if he stayed with the Knicks or left – and his salary in the equality plan (gold)
  • Max for each  LeBron, Wade and Bosh – they have the same possible max – and their salary in the equality plan (red)

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Melo 2015 2016 2017 2018 2019 Total
Max if re-signs $22,458,402 $24,142,782 $25,827,162 $27,511,542 $29,195,922 $129,135,810
Max if signs elsewhere $22,458,402 $23,469,030 $24,479,658 $25,490,286   $95,897,375
Equality plan $14,658,494 $15,318,126 $15,977,758 $16,637,391   $62,591,769

 

LeBron, Wade, Bosh 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Total
Max if
re-sign
$20,659,633 $22,209,105 $23,758,578 $25,308,050 $26,857,523   $98,133,256
Equality plan $14,658,494 $15,757,881 $16,857,268 $17,956,655 $19,056,042   $69,627,847

Melo would be forgoing about $67 million over his max with the Knicks or $33 million over his max elsewhere. LeBron, Wade and Bosh would each be surrendering about $29 million.

For the Heat, this would be a huge bargain. The salary cap would restrict their ability to sign all four players – and there’s nothing Micky Arison could do about it. Essentially, the rules prevent him from spending, so if LeBron, Wade and Bosh want to pursue this plan, they would have no standing to even negotiate for higher collective salaries.

Miami would then have the room mid-level exception ($2,732,000) and minimum contracts to fill its roster. By design, it’s difficult for teams to add salary quickly once they’ve gone under the salary cap.

The luxury tax would be no concern at all.

For a year.

LeBron, Wade and Bosh can get paid again soon

If LeBron, Wade and Bosh re-sign, Miami would retain their bird rights. A key facet of bird rights: A team can go over the cap to re-sign players with the.

However, because free agents continue to count against the cap until signing, teams have a very limited ability to sign outside free agents and then exceed the cap to re-sign their own free agents. Hence, LeBron, Wade and Bosh would have to cut their salaries to make room for Melo this offseason.

But they wouldn’t need to make room for Melo next offseason.

LeBron, Wade and/or Bosh could sign a one-year deal – rather than a five-year deal – with the same starting salary as the equality plan. Then, next offseason, they could re-sign for max contracts – and significant raises.

Realistically, they would sign a two-year contract with a player option. That way, they could still become free agents in 2015 but would have an extra year of salary protection in case they determine their stock had fallen. (Options can only occur in the final year of a contract, so any deal longer than two years would delay getting a new max contract.)

The Heat would not hold Melo’s bird rights for three years, so he couldn’t take advantage of this plan until 2017. He’d likely receive a four-year contract with a player option regardless.

Here’s:

  • Annual salaries for each LeBron, Wade and Bosh in the equality plan and if they opt out as quickly as possible to re-sign for the max (red)
  • Annual salaries for Melo in the equality plan and if he opts out as quickly as possible to re-sign for the max (gold)

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Melo 2014-15 2015-16 2016-17 2017-18 2018-19 Total
Max if re-signs $22,458,402 $24,142,782 $25,827,162 $27,511,542 $29,195,922 $129,135,810
Max if signs elsewhere $22,458,402 $23,469,030 $24,479,658 $25,490,286   $95,897,375
Equality plan $14,658,494 $15,318,126 $15,977,758 $16,637,391   $62,591,769
Equality plan with early opt out $14,658,494 $15,318,126 $15,977,758 $25,093,282 $71,047,660

 

LeBron, Wade, Bosh 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Total
Max if
re-sign
$20,659,633 $22,209,105 $23,758,578 $25,308,050 $26,857,523   $98,133,256
Equality plan $14,658,494 $15,757,881 $16,857,268 $17,956,655 $19,056,042   $69,627,847
Equality plan with early opt out $14,658,494 $22,137,516 $23,797,830 $25,458,143 $27,118,457 $28,778,771 $127,290,716

New contract from one signed in 2014 is italicized

Projecting the 2017-18 salary cap – and therefore Melo’s max as a free agent in 2018 – is so difficult this far ahead, I didn’t even bother with how a multi-year max contract signed then would play out over its duration.

In the same vein, though far less turbulent of an estimate, LeBron, Wade and Bosh would be relying on the salary cap making another large jump 2015-16. I think that’s quite possible, but there is risk.

There’s also risk in accepting a one-year or even two-year deal with a player option. If a player gets hurt or struggles for other reasons, he might make less than had he just accepted a five-year guaranteed contract. Remember, I’m examining max salaries under these scenarios. Players aren’t guaranteed the max.

But if this worked, LeBron, Wade and Bosh could sacrifice about $6 million each in 2014-15 and then make similar salaries in coming years to the max possible had they signed this offseason.

Melo would sacrifice about $24 million over the next four seasons. So, if they plan to opt out in a year, it would make even more sense for LeBron, Wade and Bosh to accept lower starting salaries than Melo.

If LeBron, Wade and/or Bosh opt out next summer to seek bigger contracts, that could make this pursuit much more expensive for Arison. Would he go for it?

What about a plan that gets expensive for the Heat owner immediately?

Signing-and-trading for Melo

Miami could also acquire Melo in a sign-and-trade. That would make the apron – $4 million above the luxury-tax line – rather than the salary cap the key threshold. With a project cap of $63.2 million and luxury tax of $77 million, that’s a lot of extra wiggle room – and money to pay a big four.

In a sign-and-trade route, if they each want the same starting salary, LeBron, Wade, Bosh and Melo could each make $18,190,703 in 2014-15. That’s a significant jump from the $14,658,494 they could each make by signing Melo through cap space (especially because raises in future seasons are based on initial salary).

If the big four collectively maximizes its salary in a sign-and-trade scenario, there would be a host of complications. The Heat would have no room to sign anyone other than nine minimum-salary players and couldn’t add any salary in a trade for a year.

Of course, completing a sign-and-trade for Melo alone would be complicated. Miami, New York and several players would have to agree – making this a big longshot.

Essentially, the Heat would have to sign-and-trade their own free agents – other than LeBron, Wade and Bosh, of course – to the Knicks.

All players signed-and-trade must receive three-year contracts, but only the first year must be guaranteed. Fortunately for the Knicks if they want to go this route, they won’t have cap room this offseason anyway, even if they lose Melo. So, taking a guaranteed year of salary should be no problem. The Heat can structure all their outgoing contracts so they’re fully unguaranteed for 2015-16 and 2016-17, allowing New York to waive them and maximize its 2015 cap room.

But Miami can’t just re-sign one free agent to a salary equal to Melo’s and send him to New York. Anyone in a sign-and-trade whose salary increases by more than 20 percent brings up base-year-compensation issues and probably requires a third team to make the deal work.

However, the Heat might have enough free agents to complete a sign-and-trade on their own. (Even if renounced, a team can sign-and-trade its own free agents.) If Miami signs-and-trades Mario Chalmers, Shane Battier, Toney Douglas, James Jones, Michael Beasley and Greg Oden on contracts equal to 120 percent of their 2013-14 salaries, that would be enough to acquire Melo with a 2014-15 salary of $18,190,703 – his equality-plan number in a sign-and-trade scenario.

Of course, those six players must agree to leave Miami for New York. Why would they? The way Chalmers has struggled in the Finals, he might not make $4.8 million elsewhere any other way. Battier could participate and then retire, a way to leave an even stronger legacy in Miami. Douglas, Jones, Beasley and Oden are bit players who probably couldn’t get more money elsewhere. They’re just in the right place at the right time. (If Haslem opts in, the Heat could use him in place of Chalmers. Haslem would have no say in it.)

And why would the Knicks agree? For one, Melo would have to convince them he’s leaving regardless. The Heat would also have to send draft picks to make it worth their while. But remember, if everything else comes together, it’s easy to structure a dual sign-and-trade as not to interfere with New York’s 2015 cap space.

As before, Melo would be subject to a short contract and smaller raises than the Heat’s current big three, but all four players come out ahead of the cap-space model.

Here’s:

  • Annual salaries for each LeBron, Wade and Bosh in the equality plan and if Miami gets Melo in a sign-and-trade (red)
  • Annual salaries for Melo in the equality plan and if he joins the Heat in a sign-and-trade (gold)

image

Melo 2014-15 2015-16 2016-17 2017-18 2018-19 Total
Max if re-signs $22,458,402 $24,142,782 $25,827,162 $27,511,542 $29,195,922 $129,135,810
Max if signs elsewhere $22,458,402 $23,469,030 $24,479,658 $25,490,286   $95,897,375
Equality plan $14,658,494 $15,318,126 $15,977,758 $16,637,391   $62,591,769
Equality plan with early opt out $14,658,494 $15,318,126 $15,977,758 $25,093,282 $71,047,660
Equality plan with S&T $18,190,703 $19,009,285 $19,827,867 $20,646,448   $77,674,303

 

LeBron, Wade, Bosh 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Total
Max if
re-sign
$20,659,633 $22,209,105 $23,758,578 $25,308,050 $26,857,523   $98,133,256
Equality plan $14,658,494 $15,757,881 $16,857,268 $17,956,655 $19,056,042   $69,627,847
Equality plan with early opt out $14,658,494 $22,137,516 $23,797,830 $25,458,143 $27,118,457 $28,778,771 $127,290,716
Equality plan with S&T $18,190,703 $19,555,006 $20,919,309 $22,283,611 $23,647,914   $86,405,840

New contract from one signed in 2014 is italicized

However, what’s a win for LeBron, Wade, Bosh and Melo is not a win for Arison, at least not directly. Acquiring Melo in a sign-and-trade and filling the team to the hard cap of the apron would give the Heat a 2014-15 payroll of $87 million, including luxury-tax payments. On the hook for so much guaranteed money, they’d likely face the tax annually – and the repeater penalty.

This sign-and-trade plan, though it offers substantially higher salaries than using cap space, can be combined with the opt-out plan to get even more money to LeBron, Wade and Bosh as soon as 2015 and Melo as soon as 2017.

But a sign-and-trade, with all the moving parts, is so unlikely, let’s just stop here.

A compromise

No matter what, LeBron, Wade, Bosh and Melo must collectively compromise to make this happen. That’s the new Collective Bargaining Agreement working.

The document just can’t completely prohibit players from sacrificing salary to build a team as they see fit.

So many variables remain, including what each of the four key players desires, where the cap is set and whether Miami moves its other players. There’s a lot to sort out.

But – scaled up or down depending on other influences – here’s what might work best if LeBron, Wade, Bosh and Melo are committed to making a big four:

  • No sign-and-trade. It’d be difficult, though not impossible, to get everyone else on board.
  • Haslem and Andersen opt out.
  • Miami trades Cole and its first-round draft pick for future picks.
  • Wade signs a four-year contract that starts higher than the equality-plan salary, because he gave up the most money in 2010. It’s the last major deal of his career.
  • Melo signs a four-year contract with a player option that starts higher than the equality-plan salary, because he has the most to gain by signing elsewhere and gets the smallest annual raises. After the third year, he opts out and re-signs to get a higher salary, potentially the max.
  • LeBron and Bosh each sign two-year deals starting below the equality-plan salary with player options. After next season, both opt out and re-sign for five-year max contracts.
  • The Heat re-sign Haslem to the room exception and Chris Andersen and Ray Allen to minimum contracts.

Will it happen? Who knows?

But it’s definitely workable.

USA’s 78-game international win streak ends at hands of Australia, Patty Mills, 98-94

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Gregg Popovich wanted his USA team to face some adversity. For them to be challenged and see how they’d respond.

He got his wish on a Saturday afternoon in Australia and has to be disturbed by the result.

Australia, behind a red-hot Patty Mills who finished 30 points and drained seemingly every big bucket down the stretch, tore up the USA defense and outplayed the Americans when it mattered most, beating Team USA 98-94 in an exhibition match in front of a raucous 52,000 people in Melbourne.

Team USA had won 78 consecutive games — including both friendlies and in international tournaments — before this loss. The last USA exhibition game loss was in the run-up to the 2004 Olympics (when the Americans took home the bronze).

The USA opens FIBA World Cup play in just more than a week, facing the Czech Republic in their first game on Sept. 1. The Americans enter that tournament as the favorites, but the combination of improved international play and a lot of elite American talent staying home has made the USA’s margin for error very slim. Teams such as Serbia have to see this result and gain confidence.

This loss comes just two days after

“They wanted it more than us tonight,” Kemba Walker said after the game. “Lesson learned for us.”

Those lessons include needing to clean up a defense that still has communication issues, and to find more consistent shot creation outside of pick-and-rolls with Kemba Walker or Donovan Mitchell.

Walker, who came off the bench to score 22, was clearly America’s best player. His ability to penetrate was the only thing all night that either forced the Aussie defense to collapse, or it allowed him to get space for a good shot. Donovan Mitchell, who finished with a dozen points including seven straight late in the game, was able to provide a little shot creation, but the Americans lacked much ball or player movement in this one. Harrison Barnes finished with 20 points on 7-of-12 shooting.

Popovich is clearly still experimenting with lineups and combinations, and that is the silver lining of this USA loss. This was not the American’s best foot forward.

But don’t take anything away from Australia, which played a physical and feisty game all afternoon. They put the ball more in the hands of Utah’s Joe Ingles and he responded with 15 points, seven assists, and he and Andrew Bogut set up the offense and were smart with their passes. Bogut finished with 15 points.

Team USA takes on Canada in a final exhibition game in a couple of days, before heading to China for the World Cup.

Report: Dwight Howard gave back $2.6 million in buyout with Memphis, what he will make in L.A.

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Dwight Howard will get his money, the full $5.6 million he opted into this summer. The man is getting paid.

The checks are just coming from two different teams.

To facilitate a move to the Lakers, Howard is giving back $2.6 million in a buyout with the Grizzlies — exactly how much he makes on a minimum contract with Los Angeles. From Adrian Wojnarowski and Bobby Marks of ESPN:

My guess is the Grizzlies will just take the cap hit this season to get Howard off the books.

This is exactly how this was expected to go down financially if Howard came to Los Angeles. The risk for Howard is he will sign a non-guaranteed contract with the Lakers — they can waive him for whatever reason, pay a small buyout fee, and Howard loses out on the $2.6 million.

That’s motivation for him to follow through on what he promised the team.

 

Former NBA, ABA coach Tom Nissalke dead at 87

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SALT LAKE CITY (AP) — Tom Nissalke, who won coach of the year honors in the NBA and ABA, has died. He was 87.

Nissalke passed away at his home in Salt Lake City on Thursday after facing a “series of health-related problems” in recent years, according to the Deseret News.

He was the first coach of the Utah Jazz after the franchise relocated from New Orleans in 1979.

Nissalke was also an NBA head coach in Seattle, Houston, and Cleveland.

Nissalke got his start in the pro ranks as an assistant with Milwaukee and helped guide a team featuring Hall of Famers Oscar Robertson and Kareem Abdul-Jabbar to an NBA title in 1971. His work with the Bucks landed him a head coaching gig with the ABA’s Dallas Chaparrals. He led them to a 42-42 record in his first season and was named the league’s top coach.

He was hired the next season in Seattle but was fired after a 13-32 start. Nissalke then coached the Utah Stars and San Antonio before returning to the NBA with the Rockets. He won 124 games in three seasons with Houston, twice taking the team to the playoffs and the 1977 Eastern Conference finals.

Nissalke was named the NBA’s Coach of the Year after going 49-33 in 1976-77.

After retiring, he was active with the YMCA and worked as a radio analyst.

Nissalke is survived by a daughter, Holly, son Thomas Jr, and two grandchildren. His wife, Nancy, died in 2006.

 

How Dwight Howard convinced the Lakers to take a chance on him

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Laker fans Friday sounded like your friends after an ugly relationship and breakup, when you suddenly consider taking that person back. Laker nation took to Twitter screaming “ARE YOU SERIOUS? What are you thinking? Are you even thinking?”

The Lakers, however, are entering a second relationship with Dwight Howard with their eyes wide open — he will sign a non-guaranteed contract to be the team’s center (sharing duties with Anthony Davis and JaVale McGee). Howard will have to prove himself, on and off the court. The Lakers have leverage and can waive Howard and move on to Joakim Noah or someone else quickly if things do not pan out.

But how did it even get to this point? How did Howard — who did his annual summer media tour saying “I have changed, I am taking the game and my conditioning seriously, I just want a chance” and league observers shrugged because they have heard the same thing for years — convince the Lakers to roll the dice on him again? Shams Charania of The Athletic laid it all out.

Howard’s message to [Laker assistant coach Jason] Kidd and the Lakers was the same one he delivered to The Athletic in July from NBA summer league: He’s learned from the past several seasons, learned that, at age 33, he is simply one of the guys now. Howard believes he can contribute at a high level for any NBA team, but the eight-time All-Star also understands he has to focus on rebounding, defense, blocking shots, finishing around the rim and simply playing whenever he is asked… Kidd became convinced about Howard’s newfound awakening…

The Lakers then began setting workouts for free agents, and Howard traveled from Atlanta to Los Angeles on Wednesday. His meeting and workout with the Lakers was set for Thursday, but Howard went to the Lakers’ facility in El Segundo, Calif., on Wednesday afternoon for his own training session. The Lakers were surprised to see him, sources said, and many key decision makers were in attendance…

League sources said Howard had a convincing and emotional meeting with the players and Lakers officials, explaining how he had reached rock bottom a season ago and needed to find a new mindset in his life. On and off the floor. He was not the teammate he needed to be in playing for three teams in the past three years. He did not take the game seriously enough, he did not understand what was needed to turn the corner.

Howard has said all that before. Multiple times. To multiple teams and teammates. Maybe this time he has genuinely figured things out, but whatever he did and said was enough to convince the Lakers to buy in…

To a point.

One could argue — and I would make the case — that Noah would be a better fit on the court for the Lakers’ needs in terms of passing and defense, but he comes with plenty of risks as well (health, getting along with LeBron James, and how much he liked the nightlife as a Knick in New York and what that would mean in L.A.). At least with Howard, the Lakers mitigated that risk with the non-guaranteed contract. If Howard will not accept his role and is disruptive (as he has been in recent stops), if he is still eating candy like a bingeing 10-year-old on Halloween night, if he can’t stay healthy, the Lakers can waive Howard and move on. If the Lakers brought in Noah, they would have been smart to have the same non-guaranteed contract (if Noah would have signed that kind of deal).

For now the Lakers have their man, but he’s basically on probation. Howard has to prove in deeds everything he has said in words.