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.

Rumor: Kawhi Leonard meeting with Clippers set for July 2

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Kawhi Leonard will tip the balance of power this summer.

Whatever the Finals MVP decides with his free agency — stay with the Raptors, come to the Clippers, something else entirely — will change the landscape of the NBA. Wherever he goes that team will be an instant contender, with the Raptors and Clippers long having been the frontrunners and everyone else trying to get their foot in the door.

His decision likely will not drag out, but it’s not going to be LeBron James last summer “let’s do this so I can go on vacation” instant, either, if we believe this report from Frank Isola of The Athletic.

Of course, this report would be unofficial/off the record because teams cannot yet officially reach out to players or agents, and we know there is no tampering in the NBA. (Read that last sentence again in your best sarcastic voice to get the full impact.)

In Los Angeles, the Clipper hype has led to billboards.

If the Clipper meeting is July 2, in Los Angeles we presume, the question becomes when is the Toronto meeting? June 30/July 1 in Toronto, giving the Clippers the last shot? Or, are the first couple of days meetings with other teams that are longshots — Knicks, Lakers, Mavericks, etc. — just to get them out of the way.

It has long been rumored to be a two-team race for Leonard’s services. On the one hand is the chance to return home and become the leader of a 48-win Clippers team poised to be a threat for years to come if they land a superstar. (The Lakers have never been a serious consideration for Leonard, according to sources, for a variety of reasons. Let’s just say he’s not a superteam kind of guy.)

On the other hand is a Raptors team where he was given room to recover and be himself, and where he just won a ring. A city where he was fully embraced by the fans.

Also remember Leonard is at eight seasons of NBA service, meaning the max of this next contract is for 30 percent of the cap (a starting salary around $33 million next season). After two more seasons, he will have 10 years of service and be eligible for 35 percent of the cap (a starting salary of $38 million right now, and with the cap expected to go up the next couple of years it will be higher than that in reality). Despite the injury history, is Leonard willing to bet on himself and sign a two-year contract to get to the larger max, then re-sign?

The leading theory floating around the league now is Leonard signs a short deal in Toronto, then re-enters the market in a year or two. But it’s just a theory. Nobody really knows because Leonard does not tip his hand. About the only thing we seem to know his he will meet with the Clippers on July 2.

Ex-Sacramento Kings exec gets 7 years for siphoning $13.4M

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SAN FRANCISCO (AP) — A former top Sacramento Kings executive was sentenced Monday to seven years in prison for siphoning $13.4 million from the team.

Jeffrey David, 44, the team’s former chief revenue officer, pleaded guilty in December to wire fraud and aggravated identity theft.

David diverted the sponsorship payments of five companies to a bank account he controlled from October 2012 through July 2016, using the money to buy and remodel Southern California beachfront properties, pay for a private jet membership and pay off credit card bills.

“The brazen scheme involved forgeries, stolen corporate executive identities, money laundering and even instructing a former colleague to destroy evidence,” U.S. Attorney McGregor W. Scott said in a statement. “Today’s sentence should deter others from committing substantial frauds such as this one.”

David’s lawyer, Mark Reichel, disagreed with the sentence from U.S. District Judge William Shubb.

“We see no appropriate purpose served by a sentence this lengthy,” Reichel wrote in an email, citing David’s “tremendous life work” before and after his crimes as cause for a reduced sentence.

“The Kings received back every single penny of the previously purloined money, and Mr. David worked very hard to make sure that happened. He is tremendously remorseful,” Reichel said.

The Kings have received over $13.2 million in restitution to date, according to the Department of Justice.

David is scheduled to begin his sentence on Aug. 20.

Lakers’ Jeanie Buss: “I have 100 percent confidence in Rob Pelinka”

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Internally, the Lakers believe they are on the right track: They signed LeBron James as a free agent, they spent years acquiring assets then turned those assets into Anthony Davis, and they believe the roster that will take the court next season will bring vindication for the front office and ownership group. The Lakers believe they will be back on top, where they belong.

From the outside, um, let’s just say there are doubts around the league. Doubts about all the picks — particularly the pick swaps and deferments — that the Lakers gave up to get Davis and now that could hurt them in the future. There are doubts about the ability of Rob Pelinka to build out a roster around LeBron and Davis that is truly a threat.

Jeanie Buss has no such doubts. Speaking to Tania Ganguli of the Los Angeles Times (and other reporters) at the NBA Awards show Monday, Buss expressed nothing but confidence in Pelinka and the Lakers’ staff.

“I’ve always had confidence in Rob, whatever the speculation is out there,” Buss said. “We don’t need outside media to validate the things that we do. I’m very happy and I think we’re on the right path.”

“I have 100% confidence in him in running his basketball operations,” Buss said. “He’s brought us a great new head coach in Frank Vogel, whose teams have had a lot of success in the playoffs and who have played consistently ranking high in defense, which means not only does he emphasize defense but the players buy into his defensive schemes.”

The question isn’t Vogel’s credentials, although how a staff with Jason Kidd, Lionel Hollins, and other veteran coaches with big egos will mesh together is going to be interesting.

The question is talent.

The Lakers have the high end of that with LeBron and Davis, but when you think about the Laker title teams of the past it wasn’t just Shaq and Kobe, it was also Derek Fisher and Robert Horry and Rick Fox and a host of others. The same thing was true in this past Finals — the deeper team won because the Raptors could adapt and handle their star not being 100 percent.

Are the Lakers going to chase another star and then complete the roster with minimum salary players? Or, get two or three quality role players with their cap space to have a deeper team? Has this all been planned out and thought through? Maybe Rob Pelinka builds this roster out beautifully, but we only have one year of experience to judge him on, and that did not go well.

Buss may have confidence, she should, the rest of us are in wait and see mode.

The Greek Freak has arrived, Giannis Antetokounmpo wins NBA MVP

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Mike Budenholzer came in with a plan — an offense built around the fact no one man on the planet can guard Giannis Antetokounmpo.

It worked. The Bucks won 60 games and had the best record in the NBA. Budenholzer picked up Coach of the Year hardware for his efforts.

Now Antetokounmpo has won the NBA MVP award, edging out James Harden (who chose not to attend the NBA’s awards show in Los Angeles Monday). He was emotional in thanking teammates for helping him reach this point, then talking about his father.

It was a long road to this point, Antetokounmpo was playing second-division ball in Greece when the Bucks drafted him at No. 15 back in 2013. The word we used to describe his game at the time was “raw” — he was a long way from the player he would become. What he also turned out to be was driven. Willing to put in the work, be coached, and put in the long hours to get better and maximize his potential. Antetokounmpo earned the chance to walk up on that stage and accept the MVP award.

Antetokounmpo averaged 27.7 points and 12.5 rebounds a game, but it was his ability to destroy any defender one-on-one that made the Bucks offense work. Either the Greek Freak got to the basket and finished, he drew a foul, or he drew so much attention the shooters that surrounded him on the floor had clean looks of their own. He also was the Bucks best defender, a guy tasked with tough assignments nightly.

Antetokounmpo was the best player on the best team.

Antetokounmpo won the award handily with 941 points to Harden’s 776. The Greek Freak had 78 of the 100 first-place votes.

James Harden — who averaged 36.1 points, 7.5 assists, and 6.6 rebounds per game — finished second in the voting, Paul George of Oklahoma City was third. Harden has finished first or second in the voting for four of the past five seasons. Harden believed he deserved to win and was frustrated with another second.

Antetokounmpo is the first player from Europe to win the MVP award since Dirk Nowitzki in 2007.

Nikola Jokic came in fourth in the voting, Stephen Curry was fifth. Here are the full results: