Breaking Down the Miami Heat’s Salary Cap Situation

With it’s top three players and large chunk of its cap space able to opt out, the Miami Heat’s offseason is a murky one. It will start to clear up once LeBron James, Chris Bosh and Dwyane Wade make decisions about their futures, and what they decide to do with their contracts is the biggest issue facing Pat Riley and Micky Arison.

James, Bosh and Wade all have early termination clauses. If James and Bosh decide to opt in, they would each make $20.59 million in 2014-14 and $22.1 million in 2015-16. Wade would make $20.16 million in 2014-15 and $21.7 million in 2015-16.

Miami currently has Norris Cole on the books for a little more than $2 million next season. Justin Hamilton is signed to a non-guaranteed deal worth $816,482.

Udonis Haslem is set to make $4.62 million next season, but holds an opt-out clause. He is expected to opt in, but reports say that he may opt out in favor of more years. Chris Andersen has a player option for $1.45 million but is expected to opt out.

Shane Battier will be retiring and Ray Allen, whose contract expires, has yet to decide on his future.

The remaining Heat players—Mario Chalmers, Toney Douglas, James Jones, Rashard Lewis, Michael Beasley and Greg Oden—are free agents.

Next season, the NBA salary cap is projected to be $63.2 million with the tax level set at $77 million. Those numbers increase to $66.5 million and $81 million in 2015-16. Miami has paid the tax in three of the last four seasons, which has cap and mid-level exception implications.

If the Big Three opt in, Miami will be operating above the $63.2 million cap and would be limited to the $3.28 million taxpayer mid-level exception plus whomever they could sign to the veteran minimum up to $1.4 million.

Feb 16, 2013; Houston, TX, USA; Eastern Conference forward LeBron James (6) of the Miami Heat and forward Carmelo Anthony (7) of the New York Knicks react as they are introduced during practice for the 2013 NBA all star game at the George R. Brown Convention Center. Mandatory Credit: Brett Davis-USA TODAY Sports

That means big name free agents like Carmelo Anthony and Kyle Lowry are off the table. Other free agents like Trevor Ariza, Luol Deng and Marcin Gortat would be unlikely to sign for so little. Miami could be limited to a pool featuring such names as Richard Jefferson, Mo Williams and Al Harrington.

And that’s if Miami decides to use its mid-level exception. The Heat, deciding not to tempt the dreaded repeater tax, could opt not to use it.

In this scenario, the Heat would be hard pressed to put an improved team on the court next season.

So let’s say the Big Three opt out.

Wade could resign with the Heat for up to $87.2 million over four years ($21.8 million per season). James and Bosh could resign for up to $115.1 million over five years ($23.02 million per season).

Wade would certainly not command that kind of money, and it would be questionable for Bosh.

What Heat fans are hoping for is that the three sacrifice money in the name of competing for more championships.

If they decide to opt out and return at a bargain, say, around $14 million each, that would give Miami about $16 million to operate. Haslem could also opt out and return for more years near the veteran minimum to give them even more space.

Then there is the chance that one or more of the Big Three leave. In this case, the Heat could only exceed the cap to sign players to the minimum or use a $2.7 million cap room exception. If James or Bosh join another team, they could only sign for up to $85.5 million over four years.

Signs point to the Big Three returning to Miami. James, Wade and Bosh already made sacrifices to chase championships, so it stands to reason that they could do it again.

After all, James and Wade make a killing in endorsements and Bosh has mentioned a willingness to take a pay cut to stay with the Heat.

Riley was able to convince them to join forces in Miami. His job now is to convince them to take less money in order to stay and make the most of their time—and not in cash—with the Heat.

Cap information via Larry Coon’s NBA Salary Cap FAQ blog. Salary information via ShamSports.com.