At the start of Wednesday, the Heat faced a luxury tax bill of $9.7 million. By the end of the day, that tax bill had been trimmed to $1.8 million.
A deal that sent Wayne Ellington and Tyler Johnson to Phoenix a day before the NBA’s trade deadline eliminated most of the Heat’s tax burden. Miami received 6-foot-10 power forward Ryan Anderson in return.
Anderson, 30, has had a solid NBA career. He averaged 19.8 points for New Orleans in 2013-14 and 17 points for the Pelicans in 2015-16. But this move wasn’t about adding another rotation player to the roster, after all Anderson has been in decline in recent seasons and averaged 3.7 points in a very limited role for the Suns this year.
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Wednesday’s trade was a cost-cutting one. It was about trimming the tax bill and inching closer to escaping it completely, and bringing some clarity to a rotation that was loaded with wing players before the move.
The Heat is now just $1.2 million over the luxury tax threshold. Miami has until the end of the regular season to make moves to get completely below the line to avoid paying the penalty.
Here’s some stuff to consider …
▪ A minor move like trading Rodney McGruder’s $1.5 million salary could get it done. Or trading a player on a bigger contract like Dion Waiters, James Johnson or Hassan Whiteside for one on a slightly cheaper deal could be enough to push Miami over the edge. The question is, does the Heat want to trade away another rotation-level player just to get out of the tax?
Whatever Miami decides to do, it has less than 24 hours to make another trade if it wants to finish the job before Thursday’s 3 p.m. trade deadline. And Miami technically has to shave off a little more than $1.2 million because it currently has just 13 players on its roster, and will need to sign another to get to the league-wide minimum of 14 players within two weeks.
▪ In reality, though, the Heat is far closer to getting out of the tax than it seems.
As Heat Hoops cap expert Albert Nahmad pointed out, center Kelly Olynyk has a $1 million bonus in his contract for this season if he plays 1,700 regular-season minutes and a $400,000 bonus if the Heat makes the playoffs. Since he accomplished both last season, both bonuses are included into Miami’s current team salary.
But it’s unlikely that Olynyk will reach the 1,700-minute mark this season. He’s played a total of 987 minutes and averaged 20.2 minutes through the Heat’s first 52 games and would need to average 23.8 minutes of court time the rest of the season to unlock the bonus.
The playoff bonus is still very possible, with the Heat currently in the Eastern Conference’s eighth spot and 1.5 games ahead of the ninth-place Detroit Pistons.
Even if the Heat makes the playoffs, though, the Heat could actually be less than $1 million away from avoiding the luxury tax. Why? Because Olynyk’s $1 million bonus for minutes played will be subtracted from the team’s salary at the end of the season if he doesn’t meet the requirement, which he’s not expected to at this point.
To be clear, Miami is not intentionally limiting Olynyk’s playing time to make this happen. It’s evolved organically because of Miami’s crowded frontcourt that has coach Erik Spoelstra splitting minutes between Hassan Whiteside, Bam Adebayo, James Johnson and Olynyk.
The clock is ticking with the trade deadline just hours away, but what looked like a tall task Wednesday morning turned into a real possibility by the end of the day. The Heat is almost out of the tax.
A QUESTION FOR THE OFFSEASON
While Anderson’s $20.4 million salary for this season is locked in, he’s due $15.6 million next season if he’s waived by July 10, which would be expected. If Anderson is not waived by the Heat before this date, his guaranteed salary for 2019-20 would jump to $21.3 million.
Another option the Heat has is to use the “stretch provision” when waiving Anderson this upcoming offseason. That would split up his $15.6 million salary into a $5.2 million annual cap hit over the next three seasons and would give Miami an an extra $10.4 million in cap space this summer.
But the Heat might not want to add a $5 million commitment to the books for the 2020 and 2021 offseasons, when it’s expected to have enough cap space to be a major player in free agency.