As the Miami Heat prepare for Thursday’s 6 p.m. start of the NBA’s free-agency negotiation period, a priority for the team apparently remains avoiding having to work under a hard salary cap on total payroll for the 2022-23 season.
With an eye on a possible trade — potentially a blockbuster trade — either this offseason or ahead of the February 2023 NBA trading deadline, the Heat have prioritized retaining salary-cap flexibility going forward, according to an NBA source familiar with the team’s thinking.
Under the NBA’s complex salary-cap rules, a team is forced to work under a hard-cap payroll ceiling if it:
— Utilizes all or part of the non-taxpayer mid-level exception, which this offseason stands at $10.4 million, on a free agent or multiple free agents.
— Utilizes the bi-annual salary-cap exception, which this offseason stands at $4.1 million, on a free agent.
— Acquires a player in a sign-and-trade transaction. (Sending out a player in a sign-and-trade does not trigger a hard cap.)
The hard cap for 2022-23 NBA payroll is expected to be set at $155 million.
By avoiding the hard cap, teams are allowed to exceed that payroll total, through trades or re-signing their own players, by an unlimited amount, provided they accept the exponential luxury-tax payments that accompany such an excessive payroll, as has been the case in recent seasons with the Brooklyn Nets and Golden State Warriors, among other teams.
The Heat have operated under a hard cap the last three seasons::
— In 2019-20, after acquiring Jimmy Butler in a sign-and-trade agreement with the Philadelphia 76ers.
— In 2020-21, after utilizing the non-taxpayer mid-level exception for the combined salaries of free-agent additions Avery Bradley and Maurice Harkless.
— And this past season, after acquiring Kyle Lowry in a sign-and-trade agreement with the Toronto Raptors and also utilizing part of the non-taxpayer mid-level exception to add P.J. Tucker in free agency.
This past season, about half of the NBA’s 30 teams operated under a hard cap, either by utilizing one of the two exceptions that trigger the cap, or by acquiring a player via a sign-and-trade transaction.
With so many unsettled personnel situations around the league, from the future of Donovan Mitchell with the Utah Jazz, to the ongoing uncertainty with Kevin Durant and Kyrie Irving in Brooklyn, to players who tire of losing situations or the lack of playing time, avoiding the hard cap eases such potential future trade permutations.
One NBA insider said that there is anticipation of a potentially “volatile” trade market through the course of 2022-23.
Avoiding the hard cap also makes it easier for teams to trade out players for a greater amount of return salary. For example, should the Heat avoid the hard cap, it would ease the possibility of sending out Duncan Robinson’s $16.9 million 2022-23 salary for a player or players earning $21.1 million.
At the current crux of hard-cap avoidance for the Heat is the return to free agency of Tucker.
Having been with the Heat last season on a $7 million salary, the Heat have the right to start a new contract for Tucker at $8.4 million (the allowable 20 percent raise available to all players). However, the only higher starting salary slot available to the Heat for Tucker would be the $10.5 million non-taxpayer mid-level exception, which then would trigger a hard cap.
It is against that backdrop that Tucker’s Heat future, or a Heat 2022-23 future under a hard cap, hangs in the balance.
Similarly, if the Heat were to utilize the $4 million bi-annual exception to retain free-agent forward Caleb Martin, that, too, would trigger a hard cap.
The irony is that during the 2011 NBA lockout, Heat owner Micky Arison stood as a staunch proponent of an NBA hard cap for all 30 teams, as a means of maintaining cost certainty.
At the time, Arison said, “The original intent of the owners was to have a hard cap.”