The appealing options available to Miami — and a likely course — if it operates over cap

The Heat has two primary paths to augment the roster this summer: clear out cap space and sign one or more players with between $20.5 million and $27.5 million in cap space, a scenario we discussed here, or operate as an over-the-cap team.

A look at how the offseason could play out if Miami operates as an over-the-cap team:

By taking this path, the Heat could exceed the salary cap to re-sign Victor Oladipo, Goran Dragic, Trevor Ariza and Andre Iguodala, though a return by Iguodala (at that salary) appears highly unlikely and there’s no guarantee on the others, with Oladipo expected to miss part of next season after knee surgery.

The expectation is that the Heat will decline Dragic’s $19.4 million team option for next season. But even if Miami declines the option, it would still retain his Bird Rights and could surpass to the cap to sign him for something in the $6 million to $10 million range if it chooses, under this scenario of operating as an over-the-cap team.

The same would apply with Iguodala. The Heat must make decisions on both of their options by Aug. 1.

Under this scenario, the Heat could keep Jimmy Butler, Bam Adebayo, Tyler Herro, KZ Okpala, Precious Achiuwa, impending unrestricted free agents Oladipo, Dragic, Ariza and Iguodala (all four of those on very modest contracts if they’re amenable) and impending restricted free agents Duncan Robinson and Kendrick Nunn, and have two exceptions available: a mid-level exception for $9.5 million and a bi-annual exception for $3.6 million.

The Heat could offer Dewayne Dedmon a deal at the $2.6 million minimum or the $3.6 million bi-annual exception.

What’s more, the Heat could try to improve the roster with a sign-and-trade, perhaps for Toronto unrestricted free agent point guard Kyle Lowry or Atlanta restricted free agent power forward John Collins, with Lowry viewed as the far more likely option.

But obtaining Lowry or Collins through a sign-and-trade likely would require parting with at least one valuable asset; otherwise, the Raptors or Hawks would have little incentive to cooperate. (And we view the Collins scenario as a long shot.)

The other obstacle with the sign-and-trade route: Teams that make sign-and-trades are hard-capped the following season. So if the cap is $112 million and the tax line is $138.9 million as projected, that would mean Miami could not exceed $144.9 million in salary in 2021-22. (That $144.9 million is called the tax apron.)

Let’s take the sign-and-trade obstacle first. If Lowry decides to come to the Heat and agrees to a deal that would pay him, say, $25 million next season, Miami would need to send Toronto players earning at least $20 million if the Heat operates as an over-the-cap team.

Unless a sign-and-trade involving Robinson were part of the deal (unlikely Miami would do that), the only way the Heat could realistically come up with that amount of outgoing money would be if Toronto agrees to:

1) take Nunn (who obviously would need to agree to this) in a sign-and-trade and take a few young Heat players (not Herro) on low money deals as cap fillers; or

2) take the Dragic or Iguodala contracts, combined with perhaps Achiuwa and/or Okpala and maybe a draft pick.

Option 1 is complicated by arcane NBA cap rules, and Nunn would need to agree to be involved.

Option 2 would require Miami to exercise the Dragic or Iguodala team options with the intent of trading them. But the timing is problematic, because Lowry and other free agents cannot legally speak with other teams until Aug. 2. The Iguodala and Dragic option decisions must be made by Aug. 1.

So how could the Heat go to Toronto and propose this deal in late July without “legally” knowing if Lowry wants to come to Miami?

In today’s NBA environment, this type of deal could still come together. But why would Toronto have any incentive to pay Dragic or Iguodala those large sums next season merely to accommodate the Heat and Lowry? The Heat could throw in Achiuwa or Okpala, but I’m still not sure why the Raptors would be motivated to do that.

A Lowry sign-and-trade likely wouldn’t work if the Raptors insist on Herro or Robinson, two players that Miami said it did not offer for Lowry at the trade deadline.

The Heat’s other option with Lowry, as we explained in part 1, is simply using cap space to sign him. But that would make it tougher to fill the need at power forward or keep Dragic or Oladipo.

Operating as an over-the-cap team also gives the Heat a $9.5 million mid-level exception that could be used in whole - or in part - or more than two dozen players we list here.

Those mid-level options would include stretch fours Bobby Portis, Rudy Gay and Otto Porter, swing forward Doug McDermott, potentially centers Andre Drummond or Daniel Theis, point guard Denis Schroder and former Heat wing Josh Richardson.

Point guard Derrick Rose would be appealing, though it’s difficult to see Rose leaving New York.

Other potential mid-level options include Lakers center Montrezl Harrell, Denver guard Austin Rivers, Portland center Enes Kanter (a volume scorer and rebounder but a deficient defender so probably not a Heat fit) and Phoenix wings Torrey Craig and Cameron Payne.

Some of these players will command more than mid-level exception money.

So let’s say Miami signed Portis or the 34-year-old Jeff Green (who has a home in Miami and has been productive for the Nets) using its $9.5 million exception. Green wouldn’t command the full exception.

Both are high-percentage three-point shooters this season and both would give Miami an upgrade at power forward.

Green played on a minimum deal for the Nets this season and has been very good, shooting 41.1 percent on threes, though he’s 34 and not a high volume rebounder.

If Toronto took Dragic’s contract, plus Okpala and Achiuwa for Lowry, that would give the Heat the opportunity, within cap rules, to have a roster of Butler, Adebayo, Lowry, Robinson (if he re-signs), Oladipo (if he re-signs), Herro, Nunn (if he re-signs), Ariza and Dedmon (if they re-sign) and, say, Portis at the $9.5 million mid-level.

The question is whether the Heat could afford that roster without paying a tax or without being hard-capped.

If Lowry gets $25 million for next season, Robinson $15 million next season, and Oladipo in the range of $8 million (combined with Ryan Anderson’s $5.2 million dead money hit), the Heat would be under the tax line.

But if Nunn is included in that group, the numbers don’t work without removing someone.

So if Miami operates as an over-the-cap team, there is a do-able scenario which would allow the Heat to keep Butler, Adebayo, Herro, Robinson and Oladipo and add Lowry and Portis.

What about a sign and trade for Kawhi Leonard? The Heat obviously would do that in a heartbeat if Leonard wanted that, but ESPN and The Athletic reported that Leonard is expected to stay with the Clippers.

Keep in mind that Miami could trade its 2028 first-round pick beginning in August, but trading any first-round pick before that would require Oklahoma City to agree to Miami’s request to waive the protections on the 2023 Heat first-round pick that’s due OKC.

Here’s part 1 of our 4-part series on how the Heat can improve its roster.

Here’s my Thursday piece with news on Dan Le Batard, NFL TV news, Dwyane Wade and Chris Bosh discussing the Heat, and media notes.

Here’s my Thursday Dolphins piece on Tua Tagovailoa and others.

Coming Friday in part 3 of my series on where the Heat goes from here: Another path for the Heat to improve that wouldn’t require relinquishing valuable assets.