Free agency guide: Examining Heat’s tricky cap situation, how it impacts Lillard pursuit and more

Less than three weeks ago, the Miami Heat’s season ended in the NBA Finals after a historic playoff run as the Eastern Conference’s No. 8 seed. This week, the Heat’s front office will be building next season’s roster.

Free agent negotiations across the NBA can begin on Friday at 6 p.m, with free agent signings permitted to start on July 6 at noon.

As a team well above the luxury-tax threshold, the Heat enters free agency facing a salary-cap crunch.

The Heat’s current salary-cap breakdown for next season includes Jimmy Butler ($45.2 million), Bam Adebayo ($32.6 million), Kyle Lowry ($29.7 million), Tyler Herro ($27 million), Duncan Robinson ($18.2 million), Victor Oladipo ($9.5 million), Caleb Martin ($6.8 million), Jaime Jaquez Jr. ($3.5 million), Nikola Jovic ($2.4 million) and Haywood Highsmith ($1.9 million nonguaranteed salary).

There are a few things worth noting about this 10-man list:

▪ Jaquez has not signed his rookie-scale contract yet. He’s slotted to make about $3.5 million next season as the 18th overall pick and will be under team control for five seasons. This year’s first-round picks can begin signing their contracts on Saturday.

▪ Highsmith’s full $1.9 million salary for next season becomes guaranteed if the Heat does not waive him before July 15.

Not including cap holds, the Heat has about 179.3 million committed to salaries for 10 players, including “unlikely to be earned incentives” that raise Herro’s cap number for this upcoming season to $29.5 million.

With the 2023-24 salary cap projected to be set at $136 million, the projected luxury tax at $165 million, the projected first tax apron at $172 million and the projected second tax apron at $182.5 million, the Heat is already a luxury tax team and very close to crossing the newly instituted and ultra-punitive second apron with roster spots still to fill for next season.

That leaves eight players from the Heat’s season-ending roster who will become free agents this summer: Jamal Cain, Udonis Haslem, Kevin Love, Orlando Robinson, Max Strus, Gabe Vincent, Omer Yurtseven and Cody Zeller. Haslem, who enters retirement after 20 NBA seasons, will not return.

NOT MUCH TO OFFER NEW FACES

The NBA’s new collective bargaining agreement that goes into effect Saturday limits what the Heat can offer as a team about to surpass the second apron.

The Heat has no cap space, and it also likely won’t have a midlevel exception to offer outside free agents because it’s expected to be above the second apron. That means the only realistic way for Miami to add outside talent this offseason is through a trade and/or with minimum contracts unless a move is made to change the salary-cap math.

The Heat can’t even acquire an outside free agent through a sign-and-trade because such a move hard caps a team at $172 million — a line Miami is already beyond.

If the Heat is left filling its roster with minimum deals, which is very possible, there are some notable outside free agents who could become options at that price point: Jevon Carter, Goran Dragic, Reggie Jackson, Cory Joseph, Austin Rivers, Will Barton, Wesley Matthews, Damion Lee, Kendrick Nunn, Rodney McGruder, Terrence Ross, T.J. Warren, Juan Toscano-Anderson, Torrey Craig, Dario Saric, Trey Lyles, Justise Winslow, Derrick Jones Jr., Jae Crowder, Javonte Green, Jeff Green, Taurean Prince, Eric Gordon, Cam Reddish, Dennis Smith Jr., Mo Bamba and Markieff Morris.

The Heat can also sign a developmental prospect from its summer league team to a minimum contract to complete its roster.

RUN IT BACK?

With so many limitations on what the Heat can offer outside free agents, another option is to bring back most of this past season’s roster that made the NBA Finals.

The Heat holds full Bird rights on some of its own free agents, which allows Miami to exceed the salary cap to re-sign them up to their maximum salary despite being over the cap. But that would come at a price since the Heat is already deep into the tax.

Strus and Vincent are the Heat’s two impending free agents who are expected to receive the most interest around the league. The Heat holds full Bird rights for both.

Here’s the issue: If the Heat hypothetically signs Vincent (or Strus) to a contract that includes a starting salary of $10 million for this upcoming season, it will also cost the team more than $20 million in taxes because of its salary-cap situation.

The Heat enters free agency with a roster that would carry a luxury tax bill of nearly $30 million, and that bill will multiply if it re-signs Strus and/or Vincent. The last time the Heat was a luxury tax team was in the 2019-20 season and the highest luxury tax bill it has paid in franchise history was for $14.4 million in the 2013-14 season, according to Spotrac.

In a perfect world that didn’t include salary-cap and luxury tax implications, the Heat would bring back both Strus and Vincent, who started for Miami during this past season’s playoff run to the NBA Finals. But it could be challenging for the Heat to bring back even one of them because of the amount the contract would cost toward the luxury tax this upcoming season and what it could mean for the team’s salary-cap situation in future seasons.

The Indiana Pacers, Detroit Pistons and Chicago Bulls are expected to be among the suitors for Strus when free agency opens. A source close to Strus told the Miami Herald that the expectation is he’ll command the $12.4 million mid-level exception or potentially something higher from the Pacers or Pistons.

Meanwhile, the Heat has expressed interest in re-signing Vincent. Heat president Pat Riley was planning to meet with Vincent this week in Southern California ahead of free agency.

One way to reduce the tax cost of retaining Strus and/or Vincent is for the Heat to shed some of the current salary on its books.

HOW ABOUT LILLARD?

While the Heat enters free agency without cap space, a mid-level exception and the ability to execute a sign-and-trade, there is one way it can acquire a star this summer.

Through a traditional trade.

Portland Trail Blazers star guard Damian Lillard is the Heat’s target. Lillard is contemplating his future with the Trail Blazers as the franchise moves toward a rebuilt, but he hasn’t requested a trade yet.

The Heat has decided to wait patiently on Lillard to make a decision because it views him as a player worth waiting for, according to multiple sources. Plus, landing Lillard or another star through a trade is the Heat’s only realistic route to make a significant upgrade to the roster this offseason since it’s only positioned to offer minimum contracts to outside free agents.

Lillard, 32, is under contract for the next four seasons. He’s due $45.6 million this upcoming season.

To complete a trade for Lillard, the Heat would need to send out about $41.5 million in salaries in such a deal. The Heat is also currently eligible to trade its 2028 and 2030 first-round selections, and can unlock a third first-round pick to trade in 2024 if the Oklahoma City Thunder agree to lift the protections on a first-rounder owed by the Heat.

HEAT’S OTHER FREE AGENTS

▪ The Heat does not hold Love’s Bird rights, which limits the resources it has to re-sign him. Using non-Bird rights, the Heat can offer a contract to Love with a salary of up to $3.8 million for next season. The Heat can also just sign Love to the minimum, which would pay Love about $3 million but only cost the Heat about $2 million toward the salary cap.

There’s mutual interest between Love and the Heat on a return.

▪ The Heat opted against extending a $2.3 million qualifying offer to Yurtseven prior to Thursday’s deadline.

By extending a qualifying offer, the Heat would have made Yurtseven a restricted free agent and retained the right to match outside offers to re-sign him. But, instead, the Heat’s decision to forgo the qualifying offer means that Yurtseven will be an unrestricted free agent.

The Heat still holds Yurtseven’s full Bird rights, so it can exceed the salary cap to re-sign him up to his maximum salary or try to bring him back on a minimum contract. But at this point, the Heat has not expressed interest in bringing back Yurtseven.

▪ There’s a possibility that Zeller returns, likely on a minimum contract, as the Heat doesn’t yet have a backup center under contract for next season. But that may depend on how the Heat handles the impending free agency of Yurtseven and Robinson.

The Heat does not hold Zeller’s Bird rights.

▪ The Heat extended two-way qualifying offers this week to Cain and Robinson, who closed this past season as Miami’s two-way contract players.

The qualifying offer makes Cain and Robinson restricted free agents and gives the Heat the power to match outside offers to retain them. The Heat’s qualifying offer could turn into another two-way contract or they could be promoted to a standard contract.