Poor Financial Decisions Are Killing The Miami Heat

The Miami Heat continued to spend freely last offseason, and now they have to pay the consequences.

The Miami Heat are in trouble. The season is not going as well as Miami had hoped, and while the team still looks to hold a playoff spot it seems entirely unlikely that there will be any sort of banner hoisted in South Beach in 2016.

As such, Pat Riley has no desire to keep his team’s salary in luxury tax levels this year. Since the Heat have been throwing dollars around for years now, the team would have to pay the repeater tax.

That’s a ton of money to fork over for a team that doesn’t seem to have a shot at winning a title, which is where the Heat are at currently. Although even at full strength this team probably can’t compete with the Cleveland Cavaliers (much less the Golden State Warriors or San Antonio Spurs), injuries have ravaged Miami this season.

Chris Bosh is dealing with those terrible blood clots again, Tyler Johnson tore his rotator cuff, and Beno Udrih hurt his foot. Bosh is out indefinitely while the other two are out for the year, meaning the Heat have to assume they won’t get any of them back before the end of the season.

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Miami’s roster sits at just 13 players after the Heat dealt away some veterans to help them get under the tax line, meaning after factoring out Bosh, Johnson and Udrih that Miami sits at 10 available players for the rest of the season.

Signing someone for the rest of the year would take the Heat back over the tax line, which is something the team apparently refuses to do.

The Heat would indeed have to pay the repeater tax, because despite getting just under the luxury line last season they were over it in the three seasons before that one. According to the current CBA, any team that paid the luxury tax in three of the last four seasons has to pay the repeater tax.

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So, now what? The Heat could sign someone from the D-League to a 10-day contract as a fill-in, but that’s still not going to help much considering it’s entirely possible they get none of those three currently injured players back this season.

The trade deadline is over, so Miami can’t really shed any more salary. The team is essentially stuck between a rock (not having enough players to rest anyone, potentially leading to more injuries) and a hard place (paying the repeater tax).

The one light at the end of the tunnel for Miami is that the minimum salary they can pay a player pro-rates with the amount of days left in the season. Somewhere around March 6th is around when that minimum will be low enough for the Heat to sign a player for the remainder of the season without going into tax territory.

Paying that extra tax would cost the Miami Heat more than just money. The Heat lose a lot of benefits, including: being able to participate in a sign-and-trade, using the bi-annual exception, and being able to sign players to four-year deals using the mid-level exception along with having a smaller mid-level exception than other teams.

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Those benefits are only lost if Miami crosses the luxury tax apron, which is $4 million above the actual tax line. So the Heat still have some space to operate in without suffering from all of those penalties, but they’ll still get taxed at the repeater rate if they go above the tax line at all.

Instead of paying an extra $1.50 for each dollar the Heat are above the tax line, Miami would have to pay $2.50 for each dollar. That’s in addition to the team actually paying all of its owed salaries to players.

Clearly no owner would be open to burning that much cash unless their team was on the verge of greatness. Miami did not open its checkbook to add new pieces last summer, but instead had to pay up just to keep Dwyane Wade and Goran Dragic around.

Those two are good players, but the combined $35 million they’re making is really limiting Miami’s options. If another player gets hurt the Heat will almost certainly have to face the tax just to get through the season, much less make a postseason run.

Playing Wade around 40 minutes a night just isn’t sustainable. The 34-year-old is averaging around ten minutes less than that per game this season, which sounds about right for him.

The skeleton crew currently making up the Miami Heat would probably be enough for a decent playoff rotation, if they can get that far healthy. If Bosh comes back their chances would be better to make a run of course, but no basketball season is worth jeopardizing a player’s life.

With all of the salary dump moves Miami has made, the team really seems to have thrown in the towel on this entire season. The Heat are surely going to pitch Kevin Durant this summer, and will likely reach out to more than just KD.

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In the meantime, Miami will do their best this season without compromising the team’s long-term financial future. That’s the smart play, and something the Heat should’ve thought about doing this summer before throwing themselves into this situation.