Miami Heat: Financial implications of the trade for Andre Iguodala

The Miami Heat did the unthinkable at the trade deadline. They improved their team on the floor, bettered their short-term financial situation and didn’t hurt their future.

The Miami Heat bear virtually no resemblance to the squad that ended last season shy of the playoffs. They traded Josh Richardson to the Philadelphia 76ers in a sign-and-trade for Jimmy Butler, making themselves better on the floor but hard-capping themselves in the process.

They’ve gotten next to nothing from Justise Winslow, James Johnson and Dion Waiters, three players who were at least occasional contributors last season, while a young duo of undrafted guards in Duncan Robinson and Kendrick Nunn have taken the NBA world by storm in their places.

Nunn and Robinson have saved the Heat to a certain degree. With the injuries and suspensions that have ravaged them, there’s no way they’d find themselves fourth in the Eastern Conference without them, even with Butler’s steadying presence.

Now the Heat consider themselves contenders, at least to the point of being able to push the Milwaukee Bucks more than almost any other team in the NBA (or at least the East).

This being the case, team president Pat Riley hit the holy trinity of moves: They improved themselves on the floor, they improved their current financial situation and they preserved their future financial flexibility as they build to recruit Giannis Antetokounmpo in the summer of 2021.

The Miami Heat pulled off a three-team deal Wednesday night through Thursday afternoon with the Memphis Grizzlies and the Minnesota Timberwolves. The details are as follows:

The Heat also signed Iguodala to an extension in the process. That extension is a two-year deal worth $30 million, with a team option in the second season. Iguodala has a 7.5 percent trade kicker that will activate if the Heat trade him.

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When this deal took place, the Miami Heat were just a few thousand dollars shy of the hard cap which kicked in as a result of the Butler sign-and-trade. This meant that they could not bring in more salary than they sent out, complicating matters.

Now the Heat find themselves almost $3 million shy of the tax apron which gives them room to maneuver if they need to sign veterans to minimum contracts for depth or sign a player to a 10-day contract. It also reduces their tax bill.

Next season they will be a cap space team with perhaps as much as $30 million in space, and in 2021, the summer that matters most, the Heat will have virtually clean books.

Rather than being shackled with the long-term deals belonging to non-contributors like Waiters and Johnson, the Heat have suddenly opened their own opportunities and horizons while getting significantly better on the floor.

The Miami Heat proved last summer in their acquisition of Butler that a lack of cap space isn’t a deterrent if they want a player, but the possibilities are virtually endless when you give Pat Riley the recruiting combination of South Beach, Heat culture and massive cap space.