We underestimated Pat Riley. This season first looked like a bridge year while the Miami Heat got their finances in order.
Instead, Riley and his front office orchestrated a complicated sign-and-trade deal to acquire Jimmy Butler, drafted Tyler Herro, expanded the role of Bam Adebayo as he blossomed into an All-Star and eventually landed veterans Andre Iguodala and Jae Crowder at the trade deadline.
Those moves turned a Heat team many considered "vanilla" into the Eastern Conference champs.
The offseason presents another challenge for the Heat: preserving cap flexibility for the summer of 2021 while trying to keep two starters in Goran Dragic and Crowder. Miami also has to weigh a potential extension for Adebayo.
Note: The financials here are based on the salary cap and luxury tax holding at the 2019-20 levels, as expected. Dates are subject to adjustment.
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The rookie extension for Bam Adebayo
There is no player more important to the Heat and coach Erik Spoelstra than Adebayo.
"Bam is one of the great competitors already in this association," Spoelstra said after the Heat advanced to the NBA Finals. "He's really going into a leadership role. Way beyond his years. His offensive game is just growing daily. And he wants the responsibility, and he wants the accountability, and he isn't afraid of putting that responsibility on his shoulders."
At just 23, Adebayo is already an All-Star and an All-Defensive second-teamer. Still, despite his achievements, the decision to extend Adebayo is likely to come down to how much Miami values preserving salary-cap flexibility for the 2021 offseason. Here is why an extension is complicated.
Before the coronavirus halted the NBA in mid-March and knocked the league's economic growth off track, Miami was projected to have $50 million in cap space in 2021. The Heat could have extended Adebayo at a max salary and also had more than $37 million in cap room -- good enough for another max player.
Now, after accounting for Adebayo's $15.4 million free-agent hold and a possible salary cap of $109.1 million, the Heat project to have $34 million in cap room -- good enough for a max player, but only if Adebayo's contract is not extended.
If the Heat were to extend him, the $34 million in cap space would shrink to $22.5 million. The Heat could get to $31.3 million but would need to move Herro and their 2020 first-round pick and not sign free agents Duncan Robinson and Kendrick Nunn.
So what should Miami do?
Treat Bam Adebayo like a free agent -- and a franchise player.
There will need to be a meeting involving the Heat front office; Spoelstra; Adebayo; and his agent, Alex Saratsis from Octagon. The goal for Miami would be to treat the meeting as if it were recruiting a franchise-level free agent.
Instead of pitching Adebayo on why he should stay in Miami, explain how holding off on a new contract would be beneficial to the team. In the presentation, the Heat should show Adebayo and Saratsis a salary-cap breakdown for 2021.
Making Adebayo part of the process as the Heat continue to build the roster -- instead of making him a bystander -- is crucial in building the trust level between the sides. That trust will help defuse Adebayo's feelings when he sees fellow 2017 draft-class members Jayson Tatum and Donovan Mitchell sign max extensions in the offseason, assuming that happens.
Waiting until 2021 does come with other issues. Adebayo would need to take out an insurance policy in case he were to suffer a career-altering injury. The Heat cannot promise a contract extension -- that would violate league rules and cost them the right to sign Adebayo when he becomes a restricted free agent. It would also cost them future draft assets and significant financial penalty. (Recall the Joe Smith situation in Minnesota.)
So we will not fault the Heat if they do elect to extend Adebayo to a max contract. But if they do, Miami will likely have to remain mostly on the sideline in the summer of 2021 when it comes to the big names in free agency.
The one-year contracts: Goran Dragic and Jae Crowder
The Heat tipped their hand at the trade deadline when it comes to how they value cap flexibility in 2021.
Miami included a $15.0 million team option in the Iguodala extension and backed off on acquiring Danilo Gallinari when extension talks broke down over guaranteeing the forward's salary for 2021-22.
Now the Heat face more big decisions when it comes to the free agency of Dragic and Crowder.
Before the season, the 34-year-old Dragic relinquished his starter duties to rookie Nunn and accepted the role of sixth man.
Instead of pouting and taking a me-first approach, Dragic thrived, averaging 16 points in 28 minutes. In the playoffs, Dragic replaced Nunn -- whose return had been hampered by his case of COVID-19 -- and averaged a team-high 21.3 points, shooting 46% from the field and 38% from 3.
He ranks No. 2 on the free-agent point guard board behind only the Toronto Raptors' Fred VanVleet.
The Heat can offer Dragic a one-year, $20 million contract and still have the flexibility to bring back Crowder, use the $9.3 million midlevel exception, remain below the tax line in 2020-21 and have cap space in 2021-22.
Teams such as the Dallas Mavericks and Los Angeles Lakers have the $9.3 million midlevel exception to offer for multiple seasons, but Dragic could more than double that amount next season by going the one-year route with the Heat.
The teams that have cap space include Atlanta (which has Trae Young), Charlotte (Terry Rozier and Devonte' Graham), Detroit (point guard is a position of need) and New York (same).
The Heat represent Crowder's sixth team (and perhaps best fit) since he was drafted in the second round in 2012.
He became the full-time starter at power forward when the season resumed in late July. During the playoffs, he would average better than 30 minutes per game, play strong defense and carry the offense at times with his hot shooting.
A one-year, $15 million contract (double what he earned this season) would leave the Heat at $11 million below the tax line (with Dragic signed to a one-year deal).
The Miami front office will thoroughly analyze the situation and put together a plan if both players receive offers of more than one year. Will the Heat match those offers even if that means compromising cap flexibility?
As Brian Windhorst wrote, the Heat do not believe in three-year plans.
"You know me, I'm all about now," Riley said earlier this season. "We're going to press on and we're not going to stop."
That suggests they are not going to risk losing Dragic or Crowder even if that means adding a second year to their respective contracts. Both players would still have trade value in 2021 if Miami needed to clear room.
Offseason cap breakdown
A year after having roster restrictions because of the hard cap, Miami could have up to $21 million in room.
For the Heat to have money to use in free agency, a decision on their own free agents -- most notably Dragic and Crowder -- will need to be made. Dragic and Crowder have a combined $48 million that counts toward the cap.
Retaining their own free agents and staying over the cap would leave the Heat with the $9.3 million midlevel and $3.6 million biannual exceptions. If the Heat elect to use space, they will have the $5.0 million room midlevel.
Miami also has a $7.5 million trade exception.
The resources available to build the roster
The draft: first-round selection
Cash to send out or receive in a trade
Player development: Nunn, Herro, Robinson, KZ Okpala and Chris Silva
Exceptions: $9.3 million midlevel and $3.6 million biannual
Dates to watch
After playing with Sioux Falls (the G League affiliate for the Heat) in 2018-19, Robinson started 68 of 73 games this season, shot 44.6% from 3 and averaged 13.5 points per game. His contract has $1 million in protection if he is on the roster two weeks after free agency starts. The remaining $663,861 is guaranteed on the first day of the regular season.
Nunn was recently named All-Rookie first team and finished second in Rookie of the Year voting. He started 67 regular-season games, averaging 15.3 points. He has $300,000 in guaranteed money if he is on the roster the first day of the regular season.
Both players are in no danger of being waived, and the Heat should amend the contracts for both and guarantee their salaries for 2020-21 once the regular season ends.
Kelly Olynyk has until the day prior to the start of free agency to opt into his $12.2 million contract. It is highly likely that Olynyk will return for the 2020-21 season on his current contract.
The Robinson and Nunn contracts -- each worth $1.7 million in non-guaranteed salary -- are widely considered among the best value contracts in the NBA.
The deadline on an extension for Adebayo is one day before the start of the 2020-21 regular season.
Restrictions
Because of the seven-year limit for trading future draft picks and the Stepien rule (a team cannot trade its first-round picks in back-to-back years), the Heat are restricted from trading a future first-rounder in any year. Miami will send Oklahoma City a 2021 first and 2023 lottery-protected first. The pick has lottery protection in 2024 and 2025 and is unprotected in 2026. They are allowed to trade the rights to their 2020 first in November, but only after that player is selected.
Butler has a 15% trade bonus in his contract. The bonus would be voided because it exceeds the maximum salary allowed.
Iguodala has a 7.5% trade bonus. If Iguodala is traded in the offseason, the bonus would be $1.1 million.
Olynyk has a $2 million trade bonus. Olynyk cannot be traded until he opts into his contract.
Extension candidates
Nunn and Robinson are both extension-eligible. Because each has a low $2.1 million free-agent hold and is a restricted free agent, it is unlikely either player will receive a new contract. The Heat would lose cap space on a new contract for Robinson or Nunn.
Olynyk is extension-eligible and can receive a new contract for an additional four seasons. It is unlikely the Heat will extend the forward.
The draft assets
Miami's 2021 unprotected first was sent to Phoenix in 2015 to acquire Dragic.
The Heat's 2023 protected first was used last offseason in the Butler sign-and-trade. It is top-14 protected in 2024 and 2025 and unprotected in 2026 if it is not conveyed in a prior year.
Both firsts eventually were rerouted to Oklahoma City as part of the Paul George trade with the LA Clippers.
The Heat do have their own first this year.
Here's how ESPN's Jonathan Givony and Mike Schmitz have Miami selecting in the draft:
No. 20 (own): Kira Lewis Jr. | G | Alabama
The Heat do not have a second-round pick except for in 2024 (but only if it falls between 31 and 50).