Everyone remembers the summer of 2010. Following a tense free-agency period, the Miami HEAT walked away from the early parts of July with LeBron James, Dwyane Wade, Chris Bosh and Mike Miller signing contracts that would take them through four-consecutive trips to the NBA Finals. It was, without a doubt, one of the best offseasons any team has had in the history of any league. Fewer remember that the vaunted Summer of 2010 began, very quietly, four years earlier. Shortly after Miami’s first title in 2006, Dwyane Wade signed a contract extension that would give him the option of joining a heralded class of young stars in 2010 free agency. Soon after, Pat Riley texted then-Vice President of Basketball Operations Andy Elisburg with a simple message, ‘We’re going to have cap room in 2010’. And so began a multi-year plan, one featuring moves which, when looked at individually, may not have amounted to much in the public sector. Sure, there was the trade of Shaquille O’Neal for Shawn Marion and, later, the trade of Shawn Marion for Jermaine O’Neal, but there were also dozens of smaller moves which barely registered on the Richter scale – not to mention the opportunity cost of not signing players to contracts extending past 2010 in order to fit James, Wade and Bosh under the salary cap. The team had to make sure it had as little money as possible on the books so it could have the flexibility to sign the marquee players, all while remaining competitive with an in-his-prime Wade on the roster. In three of those next four years, they made the playoffs. When free agency hit, they had all the space they needed to be a major player. Space doesn’t guarantee a thing, but you know how things worked out. Years spent dancing with the salary cap, not quite under pale moonlight, transformed a playoff team into an all-timer. Six years later matters are a bit more complicated, but the general idea remains the same. What may seem like confusing individual moves to trade away veterans like Mario Chalmers and Chris Andersen or young players like Shabazz Napier, James Ennis and Jarnell Stokes are really all attached to the same string – one tied to the goal of opportunity and flexibility. “You’ve got to really see the big picture in where you are,” Riley said. “From 2014 to this point, once LeBron left, we had some decisions to make. We had always been looking at 2016 and 2017. Just like back in 2006 we looked at 2010. That’s where our mind is. We want tremendous flexibility. We don’t want to be constrained by any repeater tax. “2016 and 2017 have become the new 2010.” What’s different? The luxury and aforementioned repeater tax. While the luxury tax, which penalizes teams for being too far over the salary cap by forcing them to pay dollars to dollars to the league, is hardly a new concept, the new Collective Bargaining Agreement of 2011 introduced a significantly harsher system than had been in place before. Teams would be allowed to exceed the salary cap using a variety of complicated mechanics, but for every $1 dollar that you were over the higher-than-the-cap tax line, a team would have to pay at least an additional $1.50 and possibly more than $3.75 to a league fund – when around half of those funds would be redistributed to the other 29 teams. Just being $4 million over the tax at the end of this season, even if it’s just for signing small deals to fill out your final roster spots, could cost a team another $6 million. What’s more, if you’ve been paying tax dollars for four out of the past five years, the dreaded repeater tax kicks in and you’re paying upwards of $4 additional dollars for every $1 dollar you spend over the line – in a system that already limits free-agent spending once you’ve exceeded the salary cap. Good luck with that. “One of the things I said when I first read the new [Collective Bargaining Agreement] was that this agreement forces you to make choices,” Elisburg said. “You couldn’t have everything. One of the things that the repeater tax element brought in was that with your payroll – you were at times going to be a tax-payer but at times you had to cleanse yourself and get under [the tax line]. “You don’t want to be in a situation where you’re competing against people and having to spend at a significantly higher level just to compete equally for the same players.” You can keep dancing with the tax all night if you’d like, but wisdom lies in knowing when to sit a song or two out. Even though the tax doesn’t create hard cap in the strictest sense – though you can spend yourself into one if you aren’t careful – the penalties are similarly prohibitive. While it’s theoretically possible to double your own team payroll in tax dollars alone, being above the tax line imposes other restrictions such as stripping a team of exceptions it can use to sign new players, making it tougher to sign their own free-agents all while simply making it tougher to execute trades. No matter your willingness to spend, the rules of the league can eventually paralyze a team that doesn’t make prudent financial moves. In other words, as much as the game on the court is about maximizing efficiency and getting the most out of every single possession, front offices are trying to get the most out of every dollar they spend. Which is why the HEAT were the only team in line to pay the repeater tax this season due to previously spending on their championship-level teams. (Brooklyn is also eligible but has spent the entire season under the tax level.) “We’re committed to spending money,” Elisburg said. “We’ve been a tax-payer multiple times and I’m sure in the future we’ll be a tax-payer multiple times. “It’s not necessarily do you spend money, it’s when you spend the money, how you spend the money, where you spend the money. If the business of sports were so simple that if you spend more than everyone else then you win, it would be a very simple business. It doesn’t work that way. You have to spend the money wisely.” With that in mind, Riley and Elisburg took stock of the team’s situation last summer. As before, they would have to limit their long-term deals to maximize cap space, but they now had the repeater tax to consider – would spending less now help them spend more in the future? They were prepared to pay any penalties for a winning team, but if they could add flexibility without costing today’s roster of a competitive advantage it would be more than worth it.
With 17 players under contract as of last July 10 – having re-signed players like Goran Dragic and Wade – pushing them $11.3 million over the tax for $30.9 million in tax penalties, they had some work to do.First, they had to pare down the roster to 15 so Zoran Dragic and Shabazz Napier were traded, with Henry Walker being waived, in early August as rookie Josh Richardson was signed. Next, with Tyler Johnson emerging as a rotation player in November the team decided to trade Mario Chalmers and James Ennis to the Memphis Grizzlies. At this point Miami had shaved roughly half of its tax obligations and had plenty of season left for evaluation. And when last week’s trade deadline presented opportunities to get under the tax line by trading Chris Andersen, Brian Roberts and Jarnell Stokes in three separate moves, they took that path. Altogether, nearly eight months of roster moves looked like this: In: Goran Dragic, Dwyane Wade, Justise Winslow, Josh Richardson, Gerald Green, Amar’e Stoudemire and Beno Udrih, with two open roster spots. Out: Chris Andersen, Mario Chalmers, Zoran Dragic, James Ennis, Shabazz Napier, Brian Roberts, Jarnell Stokes and Henry Walker. While each individual move may not have seemed like much in real-time, viewed from this macro perspective the team clearly managed to improve in the short-term, sacrificing little from its game-to-game rotation. Moving forward, two roster spots opened up for use during veteran buyout season this March all while protecting that precious offseason flexibility which could allow for additions of high-level talent. It should be noted, however, that for all this talk of luxury taxes and protecting the future, the plan detailed above was hardly chiseled in stone. There’s always due diligence to be done when there’s possibilities for adding talent. “There was never a mandate to get out of the Tax,” Elisburg said. “We always look at the basketball and business benefits of every trade we make or choose not to make. Sometimes you make a trade to open up a roster spot. Sometimes you don’t make a trade because you like the players you have more than the players you may be acquiring. Once we determined that we did not have another trade to make, we chose to move forward with the opportunity to get under the Tax.”
“Not one move did we make at the trading deadline compromise our competitiveness to get into the playoffs,” Riley said.
It may not seem like quite the coup that 2010 was because future opportunity has yet to translate into actual players, but you have to set yourself up for success before you can actually obtain it. If things do work out, if the front office is able to acquire championship-level talent in the next two years, nobody will remember the smaller moves made around the 2016 trade deadline just as people usually don’t fondly recall a few open jumpers made in the first quarter of a one-point win. “For now we sit down and really start to think and talk about the possibilities,” Riley said. “We have this passion to win and to be great, to celebrate and win championships. It’s how you also go through adversity, and the tough times, to get back on top. “What happens in ’16 and ’17, are the next two years of being able to build this team back to a championship contender. That’s our goal. That’s my goal. That’s my desire.”