Free agency guide: Examining the Heat’s cap crunch, the Highsmith/Martin situation and more

What will the Miami Heat’s roster look like this season? More clarity is expected in the coming days.

While NBA teams were allowed to begin negotiating with their own impending free agents on June 18 after the NBA Finals ended, free agents can begin negotiating with every team in the league on Sunday at 6 p.m. Most free agent signings aren’t eligible to become official until the league’s moratorium is lifted at noon on July 6.

Caleb Martin, Kevin Love, Thomas Bryant opt out to enter free agency. What it means for the Heat

As a team already in luxury-tax territory and on its way to crossing the punitive first apron, the Heat enters free agency facing a salary-cap crunch that limits its flexibility to add to next season’s roster.

The Heat’s current salary-cap breakdown currently includes nine players on guaranteed salaries for next season: Jimmy Butler ($48.8 million), Bam Adebayo ($34.8 million), Tyler Herro ($29 million), Terry Rozier ($24.9 million), Duncan Robinson ($19.4 million), Kel’el Ware ($4.2 million), Jaime Jaquez Jr. ($3.7 million), Josh Richardson ($3.1 million) and Nikola Jovic ($2.5 million).

There are a few things worth noting:

▪ This list is actually expected to grow to 11 players soon because two others are expected to sign standard contracts with the Heat in the coming days.

Veteran big man Kevin Love is not on this list because he opted out of his $4 million player option to become an unrestricted free agent. But the expectation is that Love will re-sign with the Heat in free agency, according to league sources, potentially on a cheaper minimum contract that would create more room under the second apron to help Miami re-sign some of its own free agents.

Also, Heat second-round pick Pelle Larsson out of Arizona is expected to sign a standard contract with the Heat. While it’s still unclear how the Heat will structure Larsson’s standard deal, his salary for next season will likely be between $1 million and $2 million. The Heat could also sign Larsson to a two-way contract, which does not count against the salary cap or toward the 15-man standard roster.

▪ Ware has not signed his rookie-scale contract yet because he’s not permitted to. He’s slotted to make about $4.2 million next season as the 15th overall pick in this year’s draft and will be under team control for five seasons. This year’s first-round picks — a group that includes Ware — can begin signing their contracts on Monday.

▪ The Heat has until July 15 to guarantee developmental center Orlando Robinson’s full $2.1 million salary for this upcoming season. If the Heat decides not to guarantee Robinson’s salary, he will become an unrestricted free agent.

▪ Two of the Heat’s three two-way contract slots are occupied. Miami agreed to two-way deals with Florida guard Zyon Pullin and Arizona forward Keshad Johnson on Thursday shortly after the completion of the NBA Draft. Pullin and Johnson went undrafted.

▪ There have been discussions between the Heat and Adebayo regarding a three-year maximum contract extension worth $166 million, according to league sources. Adebayo’s extension with the Heat, which could be signed starting on July 6, would begin in the 2026-27 season and run through the 2028-29 season when he’ll be 31 years old.

▪ Starting on July 7, Butler is eligible to sign a maximum two-year contract extension worth about $113 million. The window for the Heat to sign Butler to the two-year max extension closes next year on June 30, 2025. But after entering this offseason seeking that max extension, league sources say that Butler now intends to play this upcoming season without signing an extension in hopes of getting a max contract next offseason when he can opt out of his contract and become a free agent.

Not including cap holds or Love and Larsson, the Heat has about $172.9 million committed to salaries for nine players, including the $2.5 million in “unlikely to be earned incentives” that raise Herro’s cap number for this upcoming season to $31.5 million.

With the projected salary cap for the 2024-25 season set at $141 million and the projected luxury tax set at $171.3 million, this means the Heat enters free agency already in luxury-tax territory. With five or six roster spots still to fill for next season, the Heat is also on its way to crossing the punitive first apron of $178.7 million and not far from the dreaded second apron of $189.5 million. In other words, the Heat’s salary cap situation will limit who it can add and/or re-sign in free agency this summer, especially considering that Miami does not intend to pass the second apron unless it’s to acquire an All-Star talent.

That leaves nine players from the Heat’s season-ending roster who will be free agents this summer: Thomas Bryant (unrestricted free agent), Jamal Cain (unrestricted free agent), Haywood Highsmith (unrestricted free agent), Love (unrestricted free agent), Caleb Martin (unrestricted free agent), Patty Mills (unrestricted free agent), Cole Swider (restricted free agent), Alondes Williams (restricted free agent) and Delon Wright (unrestricted free agent).

NOT MUCH TO OFFER NEW FACES

Unless a trade is made to shake up the roster or dramatically shift the salary-cap math, the Heat simply doesn’t have the resources to make big changes in free agency.

With the Heat entering free agency as a team on its way to surpassing the first apron, but expected to stay below the second apron, it currently only has the projected $5.2 million taxpayer midlevel exception and minimum contracts to offer outside free agents this offseason.

But using any part of the $5.2 taxpayer midlevel exception would hard cap the Heat at the second apron for the entire 2024-25 NBA calendar. Not triggering the hard cap means the Heat would preserve the flexibility to surpass the second apron if needed and then eventually make a move to get below that threshold this season to avoid the penalties that come with being a second-apron team.

If the Heat is left filling its roster with minimum deals, which is possible unless a trade is made to change the salary-cap math, among the notable outside free agents who could become options at that price point this offseason are Eric Gordon, Jae Crowder, Kyle Lowry, Evan Fournier, Patrick Beverley, Justin Holiday, Wesley Matthews, Markieff Morris, Reggie Bullock, Jordan Nwora, Josh Okogie, Dario Saric, Dennis Smith Jr., Goga Bitadze, Naji Marshall, T.J. Warren, James Wiseman, Mo Bamba and Aaron Holiday,

RUN IT BACK?

With the Heat limited in what it can offer outside free agents, another option is to fill out the roster by bringing back its own free agents.

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 considering the Heat will be up against the second apron and doesn’t want to cross that threshold because of the roster-building restrictions that come with it, don’t expect Miami to spend past the second apron to retain a player.

Highsmith and Martin 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.

But because of the Heat’s salary-cap situation, the best the Heat can realistically hope for is to re-sign either Highsmith or Martin and not both players. Bringing back Highsmith and Martin would push the Heat, as presently constructed, past the second apron.

Highsmith is considered the more realistic candidate of the two free agents to return to the Heat because he’s expected to be a cheaper option. Meanwhile, re-signing Martin would very likely make the Heat a second-apron team because of the salary he’s projected to command on the open market.

In fact, a return to the Heat is considered unlikely for Martin, according to a league source.

ESPN’s Bobby Marks, an ESPN front office insider and former team executive, told the Miami Herald that he projects Highsmith to get in the $8 million to $10 million range per season and Martin to receive the full $12.9 million nontaxpayer midlevel exception in free agency.

According to league sources, since NBA teams were allowed to begin negotiating with their own impending free agents in mid-June, there have already been discussions between the Heat and Highsmith regarding a potential new contract. Those talks are ongoing, as the Heat has interest in keeping Highsmith and Highsmith has interest in returning to the Heat.

“I definitely want to stay in Miami,” Highsmith said after the Heat’s season came to an end in early May when asked about his free agency. “I love being here. My family lives here, my daughter lives here. So that’s a big priority for me, just to be around my daughter a lot. But I just got to figure it out and just take my time and understand it’s going to work itself out and everything happens for a reason.”

As a three-and-D wing who would fit on a long list of rosters around the NBA, Highsmith is expected to receive interest from a chunk of the league in free agency. But the Heat holds an edge over outside teams because Highsmith wants to return to Miami and the Heat could even try to get a commitment from Highsmith on a new contract before he hits the open market on Sunday.

“If the money is close, Haywood will stay in Miami,” Highsmith’s agent Jerry Dianis said this week to the Miami Herald. “You combine his perseverance to get to the NBA with his toughness, character and work ethic, he personifies Heat culture.”

WHAT ABOUT A TRADE?

While a trade may be the Heat’s only real path to make a significant addition to its roster this offseason (if you don’t consider Ware to be a significant addition), the new Collective Bargaining Agreement will make it challenging for Miami to pull off a trade during the 2024-25 NBA calendar.

Among the trade restrictions the Heat faces as a team expected to be above the first apron: Miami can’t take back more money in a trade than it sends out, won’t be allowed to use a preexisting trade exception and can’t acquire a player through a sign-and-trade. But the Heat will still be able to aggregate salaries in a trade.

To illustrate how limiting this is with a purely hypothetical scenario, the Heat would not have been allowed to trade Jimmy Butler to the Los Angeles Clippers for Paul George before George opted out on Saturday to become a free agent. That’s because, while they have similar salaries, George ($48,787,676 salary for next season before opting out) and Butler ($48,798,677 salary for next season) don’t have the same exact salary. This would prohibit such a trade because the Clippers would be taking back $11,001 more in the deal and that’s not allowed since Los Angeles was already above the first and second aprons.

Pulling off a trade would be even tougher for the Heat if it crosses the second apron. Among the trade restrictions that come with being above the second apron: Miami would not be permitted to take back more money in a trade than it sends out, aggregate salaries in a trade or send out cash in a trade. The Heat also wouldn’t be able to use a preexisting trade exception.

THE LOVE FACTOR

To help give the Heat more room under the second apron to re-sign some of its own free agents, Love could re-sign with Miami on a minimum contract that would come with a projected $3.3 million salary for next season.

That would be less than the $4 million player option that Love declined, but he could make up for the lost money by adding an extra year to his new contract and signing a two-year minimum deal. While giving Love another year of guaranteed money, it also lowers his cap hit from $4 million (if he would have exercised his option) to $3.3 million for next season.

If Love signs a one-year minimum contract to return to the Heat, he would still be on a deal with a starting salary of $3.3 million. But his cap hit against the tax and aprons would be just $2.1 million because of NBA rules, which would save Miami nearly $2 million off the $4 million cap hit that it would have incurred if Love had exercised his player option.

HEAT’S OTHER FREE AGENTS

▪ With Bryant bypassing the $2.8 million player option in his contract to become an unrestricted free agent, he appears to be on his way to finding a new team in free agency. With Love expected back and the Heat using its first-round pick this year to draft Ware, Bryant could be searching for a bigger role elsewhere as a free agent.

▪ The Heat does not hold any Bird rights on Mills or Wright. This means the Heat can only use the minimum contract or $5.2 million taxpayer midlevel exception to keep Mills and/or Wright.

▪ The Heat extended qualifying offers to Swider and Williams, making them restricted free agents and allowing the Heat to match outside offers. Swider and Williams, who both closed last regular season on two-way contracts with the Heat, are expected to play for the Heat’s summer league team this year.

▪ The Heat did not extend a qualifying offer to Jamal Cain, who spent the last two seasons on a two-way contract with Miami. Cain was only eligible for a qualifying offer at the veteran minimum on a standard contract, which the Heat bypassed. With no qualifying offer, Cain will become an unrestricted free agent this offseason and he’s not expected to return to the Heat.