As top of East strengthens, Heat’s cap crunch proving to be limiting at start of free agency

As the top of the Eastern Conference continues to strengthen, it has been a quiet start to free agency for the Miami Heat.

With league-wide free agent negotiations allowed to begin Sunday at 6 p.m., veteran center Kevin Love agreed to a two-year contract worth about $8 million to stay with the Heat just minutes after the negotiating period began. The deal does not include a player or team option for the second season, according to a league source.

But that’s the only addition the Heat has made to its 15-man standard roster, as of Monday evening.

Day 2 Free agency tracker: Heat sign Ware, loses Wright. And Cavs expect to keep Mitchell

The Heat lost veteran guard Delon Wright to the Milwaukee Bucks in free agency on Monday. Wright, who proved to be a short-term rental for the Heat after signing with Miami in February last season following a buyout agreement with the Washington Wizards, agreed to a one-year minimum contract worth $3 million to join the Bucks on Monday.

In bringing back Love, the Heat is retaining an important rotation player who established himself as a reliable and productive backup center for the Heat last regular season after making five NBA All-Star Game appearances earlier in his career.

Love, who turns 36 on Sept. 7 and is preparing for his 17th NBA season, averaged 8.8 points, 6.1 rebounds and 2.1 assists per game while shooting 34.4 percent on 4.4 three-point attempts per game in a bench role for the Heat last regular season. The Heat outscored opponents by 6.5 points per 100 possessions with Love on the court last regular season.

The issue for the Heat is some of the East’s top teams have made significant upgrades to their rosters this offseason. Meanwhile, the Heat appears to be on track to bring back a very similar core to the one that has needed to qualify for the playoffs through the play-in tournament in each of the last two seasons.

The Philadelphia 76ers reportedly landed nine-time All-Star forward Paul George on a four-year, $212 million maximum contract in free agency. George is teaming up with All-Stars Joel Embiid and Tyrese Maxey in Philadelphia. The 76ers are also reportedly re-signing Kelly Oubre Jr., while adding Eric Gordon and Andre Drummond in free agency.

The Orlando Magic, which won the Southeast Division over the Heat last season, reportedly added three-and-D guard Kentavious Caldwell-Pope in free agency. Pope agreed to a three-year contract worth $66 million to join the Magic.

These moves come days after the New York Knicks made a trade to acquire Mikal Bridges, adding Bridges to a talented roster that already included Jalen Brunson, OG Anunoby, Julius Randle, Josh Hart and Donte DiVincenzo.

The defending NBA champion Boston Celtics haven’t made any big moves, but they are running it back with a roster widely considered to be the best in the league. On Monday, the Celtics reached an agreement with Derrick White on a four-year maximum extension.

As for the Heat, there remains uncertainty surrounding how it will fill its roster amid its salary-cap crunch with little to offer outside free agents and the new Collective Bargaining Agreement imposing new restrictions that will make it hard to pull off a trade. Miami also doesn’t have much draft capital available to include in a deal.

With Love returning and Wright departing, that leaves seven players from the Heat’s season-ending roster who remain free agents: Thomas Bryant (unrestricted free agent), Jamal Cain (unrestricted free agent), Haywood Highsmith (unrestricted free agent), Caleb Martin (unrestricted free agent), Patty Mills (unrestricted free agent), Cole Swider (restricted free agent) and Alondes Williams (restricted free agent).

Martin and Highsmith are the Heat’s two free agents who are expected to receive the most interest around the league.

Martin is exploring other options after bypassing the $7.1 million player option in his contract with the Heat for next season to become an unrestricted free agent. Martin is expected to command a salary for the upcoming season that will price out the Heat because of its tight salary-cap situation.

The Heat remains in contention to re-sign Highsmith, who is expected to receive interest from a handful of other teams.

Love’s return has the Heat’s roster at 10 players on standard contracts 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), Love ($3.8 million), Jaime Jaquez Jr. ($3.7 million), Josh Richardson ($3.1 million) and Nikola Jovic ($2.5 million).

This list does not include Orlando Robinson and Pelle Larsson, with the inclusion of those two players giving the Heat 12 players on standard contracts for next season depending on what the team opts to do with their contracts.

The Heat has until July 15 to guarantee 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.

Larsson, the Heat’s second-round draft pick this year, 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.

Not including cap holds or Orlando Robinson and Larsson, the Heat has about $176.7 million committed to salaries for 10 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 salary cap for the 2024-25 season set at $140.6 million and the luxury tax threshold set at $170.8 million, this means the Heat is already in luxury-tax territory.

With four or five roster spots still to fill for next season, the Heat is also on its way to crossing the punitive first apron that’s set at $178.1 million and not far from the dreaded second apron that’s set at $188.9 million.

In other words, the Heat’s salary cap situation limits 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 because of the roster-building restrictions that come with it.

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 season.

The Heat can’t even acquire an outside free agent through a sign-and-trade because such a move hard caps a team at the first apron of $178.7 million — a line Miami will be over once it fills its roster.

While a trade may be the Heat’s only real path to make a significant addition to its roster this offseason, the new CBA 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 on track 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.

For those hoping that Donovan Mitchell won’t sign an extension with the Cleveland Cavaliers and instead force a trade to the Heat, Cavaliers president Koby Altman continued to express confidence on Monday that Mitchell will make a long-term commitment to Cleveland.

“We feel good about Donovan,” Altman said Monday to reporters. “He’s in a great space mentally. He’s healthy. He was out there with those young high school players, hooping in a really good space.

“He is still under contract right now, so I think we can talk about him as a Cavalier. He’s invested. He’s really invested in what we’re doing, and hopefully soon we’ll have more of a decisive answer on [a contract extension] for you. But he’s been great. He’s been super involved and super collaborative and very, very much pro-Cleveland.”

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 Jae Crowder, Kyle Lowry, Evan Fournier, Patrick Beverley, Justin Holiday, Wesley Matthews, Markieff Morris, Marcus Morris Sr., Reggie Bullock, Jordan Nwora, Josh Okogie, Dario Saric, Dennis Smith Jr., T.J. Warren and James Wiseman.

NBA teams are allowed to carry up to 21 players under contract in the offseason and preseason, a total that does not include those on summer league contracts. Rosters must be cut to a maximum total of 18 players (15 on standard contracts and three on two-way contracts) by the start of the regular season.

The Heat’s three two-way contract slots are filled for now, as the Heat announced Monday it is bringing back guard Dru Smith on a two-way deal. The Heat also locked in Florida guard Zyon Pullin and Arizona forward Keshad Johnson to two-way contract agreements shortly after they both went undrafted last week.

Two-way contracts do not count toward the salary cap, luxury tax or apron and allow for players to be on their NBA team’s active list for as many as 50 regular-season games, with other playing time needing to come in the G League. NBA teams can have as many as three players on two-way contracts at any one time and two-way deals can be swapped out at any time.

Ware also signed his rookie-scale contract on Monday. He’s now not eligible to be traded for 30 days after signing the deal.

While free agent negotiations were allowed to begin Sunday evening, most free agents can’t formally sign their new contracts until Saturday at noon. But this year’s first-round draft picks like Ware, those who have agreed to minimum contracts of two years or less, and players who have agreed to two-way contracts were allowed to begin signing their new deals on Monday.