Superb Analytical Piece by Barry Jackson

Tax problems looming for Heat: Why big move is needed this year and the risk Miami runs

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The financial consequences of inertia would be significant.

Heat owner Micky Arison historically has expressed willingness to pay a luxury tax only if his team is a legitimate championship contender. He has paid the tax seven times, with a $52.9 million total payment over his nearly three decades of ownership.

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…a tax bill - an enormous one - looms next season if the Heat doesn’t substantially trim payroll and if Miami intends to either 1) keep at least two among Max Strus, Gabe Vincent, Victor Oladipo and Omer Yurtseven or 2) replace them with players earning more than the minimum.

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If Oladipo opts into his $9.4 million player option next season, the Heat would have $171 million committed to eight players in 2023-24. With cap holds and a first round pick factored in, Miami would be about $16 million over the tax line, potentially more, before addressing Strus, Vincent, Yurtseven or adding anyone over the minimum.

If Oladipo opts out - a good possibility if he continues playing well - the Heat would still be at least $6 million over the tax line and would have only these seven players under contract: 

Jimmy Butler ($45.2 million), Bam Adebayo ($32.6 million), Kyle Lowry ($29.7 million), Tyler Herro ($27 million), Duncan Robinson ($18.2 million), Caleb Martin ($6.8 million) and Nikola Jovic ($2.4 million). An eight player would be under contract if the Heat exercises its $1.9 million team option on Haywood Highsmith.

So Miami - without trimming payroll - would be in line to pay about a $10 million tax bill if its keeps its current roster but does not re-sign Oladipo, Strus, Vincent and Yurtseven and replaces all of them with inexperienced, minimum salary players and a 2023 first-round pick. That’s not realistic.

If the Heat decided to spend $12 million to keep Oladipo - but not Strus, Vincent or Yurtseven - that would result in a tax bill topping $40 million. That’s not realistic, either. 

So something must change.

…if Oladipo opts in (a possibility if he’s injured again) and the Heat kept this same roster intact and re-signed Strus but not Vincent or Yurtseven?

If Strus signed a deal starting at $7 million next season, the Heat’s luxury tax next season - with all of its other players under contract, including Oladipo opting in - would mushroom to more than $50 million.

What if Oladipo opts out and the Heat gives him $12 million, Strus and Vincent $6 million apiece and Yurtseven $3 million?

That would be a tax bill in the range of $94 million. There’s a better chance of a snowstorm by Miami-Dade Arena than the Heat paying that kind of tax bill for a non-championship team.

That’s why the Heat must trim payroll if it has any intention of keeping even two among Oladipo, Vincent or Strus and avoid paying a big tax. Even if the Heat parts with all of those players, signing anyone above the minimum to replace them would result in a large tax bill.

How did the Heat get itself in this situation? By agreeing to pay four players [Jimmy Butler ($45.2 million), Bam Adebayo ($32.6 million), Kyle Lowry ($29.7 million), Tyler Herro ($27 million)] between $27 million and $45 million next season, and by giving Robinson a deal that pays him $18 million next season.

There appears to be no way out and Barry Jackson has become a superb NBA writer who writes these deep analytical financial pieces that are so helpful to us who can’t balance our checkbooks. But. Cognos, looking at you Zach “Miami “Heat” symphony” Lowe, wrote “No Way Out” for 601 Biscayne in 2016/17 when it was saddled with the contracts of Whiteside, Johnson & Johnson and Weighters. I trust-near totally—in Andy Elisburg. NEVER underestimate Andy.