Free Agent Guide: A look at the Heat's salary space, Highsmith/Martin, and more

As a team already in the luxury tax zone and on the verge of crossing the punitive first apron, the Heat face a salary cap crunch when entering the free agent market, which limits its flexibility to add to its roster for next season.

The Heat's current salary cap includes nine players with 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), Kyle Weil ($4.2 million), Jamie Jaquez ($3.7 million), Josh Richardson ($3.1 million), and Nikola Jovic ($2.5 million).

There are a few things worth noting:

▪ This roster is actually expected to grow to 11 players soon, as two more players are expected to sign standard contracts with the Heat in the coming days.

Veteran big man Kevin Love didn't make the list because he gave up his $4 million player option to become an unrestricted free agent. But according to league sources, Love is expected to re-sign with the Heat on the free agent market, possibly with a cheaper base salary contract extension, which would create more room for a second-round draft to help Miami re-sign some of its own free agents.

In addition, Heat second-round draft pick from Arizona is expected to sign a standard contract with the Heat. While it's unclear how the Heat will work out Larson's standard contract, his salary next season could be between $1 million and $2 million. The Heat could also sign Larson to a two-way contract, which doesn't count toward the salary cap or the standard 15-man roster.

▪ Will hasn't signed a rookie contract yet because he wasn't allowed to. As the 15th overall pick in this year's draft, he expects a salary of about $4.2 million next season and will be controlled by the team for five seasons. This year's first-round draft picks (a group of players including Ware) will begin signing on Monday.

▪ The Heat must guarantee development center Orlando Robinson's full salary of $2.1 million this season by July 15. If the Heat decide not to guarantee Robinson's salary, he will be an unrestricted free agent.

▪ Two of the Heat's three two-way contract spots have been occupied. On Thursday, shortly after the end of the NBA draft, Miami agreed to sign Florida guard Zyon Pullin and Arizona forward Keshad Johnson to two-way contracts. Pullin and Johnson were not selected.

▪ According to league sources, the Heat and Bam Adebayo are in discussions about a three-year, maximum contract extension worth $166 million. Adebayo's contract extension with the Heat is likely to be signed starting July 6 and will run from the 2026-27 season through the 2028-29 season, when he will turn 31.

▪ Beginning July 7, Butler is eligible to sign a contract extension for up to two years worth approximately $113 million. The Heat's window to sign Butler to a maximum two-year contract extension will close next June 30, 2025. But after heading into the offseason to seek a maximum extension, league sources said Butler now intends to play the upcoming season without signing a contract extension, hoping to get the maximum contract next offseason, at which point he can opt out of his contract and become a free agent.

Excluding the salary cap or Love and Larson, the Heat have committed about $172.9 million in salaries to nine players, including $2.5 million in "unlikely rewards," which would raise the salary cap to $31.5 million for Herro's upcoming season.

With the projected salary cap set at $141 million for the 2024-25 season and the projected luxury tax set at $171.3 million, this means the Heat are already in luxury tax territory when they enter the free agent market. There are still five or six player spots to fill next season, and the Heat are on the verge of surpassing the punitive No. 1 salary cap of $178.7 million and not far from the dreaded No. 2 salary cap of $189.5 million. In other words, the Heat's salary cap situation will limit the players they can add and/or re-sign on the free agent market this summer, especially considering that Miami doesn't plan to pass a second salary cap unless it's to get an All-Star.

But using any part of the $520 taxpayer mid-class exception would leave the Heat with only the No. 2 spot for the entire 2024-25 NBA schedule. Not triggering the hard cap means the Heat will retain the flexibility to go beyond the No. 2 position if necessary and then eventually take action to get their salary below that threshold this season to avoid the penalties that come with being a No. 2 team.

If the Heat can only fill the roster with base salary, which is possible unless a trade is made to change the salary cap calculation, notable outside free agents who could be options at that price in the offseason include Eric Gordon, Jae Crowder, Kyle Lowry, Evan Fournier, Patrick Beverley, Justin Holiday Holiday, Wesley Matthews, Markieff Morris, Reggie Bullock, Jordan Nwola, Josh Okogie, Dario Saric Jr., Dennis Smith Jr., Gorga J. Bitadze, Naji Marshall, T.J. Warren, James Wiseman, Mohamed Bamba, and Aaron Holiday

Resume?

Since the Heat have limited ability to make outside free agents, another option is to fill the roster by recalling their own free agents.

The Heat have a full Bird clause for some free agents, which allows Miami to go above the salary cap and re-sign them at the highest salary, even though the salary cap has already exceeded the cap. But considering the Heat are facing a second-round draft and don't want to cross that threshold due to roster-building restrictions, don't expect Miami to spend money after the second-round draft to keep a player.

Highsmith and Martin are two players on the Heat's upcoming free agency, and they are expected to receive the most attention from the league. The Heat have the full Bird clause for both players.

But with the Heat's salary cap situation, the best the Heat can hope for would be to re-sign Highsmith or Martin instead of two players. The re-signing of Highsmith and Martin would take the Heat's current roster beyond the second tier.

Highsmith is considered a more realistic of the two free agents to return to the Heat, as he expects to be a cheaper option. Meanwhile, re-signing Martin is likely to put the Heat in the second tier as he expects a high salary on the open market.

In fact, according to league sources, Martin is unlikely to return to the Heat.

ESPN's Bobby Marks, an ESPN front-of-house insider and former team executive, told the Miami Herald that he expects Highsmith's salary to be between $8 million and $10 million per season, while Martin will receive a $12.9 million non-taxpayer mid-class exception on the free agent market.

According to league sources, discussions have been in place between the Heat and Highsmith about a potential new contract since mid-June when NBA teams were allowed to begin negotiations with their own players who are about to become free agents. Those negotiations are still ongoing, as the Heat are interested in keeping Highsmith, and Highsmith is interested in returning to the Heat.

"I definitely want to stay in Miami," Highsmith said when asked about his free agent status after the Heat season in early May. "I love staying here. My family lives here and my daughter lives here. So it's the most important thing for me, to be able to be there for my daughter all the time. But I have to figure it out, take my time, understand that everything will fall into place, everything will happen for a reason. ”

As a 3-and-D wing player fit for the NBA roster, Highsmith is expected to be favored by most of the league's teams in the free agent market. But the Heat have an advantage over outside teams because Highsmith wants to return to Miami, and the Heat could even try to get him to commit to a new contract before Highsmith enters free agency on Sunday.

"If there's enough money to spend, Heywood will stay in Miami," Jerry Dianis, Highsmith's agent, told the Miami Herald this week. "His perseverance to get into the NBA combined with his tenacity, character and work ethic, and he is the embodiment of the Heat's culture."

How about trading?

While a trade may be the only real way for the Heat to make a major addition to their roster in the offseason (if you don't consider Vail a major addition), the new collective bargaining agreement will make it challenging for Miami to make a trade during the 2024-25 NBA schedule.

As a team expected to outperform the first team, the Heat face trade constraints that include: Miami can't get more money back than they paid in a trade, aren't allowed to use existing trade exceptions, and can't acquire players through sign-and-trade. But the Heat were still able to roll up salaries in the trade.

To illustrate how limiting this is with a purely hypothetical scenario, the Heat won't be allowed to trade Jimmy Butler to the Los Angeles Clippers in exchange for Paul George until George opts out as a free agent on Saturday. This is because, despite their similar salaries, George ($48,787,676 next season before opting out) and Butler ($48,798,677 next season) are not exactly the same. This would prohibit such a trade because the Clippers would get back an extra $11,001 in the trade, which is not allowed because Los Angeles has already outdone the first and second aprons.

If the trade crosses the second apron, it will be more difficult for the Heat to complete the deal. Transaction restrictions that exceed the second apron include: Miami is not allowed to get back more money than paid in a transaction, salary is not allowed to be aggregated in a transaction, and cash is not allowed to be paid in a transaction. The Heat also can't use a pre-existing trade exception.

The Love factor

To give the Heat more room to re-sign some of their free agents, Love could re-sign Miami to a base-salary contract with an expected salary of $3.3 million next season.

That would be lower than the $4 million player option that Love declined, but he could make up for the loss by adding a year to his new contract and signing a two-year contract with a minimum salary. While providing Love with another year's guarantee, it also lowers his salary cap from $4 million (if he exercises his option) to $3.3 million next season.

If Love returns to the Heat on a one-year contract, his starting salary would still be $3.3 million. But due to NBA rules, his taxes and base salary cap are only $2.1 million, which would save Miami nearly $2 million, while Miami would be burdened with a $4 million salary cap if Love exercised the player option.

Other free agents for the Heat

▪ Bryant bypassed the $2.8 million player option on his contract to become an unrestricted free agent, and he appears to be looking for a new team in the free agent market. With Loew expected to return and the Heat using a first-round pick to draft Weil this year, Bryant could be looking for a bigger role on other teams as a free agent.

▪ The Heat don't have any Bird clause for Mills or Wright. That means the Heat can only use a minimum contract or a $5.2 million taxpayer mid-class exception to keep Mills and/or Wright.

▪ The Heat made qualifying offers to Swider and Williams, making them restricted free agents and allowing the Heat to match outside offers. Both Swider and Williams signed two-way contracts with the Heat last regular season and are expected to play for the Heat's Summer League team this year.

▪ The Heat did not make a qualifying offer to Jamal Kane, who has signed Miami on a two-way contract for the past two seasons. Kane was only able to get a qualifying offer for the veteran's base salary on a standard contract, but the Heat bypassed that offer. With no qualifying offers, Kane will be an unrestricted free agent this offseason and is not expected to return to the Heat.