Update (07/01/17):

Pat Riley and the Miami Heat organization received some encouraging news on Friday, as they prepare to lure All-Star free agent Gordon Hayward away from the Utah Jazz in a meeting scheduled for Saturday.

Hayward is reportedly considering the Heat, Jazz and Boston Celtics.

The Celtics, long believed to be Hayward’s preferred destination if he should choose to leave the Jazz, were hoping to pitch Hayward on the idea of a future alongside Paul George in Boston. That won’t happen.

The Celtics were attempting to secure a commitment from Hayward, who will meet with Boston on Sunday, before pursuing a trade for George. But the Indiana Pacers were unwilling to wait, and instead agreed to deal him to the Oklahoma City Thunder in exchange for Victor Oladipo and Domantas Sabonis.

It was a shockingly meager return for George, who has one year remaining on his contract. Given Oladipo’s contract, perhaps even worse than losing George for nothing. Which makes it rather unfathomable that the Pacers were so impatient to secure a deal that wasn’t going anywhere, and that couldn’t be completed until July 6th anyway. The Celtics, flush with draft and player assets, could easily have topped it.

Nevertheless, George is on his way to join league MVP Russell Westbrook in Oklahoma City, simultaneously creating another powerhouse in the strengthening Western Conference and further weakening the significantly less competitive Eastern Conference.

Hayward’s Options

The Celtics remain a formidable option for Hayward, despite losing out on George. They are coached by his former college coach at Butler. They just reached the Eastern Conference Finals. They possess a highly desirable mix of All-Star caliber veterans and promising youngsters. They are poised to add the No. 3 overall pick (Jason Tatum) and a couple of first-round picks from last season (Ante Zizic and perhaps Guerschon Yabusele). They are flush with several exceedingly valuable future first-round draft picks. And they could potentially clear a max salary slot for Hayward. But they’d need to give up a guy to do that. And they won’t be re-able to sign any of their free agents (including Kelly Olynk). The team Hayward would be joining in July will look a bit different than they did last season. And it will be led by a ball-dominant point guard, which isn’t exactly Hayward’s speed.

The Jazz possess a supremely talented roster, which advanced to the second round of the playoffs for the first time in Hayward’s career. They acquired Ricky Rubio from the Minnesota Timberwolves on Friday, signaling the impending departure of incumbent point guard George Hill. Hill is looking for a payout substantially higher than the $14 million Rubio is set to earn next season. The trade-off brings a talented (if not as ideally suited) alternative, as well as financial stability for an organization that was projected to dive deep into the luxury tax. The move costs Hayward a close friend in Hill. But makes it likely they’ll retain a close friend in restricted free agent Joe Ingles, a potential cap casualty that the Jazz may now have the financial means to retain.

The Heat will come at its pitch to Hayward from multiple angles. Sure, they’ll get into the weather, the lifestyle and lack of state income taxes. They’ll get into the winning culture. Pat Riley may even pull out a ring or two. But they’ll also get into the basketball. They’ll describe him as the centerpiece of an offense that will likely include a to be re-signed James Johnson. They’ll describe the lethality of an offense that includes Goran Dragic – Josh Richardson or Tyler Johnson – Gordon Hayward – James Johnson – Hassan Whiteside. They’ll describe the perfect spacing — vertical and horizontal — that it generates. They’ll describe the championship caliber defense it can play.

The scenario they’ll be painting could well be James-Johnson-approved. Which could mean his return in a Hayward-included world could already be planned out. But it won’t be without its challenges.

The Heat don’t currently have enough cap space to sign Hayward at his first-year max salary of $29.7 million (let alone Johnson). But they could take imminently available action to get there.

If Miami waives Chris Bosh (whose $25.3 million and $26.8 million salaries for the next two seasons would be permanently wiped from the Heat’s cap sheet) and Wayne Ellington (whose $6.3 million contract is non-guaranteed through July 7), and waives and stretches the contract of Josh McRoberts (which would convert his $6.0 million salary into a $2.0 million dead-money cap charge), it could get to $38.0 million. That’s enough for Hayward at the max, with $8.3 million of cap space left over.

The Heat could generate up to another $1.4 million of cap space in the unlikely event they were to renounce their rights to Luke Babbitt (which would mean surrendering their right to re-sign Babbitt without regard to the salary cap, in order to generate an added $650K in savings), waive waive Rodney McGruder ($500K savings), and/or waive Okaro White ($270K savings). That could get them up to $39.5 million of cap space. Enough for Hayward at the max, with $9.7 million of cap space left over.

An offer to Johnson with a starting salary of between $8.3 million and $9.7 million could total as much as $36 million to $42 million over four years.

If that isn’t enough, Riley could seek out potential trade options to increase that total further.

Trading Josh McRoberts would clear another $2.0 million of cap space. The Heat could offer, among other things, up to $5.1 million in cash to a potential trade partner willing to take on his $6.0 million expiring salary (and full Bird rights). That would increase the range to between $10.3 million and $11.7 million, equating to a total payout of between $44 million and $50 million.

Trading Tyler Johnson would clear an additional $5.1 million of cap space, but it wouldn’t be easy. Johnson can’t be traded without his consent, or to the Nets at all, until July 10. He also has a 15% trade bonus, which would pay out up to $3.8 million. The bonus would be paid by the Heat, but it would increase his cap hit for the team that acquires him to $7.8 million (vs. the current $5.9 million) for 2017-18 and $21.1 million (vs. the current $19.2 million) for 2018-19, along with his $19.2 million player option for 2019-20. He could, however, choose to waive any or all of his bonus at will in connection with a trade.

Other trade options include first-round pick Bam Adebayo (who will be eligible to be traded on August 1) and Justise Winslow, who would clear $1.7 million and $1.9 million of added cap space, respectively.

The Money Factor

The Jazz can technically offer Hayward the highest possible payout, but that advantage is something of an illusion.

Utah can offer a five-year max contract worth $172.4 million, while Boston and Miami can only offer four-year deals worth $127.8 million.

But while the Jazz can offer a five-year guaranteed payout that no other team can, it’s not necessarily his best option.

That could be a four-year deal, with a player option after three years – which would allow him the flexibility to opt out and re-enter free agency as a 10-year veteran eligible for a Tier 3 max contract (starting salary equal to 35% of the salary cap) in the summer of 2020.

Hayward could sign a four-year deal with an opt out right after three seasons whether he’s in Boston, Utah or Miami. The financial payout would be nearly identical in each case: $96.3 million for the Jazz over the first three years, versus $93.6 million for the Heat and Celtics. In each case, he would be positioned to pursue a max salary contract that could start at around $40 million and yield a total payout of anywhere from $170 million over four years to $230 million over as many as five — a contract he might not be able to command two years later. Entering free agency after three years, at age 30, is a far different proposition than after five, at age 32.

Factoring in state tax rates, the Heat could essentially provide Hayward the highest net payout with such a structure. He would not be subject to state income taxes in Florida (though he would be subject to jock taxes while on the road) as he would in Utah and Massachusetts. They’ll be sure to point that out.

***

Would the addition of Hayward and the re-signing of Johnson be your most preferred of any plausible scenario?

Can Pat Riley pull it off?

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Original Post (June 9, 2017):

“You don’t have to go whale hunting… I think the collective bargaining agreement is going to dictate a lot of things about free agency. If you go back to 2010, when we were fortunate enough to be able to secure the services of LeBron and C.B. and Dwyane, the rules were different. The money was lower. They could sign six-year deals. You had sign-and-trades. You had all those things. Today, it’s a lot different. Any great player who plays with a team is going to have to give great pause to probably walk away from $65 to $70 million or whatever the number might be to go somewhere else. He’s going to have to want to really come to you or he’s going to have to want to leave where he is… Some of these guys’ max numbers are ridiculous…”

That was Miami Heat president Pat Riley at his end-of-season press conference in April, masterful as ever in downplaying what is always his primary free agency goal: whale hunting.

Riley has consciously maneuvered around various – sometimes intricate, sometimes transparent and highly-publicized – salary cap issues over the past couple of seasons in pursuit of the flexibility for precisely that. And this summer may be the last time for a long time to cash it in.

There’s only one whale worth pursuing this summer: Utah Jazz small forward Gordon Hayward.

In his prime at age 27, Hayward has established himself as one of the NBA’s premier wing players. The 6-foot, 8-inch first-time All-Star averaged 21.9 points per game this past season, shooting 47.1% from the floor and 39.8% from the 3-point line. He has developed into an excellent playmaker over the course of his seven years in the league, capable of attacking off the dribble and finishing at the rim or kicking out to open teammates along the perimeter. He has also become adept at spacing the floor off the ball. And while he’s not necessarily an elite individual defender (though he’s coming off an elite defensive season), his size and athleticism provide a high degree of versatility — he can hold his own at either wing spot, slide down to power forward in certain match-ups, and even defend the occasional point guard. Is there a better fit for the Heat philosophy, at its most critical position of need?

Hayward holds a $16.7 million player option for the 2017-18 season, but he is certain to decline it and become an unrestricted free agent this summer, where he will command a maximum salary that is currently projected to top $30 million.

The prevailing logic has always been that Hayward would most likely return to Utah, which has to still be considered the most likely outcome. The Jazz possess a supremely talented roster, which advanced to the second round of the playoffs for the first time in Hayward’s career. And they can offer him far more money than can any other team – Hayward can get up to five years and $175 million if he stays in Utah, versus just four years and $130 million with any other team.

But those advantages are both something of an illusion.

The Jazz face a precarious financial situation that could preclude the team from maintaining, let alone improving upon, its current roster in the months and years ahead. And even if they do, the prospect of competing against a Golden State Warriors team which just swept them out of the playoffs for a Western Conference path to the NBA Finals over the next half decade (costs be damned) could prove rather daunting.

And while the Jazz can offer Hayward a five-year guaranteed payout that no other team can, it’s not necessarily his best option. That could be a four-year deal, with a player option after three years – which would allow him the flexibility to opt out and re-enter free agency as a 10-year veteran eligible for a Tier 3 max contract in the summer of 2020; positioning him for a possible $225 million kicker on the back end that he might not be able to command two years later. Entering free agency at age 30 is a far different proposition than at age 32.

And since every team in the league can offer him such a 3+1 deal this summer (which could total up to $98 million for the Jazz over the first three years, versus up to $95 million for all other teams; a less than $3 million difference which, in some cases, is small enough to be more than offset by state tax differences), Hayward could find himself in the rather unique position of having his optimal financial payout guaranteed to be virtually identical no matter where he chooses to play. And if that’s the case, a move east — where the team of his choosing could potentially be just one aging player’s decline in production (or, if you would the rumors, move out west) away from being the premier team in its conference — could prove rather enticing.

If Hayward does decide to move east this summer, the bulk of the narrative has been that it would be to join the Boston Celtics, who are coached by his former college coach Brad Stevens. The Celtics just reached the Eastern Conference Finals. They possess a highly desirable mix of All-Star caliber veterans and promising youngsters. They’re about to add the #1 overall pick in the draft. They’ll have another prime draft pick next summer (courtesy of the Brooklyn Nets). And they could potentially create max level cap space for Hayward to boot. But they’d need to give up some guys to do that. And they’d probably be just a year away from getting excessively expensive. The team Hayward would be joining in July may not look quite the same as it did the previous July, or as it will the following July. And it would be led by a ball-dominant point guard, which isn’t exactly Hayward’s speed. Still, it’d be a compelling option.

Against that backdrop, ESPN’s Marc Stein posted this to Twitter on Friday: “Free Agency Scuttle: Volume is rising on the whispers that the team worrying Utah in Gordon Hayward’s free agency is Miami as much as Boston.”

You can bet that harpooning one last free agent whale, positioning himself for a climactic opening act to the sixth decade of his career and one that would further solidify his iconic reputation in the art of negotiation, would be of supreme interest to Riley.

But does he have enough to offer Hayward to compete with bids from the likes of the Jazz and Celtics?

Miami will start the summer with about $31 million of cap space (at the current $101 million salary cap projection). Hayward’s $30 million would leave the Heat with less than $2 million to spare. Not enough to re-sign Dion Waiters or James Johnson. And therefore probably not enough to entice Hayward. Or the Heat, for that matter.

But Riley would undoubtedly be thinking bigger.

If the Heat were to waive each of its players with non-guaranteed salaries (Wayne Ellington, Rodney McGurder and Okaro White — considering Josh Richardson effectively guaranteed), waive and stretch the contract of Josh McRoberts (which would convert his $6 million salary into a $2 million dead-money cap charge), and renounce its rights to each of its free agents (which would mean surrendering its right to re-sign Luke Babbit without regard to the salary cap), it could potentially generate up to $42 million of cap space. That could get you Hayward, and still leave you with up to as much as $11 million left over (but only if Riley makes every one of these moves). Which might be enough for the Heat to also re-sign Johnson.

But the short NBA playoffs is putting downward pressure on the projected salary cap. The leftover figure could easily become $10 million. Or less. Which could become an increasingly unlikely figure for Johnson to accept.

Riley knows that. And he’s not about to take any chances. If he truly believes he has a shot at Hayward, he will take action to prepare.

While the Heat will realistically be able to generate anywhere from $31 million to $42 million of cap space without any outside assistance, they could potentially increase that total in trade.

For starters, consider the draft.

Is the player you want still on the board at pick #14? Great! Grab him! (My personal favorite: Lauri Markkanen).

If not, why not trade out?

Just giving it away (or, more realistically, swapping it for a couple of second-rounders or a future first) takes Miami’s max cap space to $43 million. Or $13 million post-Hayward.

Package it with up to $5.1 million in cash for a trade partner willing to take in McRoberts’ expiring $6 million salary (an attractive enough offer not only to get done, but also to expect some form of consideration in return)? $45 million. Or $15 million post-Hayward.

Excise a valuable but costly (and therefore exceedingly difficult to trade) Tyler Johnson? $47 million. Or $16 million post-Hayward.

All three together? $50 million-plus. Or $20 million-plus post-Hayward.

Even more if Winslow is included.

On the low end of the hypothetical trade range, perhaps enough to appease James Johnson.

On the high end (in the event it’s possible), still likely beyond the farthest reaches of plausibility for both Johnson and Waiters, but perhaps enough for Danillo Galinari or Serge Ibaka.

How dominant could, say, a Goran Dragic – Josh Richardson or Dion Waiters – Gordon Hayward – James Johnson or Danillo Galinari or Serge Ibaka – Hassan Whiteside starting rotation be? Does it have a chance in the years ahead to knock off an aging Cavaliers team for Eastern Conference supremacy?

And consider this: For less than $2 million of whatever cap space you’ve just created in your preferred scenario, you could also bring back a nearly fully stocked bench that features Rodney McGruder at guard; Luke Babbitt (at whatever price he’d command in free agency) and Okaro White at forward; and Willie Reed (if he accepts the $4.3 million Room MLE) at center… to complement whatever players you’ve elected not to trade (e.g., Tyler Johnson, Justise Winslow, etc.).

Would this be your single most preferred of any plausible scenario?

Can Pat Riley pull it off?

I would encourage you to read this post, in which I attempt to set a basic framework for how the Heat achieved its success this past season, and then leverage that framework to pose various alternatives for how you might want the Heat to approach the summer to capitalize on that success.