Update:

The Heat has reportedly offered Dwyane Wade a two-year, $40 million contract with a player option on the second year that would allow him to become a free agent next summer. My guess is that he will, at the very least, push the Heat to add a third year to the contract which, for reasons stated below, the Heat will strongly resist.

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Original Post (07/04/16):

For the second straight summer, the Miami Heat and its star free agent Dwyane Wade and are having difficulties reaching conclusion on a new contract. Only this time around, things feel significantly more serious. Dire even.

Wade is frustrated.

He’s frustrated at having been asked to stand pat as Pat Riley and the Heat organization made its first priority for the summer to retain Hassan Whiteside, and second priority to pursue the never realistic pipe dream that was Kevin Durant. Wade, a future All-Star is no third option – particularly when successful pursuits of either or both of the first two severely limits that which is left over for the organization to compensate himself.

He’s frustrated by what appears to be an unwillingness by Riley to offer an adequate contract. A total of 10 unrestricted free agent shooting guards have come to agreements on new contracts thus far this summer. The average payout: $18 million per season. Average length: Four years. Combined All-Star selections: Two.

Even Wade’s own backup, Tyler Johnson, received an offer sheet from the Brooklyn Nets that will pay him an average of $12.5 million per season, and that was reportedly less than other teams were willing to offer.

Wade’s salary demands are unknown, but perhaps not all that dissimilar to what they were last season: perhaps three-years, somewhere in the range of $60 million.

His desire for such a contract can easily be justified. He has guided the Heat to five NBA finals and three titles. He played a critical role in luring LeBron James and Chris Bosh to Miami. He has sacrificed $25 million in salary in order to give the Heat flexibility over the past six years (a disputable amount, considering the sacrifice surely benefited himself as much as it did the organization). And, perhaps most importantly, his on-court play, in this market, is worthy of it.

The Heat would surely love to give Wade every last penny he wants in theory, but paying him what he’s seeking would present significant challenges in practice.

The team currently has $18.9 million of cap space. With that, it could build out a potential three-year, $61 million contract (or even a four-year, $84 million deal).

But, if you were Pat Riley, would you give it to him?

On the surface, the answer is undoubtedly yes. Without hesitation. He rightfully deserves far more than just that.

Underneath that surface, however, lies a bunch of serious problems for the Heat if they do.

If the Heat were to offer Wade the full $18.9 million, it would have limited opportunity with which to improve this summer. It could match the offer sheet to Johnson. It would have access to the mid-level exception for room teams, but that only pays out $2.898 million in the first year of a contract that can span two years in length. It could offer minimum salary contracts. Barring trade scenarios, that’s it.

The issues it had this past season – among them, an uncomfortable fit in the backcourt between Wade and Goran Dragic – would still persist.

That, however, likely isn’t the problem. One would think the Heat would surely give Wade the full $18.9 million. The problem lies with the future beyond next season.

The Heat has a very solid, multi-talented core of youngsters in guards Tyler Johnson and Josh Richardson, forward Justise Winslow and center Hassan Whiteside. It has a potentially perfect, floor-spacing frontcourt compliment to Whiteside in Chris Bosh, assuming health.

In an offense system designed to capitalize upon it, what was once a shocking inability to space the floor could now be considered a strength. And depending upon where Richardson – who led the entire NBA in three-point shooting percentage after the All-Star Break, at 53 percent – and Johnson – who shot 41 percent on three-pointers last season (excluding heaves), despite often being miscast as a point guard — level off with their shooting, a potentially big one.

That type of shooting could provide Whiteside — now a franchise cornerstone with his four-year, $96.4 million contract secured – much-coveted floor-spacing into which to maneuver.

At 7-feet, 265-pounds, and with a ridiculous 7-foot-7-inch wingspan, Whiteside alters the geometry of the game. His individual statistics last season, were silly – 17.6 points (on 60.6 percent shooting), 14.7 rebounds and 4.6 blocks per 36 minutes played. And he did it despite having two, three, and sometimes four defenders draped all over him every time he tried to touch the ball.

Imagine what he could do in an offense that spaced the floor around him.

Is it so preposterous to imagine he could become one of the best, and most efficient, scorers in the whole of the NBA?

Is it so preposterous to envision a constant stream of Whiteside pick-and-rolls, Bosh pick-and-pops, and swished three-pointers every time defenders rotated away from Heat shooters to try to stop it?

Is it so preposterous to imagine that with Whiteside down low; Bosh, Richardson and Johnson to space the floor around him; and Dragic’s speed and Winslow’s defense thrown into the mix; that the team could be just one elite player who fits the structure away from competing for titles?

Well… The 2017 class is loaded.

The list of players who can be unrestricted free agents in 2017 includes: point guards Stephen Curry, Russell Westbrook, Chris Paul and Kyle Lowry; shooting guard J.J. Redick; small forwards Kevin Durant, LeBron James (if he signs another one-year deal this summer) and Gordon Hayward; and power forwards Blake Griffin, Serge Ibaka, Paul Millsap and Greg Monroe.

Westbrook just had his teammate, Durant, announce his intention to leave the Thunder. He figures to be next. How might he, for example, round out that Heat rotation?

You can bet Riley is already contemplating such things.

The Heat, as of now, could create more than $18 million of cap room next summer, even if it were to match Johnson’s offer sheet. That room could grow to $21 million if it were to waive and stretch McRoberts, or $23 million if were to trade him. Trade Dragic instead of McRoberts and its $34 million. Trade both and its $39 million.

With that type of cap room, the Heat could be a major free agent player next summer. With Wade taking $20 million of that room, however, those dreams are likely gone. Not close to enough for a max salary slot.

Would you be willing to throw all those dreams away to give Wade the contract he wants, if it means your team couldn’t significantly improve over the next several years?

Or would you take a hard line with Wade and risk losing him, if it means have the flexibility to build the team, with more naturally-fitting pieces, into a title-contender as early as next season?

But that’s not the only problem.

The problems continue on into 2018, with full force and fury.

The Heat have already doled out $73.8 million to Dragic, Winslow, Bosh and Whiteside for that season. Johnson’s contract, if the Heat were to match his offer sheet, would spike that season, to $19.2 million, bringing the total to $93.1 million for just five players.

But that’s not all. Richardson also becomes a free agent in 2018. And if he continues along his current trajectory, there’s an annual eight-figure payout in his future, and not a small one at that.

With Richardson and Johnson, the Heat’s payroll for 2018-19 could conceivably soar to $120 million or more, before accounting for Wade, during a season in which salary cap growth is projected to flat-line. Current projections call for a cap of just $105 million for that season.

Would you be prepared to lose Johnson and/or Richardson in order to give Wade the contract he deserves?

Would you be willing to sacrifice one – possibly two — key pieces of the Heat future in exchange for someone who, over the next three years, despite his status as a legend and future Hall-of Famer, will perhaps offer declining production? Wade would, after all, be 37 years old by the time the third year ended.

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We, as fans, talk about loyalty. We talk about paying Wade back for everything he’s done for this organization. We talk about giving him the type of contract he so rightfully deserves. We should. Because Wade deserves no less.

But we also get frustrated when our on-court product doesn’t produce. We get frustrated when our team doesn’t advance through the playoffs. We blame our organization for not finding a way.

Wade’s desire for a long-term contract poses serious problems for the Heat’s ability to improve in the years to come.

How should Riley allocate what are, by rule, limited resources?

Should Wade accept what he’s offered, even if it’s substandard? Or should he pursue other free agency options (and possibly leave)?

There are no easy answers.