MIAMI — While Wayne Ellington is pursuing the biggest payday of his career, the Miami Heat are trying to avoid an expensive luxury-tax bill.
Both sides are justified. Ellington earned the opportunity to sign the most lucrative contract in his life with a career-best season in 2017-18 and the Heat have every reason to do everything they can to avoid paying the luxury tax for a roster that’s not considered a title contender right now.
But something has to give.
As the money dries up around the league, the Heat and Ellington have yet to reach an agreement through the first three days of free agency. The only remaining teams with significant salary-cap space this offseason are the Chicago Bulls at $23 million, Atlanta Hawks at $21 million and Sacramento Kings at $18 million.
Other teams that began free agency with a lot of money to spend, like the Lakers, Sixers, Mavericks, Pacers and Suns, have already used it on other players. This isn’t good news for Ellington, as diminished options means diminished leverage in negotiations.
It comes down to this for the 30-year-old sharpshooter: Either take the Heat’s offer (even if it’s not as much as he expected), sign with one of the three teams that still have space (Bulls, Hawks and Kings aren’t the most attractive landing spots at the moment) or take exception money from a team that lacks cap space (could be as much as the $8.6 Non-Taxpayer Mid-Level Exception).
While the Heat would like to bring Ellington back, they are in a tough position.
Excluding cap holds, the Heat have 11 players under contract for 2018-19 who are due about $120 million. That puts Miami way above the $101.9 million salary cap and very close to the $123.7 million luxury tax line.
In other words, bringing back Ellington means paying the luxury tax unless other salary is shed.
The Heat have Ellington’s early Bird rights, which allows them to exceed the cap to pay him 175 percent of his 2017-18 salary of $6.27 million. That means Miami can offer Ellington a deal starting at $10.9 million, which is the max he can make with the Heat next season.
What are other shooters getting in this year’s free-agent market? Doug McDermott agreed to a three-year, $22 million deal with the Pacers; Joe Harris agreed to a two-year, $16 million deal to stay with the Nets; Marco Belinelli agreed to a two-year, $12 million deal with the Spurs; and JJ Redick agreed to re-sign with the Sixers on a one-year deal in the $12-13 million range.
What is Ellington looking for? Stability after playing for seven different teams over the first nine seasons of his NBA career, and of course a pay raise from this past season’s $6.3 million salary after setting a new career-high and team record with 227 made 3-pointers in 2017-18.
But even just bringing back Ellington on this past season’s salary pushes Miami into the luxury tax. That’s the obstacle the Heat and Ellington must overcome to reach an agreement.
The Heat have six players from their 2017-18 season-ending roster who remain free agents: Luke Babbitt, Udonis Haslem, Dwyane Wade, Jordan Mickey, Derrick Walton Jr. and Ellington.
In a perfect world, the Heat would probably like to re-sign Ellington, Haslem and Wade. But Miami’s salary cap situation will make that very difficult.
Bringing back Ellington (a max starting salary of $10.9 million), Haslem ($2.4 million minimum) and Wade ($5.3 million exception) could cost the Heat $18 million in combined 2018-19 salaries, which would put them about $14 million above the tax line if other salary can’t be shed. That would leave the Heat with a luxury tax bill of at least $26 million on top of their salaries if the rest of the team remains intact.
Miami does not want to go that far above the threshold for a roster that’s not considered a title contender, although it’s important to note that NBA teams have until the end of the regular season to find a way to get under the tax line before they receive the bill. So one of two things will probably have to happen if Wade and Haslem decide to return: Either the Heat will have to let Ellington sign with another team in free agency (because Wade and Haslem will be back on the roster if they choose to) or the Heat will have to shed salary to make room for all three.
Something has to give.