It was a challenging question posed to Dwyane Wade.
When he faces free agency next summer, which will it be? The Kobe Bryant-style deal or the Kevin Garnett/Tim Duncan-style deal? For the Miami Heat and perhaps even for the balance of power in the league, his choice could make a big difference.
LeBron James answered for him.
“D-Wade is getting that Kobe deal,” James said from the next locker.
Wade, knowing the gravity of this issue, smiled and shook his head. Then he gave a more diplomatic answer.
“When I get into that position, it’s something I’ll think about,” Wade said. “You have to sit down at the time and see what is best for you and for your team.”
Here is the situation. Next summer Wade has an opt out in his contract. He is owed $20 million next year and $21 million in 2015-16. It is reasonable to think that Wade, who turns 32 in January, will not opt out and just collect that money. But Wade could also re-do his contract and, if the Heat agreed, get a four-year deal worth up to nearly $100 million. Or the sides could do a deal for anything in between. Basically, the Heat could ask Wade to take a pay cut and make it up to him by adding years to his deal.
That is what Wade and the Heat will likely have serious discussions about at some point before he has to make a decision on June 30. What Wade decides could have a significant impact on how the Heat proceed into next season. And Bryant’s new deal sets an interesting precedent.
Bryant is taking a pay cut next season from his $30 million salary but he will still be the league’s highest-paid player through 2016. The contract was somewhat controversial because it restricted the Lakers’ cap flexibility even as they plan to rebuild through free agency.
The reactions got to the point where Bryant ended up sniping back and forth with fans on social media. It’s not typical that a franchise player has to defend himself for re-signing with the team. Bryant pointed out that superstars shouldn’t yield to public pressure to take less money to help the franchise out and save the owners money.
In principle, Wade is on the same page.
“As a player, I loved it. Everyone who gets what they get deserves it, great,” Wade said of Bryant’s new deal. “There’s a reason the Lakers felt that Kobe should get that money. There’s no right or wrong.”
But what about in practice?
Like with Bryant, all signs point to Wade remaining with the Heat for his entire career. But the terms he settles on will make a difference to what the team can do over the next few years. Bryant correctly points out that is not the player’s concern. But it’s the reality.
In 2012, Duncan and Garnett both signed deals to stay with their teams where they took large pay cuts but in return got long-term contracts and no-trade clauses. Duncan reduced his salary with the Spurs by $11 million but got $30 million guaranteed over three years and took the San Antonio Spurs out of the luxury tax. Garnett reduced his $21 million salary by $10 million and spread $36 million over three years with the Boston Celtics (he later waived the no-trade clause) to clear the way for the Celtics’ to go on a spending spree heading into last season.
Earlier this year, Dallas Mavericks’ lifer Dirk Nowitzki said he planned to follow in the mold of Duncan and Garnett when he becomes a free agent next summer. Nowitzki is earning $22.7 million this season and said he’ll take a “significant pay cut” to help the Mavs chase free agents.
In 2005, Shaquille O’Neal was set to make $30 million with the Heat. But he opted out of the contract and lowered his salary by $10 million as part of a new five-year contract. With that savings the Heat added key role players James Posey, Jason Williams and Antoine Walker as part of a complex trade. The team won the title the following season.
That is likely the type of plan the Heat would like to work out with Wade. If Wade were amenable, the Heat could gain flexibility if Wade would be willing to do the same and opt out of the $41 million he’s owed over the next two years and take longer deal worth less per season.
“I remember when Shaq did that,” Wade said. “Not everyone is going to do that.”
The difference is all those players were older than Wade when making such concessions. Wade is slowing down because of knee injuries and he’s the oldest of the Heat’s stars but that doesn’t mean he should concede anything at the bargaining table. Bryant, who is 35, is coming off an Achilles tear and he clearly didn’t.
The issue is that starting next year the Heat face becoming the first team to pay what has been called the “repeater tax” for being a luxury tax payer for a fourth time in five years under the collective bargaining agreement that was signed in 2011. It’s complicated but all you need to know is it’s a vastly different financial dynamic than when the Heat signed Wade, James and Chris Bosh and did their budgeting in 2010, as much as tripling the penalty.
Before the season, Heat president Pat Riley said the team pushed for contracts that were signed before 2011 be grandfathered it to the old tax rates. They lost that battle.
“There comes economic decisions and basketball decisions, that's what this is all about right now,” Riley said. “I make basketball decisions, but I am more aware now than I've ever been because of the new CBA and what that brings to my desk every day.”
The Heat are facing pressure to replace aging role players, re-sign some core players and have James’ and Bosh’s potential free agencies to manage as well. With the new tax rules, it’ll be a challenge.
In 2010, Wade, Bosh and James all accepted pay cuts to make room for more talent on the roster. Because of the tax position of the Heat, the organization may ask them to do it again. But this time there is a difference. The players don’t have to fit under the salary cap; spending for players on your roster is unlimited as long as you pay the tax. And, Wade points out, motivations will be different.
“That was something we wanted to do, it wasn’t that we had to do it,” Wade said. “At the time, guys like LeBron and CB were searching for their first championship. So you’re willing to get whatever you can to put yourself in position to win that.”
Back then, Wade gave up more money than James and Bosh to help pay for the team to re-sign Udonis Haslem and bring in Mike Miller. All-in-all, James and Bosh left about $14 million each on the table in 2010 and Wade left $17 million. Wade was the catalyst for it, personally going to James and Bosh to lobby them to leave some.
It has worked out wonderfully. The Heat, despite having to use the amnesty clause to waive Miller to deal with the new tax rates, have won two titles and remain one of the deepest teams in the league and remain title favorites. The Heat are probably going to need more concessions to keep it that way and once again it may be Wade who will be asked to set the tone.
Wade has not decided how he’ll go about it. But he also said that nothing should be assumed just because of what he did three years ago.
“There are different times and different mindsets that you deal with. That was 2010,” Wade said. “I’m not saying that LeBron James or Chris Bosh, if they get the opportunity again, are going to leave $17 million on the table. No one can say they should do that. You have to do what is best for you.”