Mailbag: Over-the-cap team or room team — what makes the most sense for the Miami Heat?

The Miami Herald Heat mailbag is back to answer your questions this offseason.

If you were not able to ask this time, send your questions for future mailbags via Twitter (@Anthony_Chiang). You can also email them in to achiang@miamiherald.com.

@FernandoARuiz: Should the Heat operate as a room team or an over-the-cap team in the offseason? Which approach makes the most sense and why?

Anthony Chiang: There are pros and cons with both options.

First off, let’s set up the Heat’s situation. Miami enters the offseason with a roster that features just five players with guaranteed salaries for next season: Jimmy Butler ($36 million), Bam Adebayo ($28.1 million), Tyler Herro ($4 million), Precious Achiuwa ($2.7 million) and KZ Okpala ($1.8 million).

This means the Heat could have between $21 million and $27 million in cap space this summer, including cap holds, unless it opts to operate as an over-the-cap team and leverage the Bird rights of its own free agents to bring back some of this past season’s roster.

If Miami chooses to create cap space this offseason, it would have about $21 million in space if it extends $4.7 million qualifying offers to both Duncan Robinson and Kendrick Nunn to make them restricted free agents and about $27 million in space if it instead chooses to pull those qualifying offers to allow both to become unrestricted free agents and decrease their cap holds to $1.7 million. These calculations include a $5.2 million waive-and-stretch cap hit for Ryan Anderson that’s still on the books.

The list of players on the Heat’s season-ending roster who will become free agents this offseason includes Victor Oladipo, Trevor Ariza, Nemanja Bjelica, Nunn, Robinson, Udonis Haslem, Dewayne Dedmon, and two-way contract players Max Strus and Gabe Vincent. And the Heat could make Goran Dragic ($19.4 million team option), Andre Iguodala ($15 million team option) and Omer Yurtseven ($1.5 million team option) free agents by declining the team option in their contracts.

What does this all mean? The Heat has plenty of important roster decisions to make this summer, with as many as 12 players from its season-ending roster possibly hitting free agency.

In most realistic scenarios, operating as an over-the-cap team makes the most sense for the Heat.

This would allow Miami to make the most of the Bird rights it holds for players like Oladipo and Ariza to exceed the salary cap to re-sign them. By moving forward as an over-the-cap team, the Heat can also decline Dragic’s $19.4 million and Iguodala’s $15 million options for next season while still retaining their Bird rights to bring them back at lower salaries.

To take the alternate route and open cap space, the Heat would need to renounce most of its own free agents to get their cap holds off the books. By renouncing a player, Miami would lose their Bird rights and only be able to re-sign them by using cap space or exception money.

Another benefit of operating as an over-the-cap team is the Heat would have two exceptions available: a mid-level exception for $9.5 million and a bi-annual exception for $3.6 million. As a room team, Miami would only have a $4.9 million mid-level exception.

There’s also still a way for the Heat to add a big-name free agent if it chooses to be an over-the-cap team this summer. That’s through a sign-and-trade, which is how Miami acquired Butler in 2019 free agency despite having no cap space.

It’s also worth noting that the $21 million $27 million in cap space the Heat can open up by operating as a room team isn’t nearly enough to sign a max-level free agent.

The over-the-cap route seems to make the most sense for the Heat in most cases.

@GreenAndrew4: At the deadline we heard some rumors about Spencer Dinwiddie … is that still a possibility?

Anthony: Brooklyn Nets guard Spencer Dinwiddie was limited to just three games last season because of a partially torn ACL that required surgery. The expectation is that Dinwiddie will still decline a $12.3 million player option for next season to become a free agent this summer.

As to your question, Dinwiddie could be a free agent option for the Heat. But it appears that Kyle Lowry will be at the top of the Heat’s free agent list when it comes to guards based on mutual interest, Butler’s close relationship with Lowry, and Miami’s pursuit of Lowry at the March trade deadline.