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June 24, 2010
Transaction Analysis
Miami Heat Adds Cap Space

by Kevin Pelton

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6/23 - Miami Heat traded guard Daequan Cook and the No. 18 pick in the 2010 NBA Draft to the Oklahoma City Thunder in exchange for the No. 32 pick in the 2010 NBA Draft.

While this deal may not be as sizeable as the one the New York Knicks completed to offload Jared Jeffries' contract prior to the trade deadline, it's another bit of evidence of the lengths to which teams will go to clear space under the salary cap this summer.

To get Daequan Cook, a 23-year-old who made 38.7 percent of his three-point attempts and nearly averaged double-figure scoring off the bench two seasons ago before slumping in 2009-10, all the Oklahoma City Thunder had to do was trade up from the No. 32 pick in the second round to the No. 18 pick in the first round. Over the next three seasons, the history of the draft puts the average difference between those picks at 2.3 Wins Above Replacement Player.

Here's how the entire trade rates out, valuing the money saved at our usual rate of 1 WARP for each $2.5 million in room.

OKC        10-11   11-12   12-13    Tot
---------------------------------------
Cook        0.8     0.9     0.8     2.6
No. 18      0.6     1.2     1.9     3.7
---------------------------------------
Total       1.4     2.1     2.7     6.3

MIA        10-11   11-12   12-13    Tot
---------------------------------------
No. 32      0.1     0.5     0.8     1.4
Cap Space   1.0     1.0     1.0     3.0
---------------------------------------
Total       1.0     1.4     1.7     4.4

To do a deal like that, the Miami Heat would either have to be fairly crazy or really concerned about cap space. Clearly, the latter is the case. Even though Miami's savings aren't enormous--the Heat gains about $2.5 million under the cap when accounting for two additional minimum-salary cap holds that will replace the salaries of Cook and the first-round pick on the team's books--that money could be the difference in luring a player from free agency's second tier, like David Lee or Rudy Gay.

Before the deal, Hoopdata.com's analysis pegged Miami at approximately $41.4 million in cap room, a staggering figure that would easily allow the team to sign two max free agents. Let's say the Heat is able to re-sign Dwyane Wade ($16.6 million max salary) and adds Phoenix's Amar'e Stoudemire ($17.2 million max salary). Previously, that would have left the team $7.6 million to sign a third free agent--more than the mid-level exception, but not substantially so. (Note that if you replace Stoudemire with Chris Bosh ($16.6 million) or Carlos Boozer ($16.8 million) in this scenario, Miami has slightly more room.)

Now, the money for a third marquee free agent is up to at least $10 million. That's not enough to pull off the apocalyptic scenario of three max free agents joining forces (unlikely unless the team completely gives up on Michael Beasley), but means the Heat will have essentially as much to offer as the New Jersey Nets would have after signing a single max free agent, for example.

Given Miami's lure as a free-agent destination, especially if the team has already added an All-Star big man to go with Wade, it's fairly safe to say the cap space they've created will be more valuable than average. The difference isn't nearly as big a jump as the Knicks took with the Jeffries deal, but it's a sizeable one. It's a risk too, since the Heat can't be certain it won't just end up overspending and both the first-round pick and Cook would have been useful in terms of depth, but it's a calculated one.

Miami probably wouldn't have made the deal without getting the No. 32 pick. The beauty of adding an early second-round pick from the Heat's perspective is that the team should be able to select a player with first-round talent without taking on either the guaranteed contract or more importantly the cap hold required of first-round picks. Miami will need to fill out its roster with minimum-salary players should all the cap space be used on three larger contracts, and second-round picks--especially early ones--are the best avenue for the team to do so.

If this was something of a gamble for the Heat, it was a no-brainer from Oklahoma City's perspective. Sam Presti has maximized the Thunder's cap space all year long. He ended up turning it into a pair of first-round picks, first Eric Maynor and now the No. 18 selection. The next step is important for Oklahoma City, since adding three rookies to a roster that's already loaded with young talent doesn't seem to make sense. Ideally, the Thunder will use two of the three picks to move up, and drafting a player to stash them overseas or dealing for future picks are also in play.

In addition to the pick, Cook is hardly a typical contract dump. His salary for next season ($2.2 million, per Sham Sports) is perfectly reasonable, and Cook brings to Oklahoma City a skill (perimeter shooting) that is still in relatively short supply there. The Thunder has a chance to look at Cook next season and see if he can return to usefulness as a reserve; if not, Oklahoma City can cut bait at the end of the year with no further obligation.

Join Kevin and the rest of the Basketball Prospectus crew to chat about the NBA Draft live tonight. Follow Kevin on Twitter at @kpelton.

Kevin Pelton is an author of Basketball Prospectus. You can contact Kevin by clicking here or click here to see Kevin's other articles.

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Transaction Analysis (06/23)
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Transaction Analysis (07/14)
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Drafting by Similarity (06/24)

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