Most of Pat Riley’s end-of-season press conference Friday was tailored toward the franchise’s future. He didn’t have any opening statement–atypical for the Heat’s president–instead jumping into the meat and potatoes of the tumultuous season that was the 2024-25 Miami Heat season, plus brushing the surface of what is to come.
One of the fine details that Riley, 80, discussed was the luxury tax. Miami tried to get out of the luxury tax at the 2024-25 trade deadline, but was unsuccessful, becoming a tax team for the second-straight season.
Riley mentioned that a goal is attempting to avoid repeater tax penalties, triggered by being a luxury tax team in at least three of the previous four seasons.
“Now, because of these different CBA machinations — that have to do with repeater tax, the first apron, the second apron and the penalties that come with it — there’s a different thought process,” Riley said. “It’s a little bit different about how you plan now. It could come through trades. It could come through the addition of one or two very good players. There’s always still going to be with us, improvement from within. But I don’t think we can go there.
“I think we have to make an adjustment … I think we can handle that. This is not a priority, but it is in order to manage the final part of the team and the roster. And there’s a couple of teams that simply are so far over that they will start feeling the punitive consequences of draft picks being frozen or dropped to third or whatever. But I think we’ll probably try to get out and then get back and reset it.”
Miami has been a luxury tax team in each of the last two seasons; it paid a $15.3 million fee after 2023-24 and a $4.3 million fee after this season.
The Heat were trying to get under the tax ahead of February’s trade deadline with Kyle Anderson’s $8.8 million contract. They had a deal completed to send him to Toronto … until it wasn’t, with the Raptors backing out before they acquired Pelicans star forward Brandon Ingram.
Miami has roughly $9.4 million in luxury tax space heading into 2025-26, according to Spotrac. Though that’s before potentially re-signing Davion Mitchell, who is entering restricted free agency this offseason.
The league’s luxury tax threshold for 2025-26 is expected to be roughly $187.9 million.
The repeater tax penalties for being in the luxury tax will be far more onerous beginning next season, especially for teams who are at least $10 million into the tax. If you’re not a contender, there’s no point in triggering the repeater tax with how punitive the penalties become.
Miami did not pay the tax after 2020-21, 2021-22 or 2022-23. It has not been deeper than $10 million into the tax since 2012-13, according to Spotrac.
Riley made it known that the Heat weren’t going to “RIB it,” (run it back) but not only does it take two to tango, we don’t know the line of delineation between what “running it back” means versus the inverse; we all probably have different definitions of it. Changes will be made, but how drastic?
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As noted, the repeater tax can be egregious. It can limit who you can sign, for how much, make trades harder to complete, and even affect your draft picks. I know people don’t like to hear that, but it’s not like other sports where you can spend any amount you’re able to.
Exactly why Heat needs to use this summer, 2025-2026 season and next summer to draft 2 players, get rid of players on expiring contracts, evaluate young players and develop a strategic plan for the future.
I don’t disagree. But I still don’t think that will happen. I would rather you and others be right on this one however.
“The repeater tax penalties for being in the luxury tax will be far more onerous beginning next season, especially for teams who are at least $10 million into the tax. If you’re not a contender, there’s no point in triggering the repeater tax with how punitive the penalties become.”
I hope Riley doesn’t act impulsively and try to fix the problem all at once by trading away the future the way Phoenix did.
I think they’ll find a way out of the tax to avoid getting hit with the repeater.