Where are the Miami Heat Going? A Few Ways of Thinking About the Future of the Heat
Recently, there’s been loud clamor about the Miami Heat’s disappointing 13-15 start coming from pundits and fans alike. The cold start has led many to the conclusion that the Heat should pursue a complete overhaul. Whether it means trading a star player, tanking for a top lottery pick, or both, this crowd thinks that the front office should pursue the nuclear option.
There is a certain context in which this strategy makes sense—and can even reap serious benefits. Indeed, there’s an analogous approach to buying and selling assets in the stock market; we might call it the day trader’s philosophy. The day trader is an individual who liquidates as many assets in their possession as they can in order to short a stock whose price has become exorbitantly inflated. Put plainly, this individual will take great risks for the sake of the greater reward that could follow them.
We see the day trader’s philosophy in action in many front offices across the NBA. When he took over as President of the Minnesota Timberwolves, Tim Connelly wanted to make a splash, signaling that the Wolves were all-in on competing.
This splash came in the form of a world-shaking trade, as he swapped Malik Beasley, Patrick Beverley, Leandro Bolmaro, Walker Kessler, Jarred Vanderbilt, four first-round picks, and one pick swap for one of the greatest paint protectors of all time, Rudy Gobert.
This was not, to continue our analogy, a modest purchase of an Index Fund that tracks the S&P 500. Instead, it was more akin to selling your car to buy the dip on Bitcoin. Tim Connelly, in other words, exercised the day trader’s philosophy. So far, the cost of his play has been steeper than the reward.
But consider another approach to the market altogether. In stark contrast to the day trader’s philosophy, is an investor who may dollar-cost average their way into the market. Whether the market is bullish or bearish, the investor will purchase the same amount of the same asset at the same time every month. Usually, this asset will increase in value much more modestly, but steadily, over time.
This is an individual who always reinvests dividends and prefers an ETF to a common stock. They may allocate some of their buying to risky assets, but they will likely limit such spending to a small fraction of the whole. In short, they understand that great rewards could come at low cost with low-risk moves, but that it will take time, patience, and dedication to principles for those rewards to manifest themselves.
We see the investor’s philosophy present in organizations like the San Antonio Spurs. Through highs and lows, they committed to one coach, a stable group of core players, and rode out mediocre or disappointing seasons knowing that their unwavering commitment to a set of trustworthy individuals would pay off.
Of course, the investor’s approach isn’t flawless. The Spurs, in hindsight, likely would have gotten a greater haul for Kawhi Leonard had they sold earlier. They perhaps should have made a more concerted effort to lose games in the post-Duncan-and-Leonard eras. They could have, and maybe should have, taken a few more risks.
With these two models in mind, we should be asking ourselves, Which model has the Miami Heat front office adopted in the past and which should it adopt going forward?
In response to the first question, the Heat appear to be consummate investors. They have had the same President in Pat Riley since 1995. They have one of the longest-tenured head coaches in the NBA in Erik Spoelstra. Between Riley and Spoelstra, the front office positions have been filled by many of the same names for decades now.
The team’s infrastructure has remained intact for almost 30 years. While there have been occasional big risks that came with big rewards – consider the trade for Shaquille O’Neal and the assembly of the Big Three. There have also been big risks that have not panned out – signing Hassan Whiteside to a max contract, rewarding Duncan Robinson with a starting-level salary, and many more.
But throughout all of this, the risks have been occasional compared to constants. For instance, the Heat committed to faces of the franchise like Alonzo Mourning, Dwyane Wade, Udonis Haslem, and now Jimmy Butler. They have a tendency to invest in players who embrace a certain blue-collar mentality, who are willing to sacrifice individual success for the sake of the collective. What all these signs (and many others) point to is that the Heat have seldom been interested in day trading, taking the approach of an investor instead.
So, returning to the present, the question is, Should the Heat continue to stick to their core principles despite a slow start in the 22-23 season?
It might seem rational to say, No. They should blow this core up and start from square one. But then a new set of questions arise.
- What would they get in return for a core piece or two?
- When would they realistically be expected to compete for an NBA title again?
- Why punt on this set of core players when it’s not guaranteed that a future core could replicate the results we’ve already seen this core produce?
Of course, you might also think that, while the occasional gamble is healthy, the Miami Heat should stick to its long-term strategy. This would mean a more patient approach that could jeopardize their ability to compete this season but might see them at the top of the bracket once again in the near future.
What’s unsettling is that there are no definite answers to the question of where the Heat should go next. Based on the options before us and the past thirty years of this franchise’s history, I think I know which direction they’ll take.