Miami is sending guard Josh Richardson to Philadelphia as part of the deal, sources said.
The other parts of the deal were still being negotiated Sunday night.
"In analyzing it, his salary was too high based on other things they're trying to do," Duffy said.
Out of respect for Dragic, the Heat are working with him and his representatives to find a trade partner by Saturday, league sources told Shelburne.
Dallas has been pursuing perimeter help in free agency, with an emphasis on tough defenders accomplished as 3-point shooters.
It has been an eventful two years for Butler. The No. 30 pick in the 2011 NBA draft by the Chicago Bulls developed into a three-time All-Star in the Windy City -- only to be traded to the Minnesota Timberwolves and reunited with his former coach, Tom Thibodeau, two summers ago.
Then, after getting Minnesota to its first playoff appearance without Kevin Garnett on the roster, Butler requested a trade last fall. After a chaotic few weeks, he eventually landed in Philadelphia in exchange for forwards Robert Covington and Dario Saric in November. He was later joined by Tobias Harris, whom the Sixers acquired just before February's trade deadline, to create arguably the NBA's most star-studded lineup.
Heat find Wade's replacement in Butler
Ramona Shelburne reports that Jimmy Butler is going to the Miami Heat in a sign-and-trade with the 76ers; Rachel Nichols, Matt Barnes and Chiney Ogwumike discuss
Butler's time in Philadelphia was rocky, but he ultimately proved to be exactly what the Sixers hoped he would be in the playoffs: the kind of closer the team believed it was lacking after a disappointing loss in five games to the Boston Celtics in the Eastern Conference semifinals in 2018. Philadelphia, however, fell just short of beating the eventual champion Toronto Raptors in the East semifinals thanks to Kawhi Leonard's insane four-bounce buzzer-beater in Game 7.
Butler, who turns 30 in September, averaged 18.7 points, 5.3 rebounds, 4.0 assists and 1.9 steals in 65 combined games in Minnesota and Philadelphia this past season.
Information from ESPN's Tim Bontemps was used in this report.