Here's the deal ... the 66-year-old was reportedly praising his Cleveland squad during a film session when he told them they were no longer "playing like a bunch of thugs."

Obviously, the term has an offensive connotation ... and, according to ESPN's Adrian Wojnarowski, players were "stunned" by their head coach's comment.

But, Beilein attempted to clear the air after Cavs general manager Koby Altman brought the situation to his attention ... with the coach saying he meant to say "slugs," not "thugs."

"I didn't realize that I had said the word 'thugs,' but my staff told me later I did and so I must have said it," Beilein told Wojnarowski on Wednesday night. "I meant to say slugs, as in slow-moving. We weren't playing hard before, and now we were playing harder. I meant it as a compliment."

Beilein said he already had personally talked to eight of his players over the alleged mix-up, adding, "they are telling me that they understand."

It's been a rough start to Beilein's NBA coaching career ... after being hired this past offseason, the ex-Michigan coach has struggled to adapt to the pros.

He's just 10-27 this season ... and has reportedly riffed with team star Kevin Love throughout his short tenure in Cleveland.