While it pains me to basically just re-post what I originally posted five days ago before I was convinced to edit my original piece, now that we have apparently as definitive of an answer on the topic as we’re going to get from the great Howard Beck from the New York Times, I figured it made sense to share the situation (which, again, has finally been verified by Beck).
Here, then, is the contract status for Jeremy Lin…
Lin is not eligible for so-called “Early Bird Rights,” which means a player that has played for a team for at least two years. In the NBA CBA, you can transfer your Bird Rights if you were traded from one team to another. So if Lin had been traded from the Golden State Warriors to the Knicks, the Knicks would have his “Early Bird Rights.” However, since he was waived by the Warriors, as soon as he was waived, his Bird Rights reset. Therefore, Lin counts only as having played for the Knicks for one single season.
Landry Fields, having played for the Knicks for two years, has “Early Bird Rights.” What it basically comes down is that the Knicks are allowed to go over the cap to pay Fields anything up to the average salary (which is roughly $5 million). Since Lin has no Early Bird Rights, the Knicks are not allowed to go over the cap to re-sign him (besides a general raise of paying him 125% of his current salary – this is an exception available to all free agents in the NBA. Their current team can offer them a raise for the next season of 120% of their current salary. For Lin that’d be roughly $1 million (it is 125% for Lin since he is a restricted free agent, and your qualifying offer for a restricted free agent has to be at least 125% of the player’s current salary, so that is the bare minimum the Knicks can offer Lin for next season – that extra 5% is no chump change).
Since the Knicks will be over the $58 million salary cap this offseason but under the $70 million luxury cap, the Knicks will have access to both of the major exceptions. The Bi-Annual Exception (which is roughly $2 million and available, naturally enough, every other year – so long as you’re over the cap and under the luxury cap) and the Mid-Level Exception, which is roughly $5 million (available every year, provided you are over the cap and under the luxury cap). They can pay Lin under either of the two.
Where the Knicks luck out is the fact that both Lin and Fields, since they’re coming off their initial two-year contracts (while the Knicks did not gain Lin’s Early Bird Rights, they at least did inherit his original two-year contract), they are both restricted free agents this year. Not only that, but they are governed by the so-called “Gilbert Arenas Provision.” This limits the amount of money other teams can offer either Lin or Fields to a maximum starting salary of the average NBA salary (roughly $5 million).
Since the Knicks own Fields’ Early Bird Rights, they can match any offer without having to use their mid-level exception. However, since Lin does not have Early Bird Rights, the Knicks would have to dip into their exceptions (and almost certainly the mid-level) to match any offer sheet for Lin.
So the good news is that the Knicks are guaranteed to be able to keep both Fields and Lin if they want to. The bad news is that if anyone makes an offer of over $2 million to Lin, the Knicks would have to dip into their mid-level exception to pay for it, therefore effectively nullifying the MLE as a tool to sign a good free agent (like, say, Steve Nash). So they might be in a situation where they would have to choose between Nash and Lin. Who would you choose?
One tricky aspect of the Gilbert Arenas Provision is that teams could still sign Lin to deals bigger than just the MLE times however many years (like 4 years/$20 million), they just can’t have the first two years be larger than the MLE so that the Knicks cannot be outbid. The first year has to be for $5 million. However, if a team is, say, $11 million under the cap, they can offer Lin a 4 year/$44 million contract (you have to be currently under the cap by whatever the average yearly figure of the deal is). The first two years would be for the MLE and then the last two years would be backloaded so that the entire deal would average out to $44 million (so the first two years would be $5 million a year and the last two years would basically have to be $16 million a year each). It is highly unlikely that a team would throw such backloaded payments into a deal, as it is not good for anyone’s salary cap, but I can imagine a team figuring that it would be especially bad for the Knicks, what with the increases in Melo and STAT and Chandler’s salaries in three years. Imagine the luxury tax that the Knicks would have to pay! So do not be surprised if a team tries to give Lin a deal for more than $5 million a year. Still, if Dolan is willing to pay the luxury tax, then the Knicks cannot be outbid.
So that’s pretty much it. The Knicks can keep both Fields and Lin, but if they keep Lin, they are pretty much saying goodbye to any other notable free agent. With the way Lin is playing, though, that is not such a bad thing.
Thanks to Larry Coon for his invaluable Salary Cap FAQ, which turned out to be absolutely right on target (as it said “If a player is waived and is claimed by another team before he clears waivers, then his Bird clock resets”). And thanks to the aforementioned Howard Beck!