Remember July, 2012? The NBA Players’ Union had just won an arbitration case against the league that redefined whether players retained their “Bird” rights through the waiver process. It was a relatively trivial ruling for most of the league, but a coup for the New York Knicks, whose top two free agents, Jeremy Lin and Steve Novak, had both been claimed off waivers to start the season (and both had played their way into significant salary raises). Lin, of course, was coming off his meteoric rise to international fame, and the New York fan-base exhaled in a collective sigh that they weren’t going to lose their newest folk-hero to the draconian salary cap (since Lin was a restricted free-agent, the team could now match any offer without salary cap restraints).
Well, as it turned out, even with the ability to exceed the cap and match any offer, the Knicks opted to only sign one of their two free agents: the sweet-shooting, sour-everything-else Steve Novak.
The Knicks never stated an official reason for not matching Lin. The transaction was relayed to the press by a spokesman who stated “I can confirm we are not matching”.
And that was that. The unceremonious end of Linsantiy.
Of course, though it wasn’t stated publicly, there was obviously a reason the Knicks opted to let Lin walk to Houston, and many sought to understand how Lin, a virtual lock to return to the Knicks in the wake of the arbitration victory, was suddenly gone. Certainly the ultimate decision rested with team owner and MSG chairman James Dolan, through whom all major transactions had to pass. Stories came out that Dolan felt “betrayed” by Lin. Others reported that Carmelo Anthony, Dolan’s most prized-player, had called Lin’s contract “ridiculous”. Statements made by the neoteric JR Smith, a CAA client to whom the Knicks possibly had a silent agreement with to re-sign on the cheap side in exchange for future considerations, indicated that Lin’s contract would create jealousy amongst the other Knicks.
But the MSG spin eventually repainted it, not as a personal vendetta, but as a shrewd business move in the changing face of NBA economics. The contract, it was estimated, could cost the Knicks upwards of $28 million in taxes alone it’s final year, due to the new Collective Bargaining Agreement’s escalating luxury tax on high spending teams.
Effectively, a line had been drawn in the sand. James Dolan, who over a previous six year span had forked over $190,089,121 in luxury tax payments (all for an average of 31 wins/year (yes, that’s $1,016,519.64 in taxes per win!)), had reached his breaking point. The thought of paying an extra $28 million for a player was simply too painful to swallow, and, in the name of born-again fiscal responsibility, Dolan cried “uncle!”
It served to quite the hysterics. Who among the critics would personally feel good about writing a gratuitous $28 million dollar check to David Stern? And for those of us that spent years pleading for fiscal responsibility in the face of Isiah-nomics, it was impossible to argue against. Had Dolan changed? Would there be no more gross overpays for middling talent? No more Malik Roses, Antonio Davises, Mo Taylors, Jerome Jameses, Jalen Roses, Shandon Andersons, Jamal Crawfords, Stephon Marburies, Howard Eisleys, Eddy Currys, Steve Francises, or Jared Jeffries. Jeremy Lin, it seemed, was a small price to pay for a long-term commitment to franchise building.
Then, almost a year to the day that Jeremy Lin was poached by the Rockets, along came Andrea Bargnani.
$23,362,500 over the next two years for a player that’s been the poster-boy for under-performance. Yes, that is more than Jeremy Lin stood to make over the same amount of time (both contracts expire on July 1st, 2015). And, just as was the case with the Lin offer, the Bargnani contract had no salary cap impact and wouldn’t have any bearing on future flexibility. The only negative rested in the tax it would levy on just one man: James Dolan.
Which brings us to the titular question: is James Dolan a hypocrite?
There is a simple way to determine this. Add up the numbers and see if Dolan truly was thinking with his wallet, or if there were ulterior motives at play. If he is paying less tax on Bargnani’s contract than he would have for Lin, then the Knicks’ highroad fiscal preparedness position should not be questioned. If, however, the taxes for Bargnani add up to more than what Lin was estimated to have cost, then it would appear that James Dolan, in typical James Dolan fashion, cut off the nose of the franchise to spite it’s face.
So, let’s look at the numbers:
Entering free agency in 2012, the Knicks had four long-term contracts in place: the big-three of Anthony, Stoudemire, and Chandler, along with Iman Shumpert’s rookie deal, for a 2015 total of just under $64,000,000. By the time of the Lin decision Jason Kidd had already been added, adding another $3,090,000, and the Marcus Camby trade had been agreed to and a contract was being worked out that would eventually extend to 2015, but of that, only $646,609 was guaranteed, effectively making it, for tax purposes, a minimum contract slot hold. Also, during the Lin deliberations, the Knicks allowed Landry Fields to leave for Toronto, but agreed to a long-term contract with Steve Novak that would add another $3,445,947 toward the 2015 pot. And, of course, in the frantic days that surrounded Lin’s departure, replacement Ray Felton was added for four years, including $3,793,693 to the all-important 2015 figure. The rest of the roster was then fleshed out with short-term minimum salaries (with the lone exception of JR Smith’s more complicated 1 year deal), bringing the 2015 total to $74,287,896. If Dolan had decided to match on Lin, and had kept all other moves the same (including bringing in Felton for linsurance), the 2015 projected total would have been $89,087,896, significantly above the tax threshold.
Jump forward one year and the 2015 outlook has changed. Off the books are Jason Kidd (retired) and Steve Novak (traded), clearing $6,535,957. At the same time, marginal raises were given to two of last year’s minimum slots (Prigioni and World Peace) totaling $1,800,121. Also, the team added the guaranteed $1,250,640 of first-round draft pick Tim Hardaway, as well as the (as-promised) raise to JR Smith of $5,982,385, totaling $78,066,964. Add to that the big addition of the summer, the aforementioned Andrea Bargnani, and the $11.5 million committed to him in 2015, bringing the current 2015 projection to $89,566,964.
So, is the Bargnani tax going to cost as much as the Lin levy was estimated to have been?
Because of the “poison pill” structure of the contract Lin signed with Houston, Lin would have been owed $14.8 million by the Knicks in 2015 (or, $3.3 million more than Bargnani stands to make that year). Because the new luxury tax has an tiered system, the higher a contract goes over the threshold, the higher the tax rate. So that extra $3.3 million would have been taxed $2.50 for every dollar paid to Lin. Doing the math, Bargnani’s tax bill in 2015 will be $19,999,997, whereas Lin’s, as stated, would have been $28,000,000.
So, is James Dolan a hypocrite?
The answer, it seems, is no. Dolan will save $8 million dollars in 2015 by paying Bargnani instead of Lin. He has not crossed the line in the sand that was drawn during the Lin saga. He still has a foot solidly placed on the high road. Instead of the irresponsible $43 million Lin would have cost him in 2015, Bargnani will only cost him a healthy $31.5 million. By this standard, Dolan is not a hypocrite.
However, what isn’t represented in this total is the amount that Bargnani will cost the Knicks in 2014. Lin only stood to earn $5,225,000 this coming season–a season in which Bargnani will be paid $11,862,500 ($6,637,500 more than Lin). 2014 is the first year of the incremental tax structure, so Bargnani’s taxes will cost Dolan $12,843,748 more than Lin would have, which evens out the 2015 poison pill. Andrea Bargnani will ultimately cost the Knicks more over the next two years than Lin would have, had the Knicks matched.
But the line in the sand wasn’t drawn around 2014. It was 2015 that the argument against Lin was based on, and in 2015 James Dolan will, technically, save $8 million dollars.
The question then becomes: what will Dolan do with the $8 million that will be burning a hole in his pocket in 2015? Only time will tell. But one thing we do know is that $8 million doesn’t go very far in the world Dolan lives in. It comes up a few million short of buying a sexual harassment settlement. And it’s not even half the way towards paying Larry Brown not to coach the Knicks again.