The Knicks might not resign Jeremy Lin after all.Lin recently won an appeal that allowed the Knicks to offer him a contract that could exceed the salary cap. But now it looks like another team could blow NY out of the water with a backloaded, “poison pill” contract.
Here’s a quick explanation for what that all means:
There’s this rule — named after Gilbert Arenas — that allows a team to offer a restricted free agent the mid-level exception for the first two years of the contract, and the maximum amount in the last two years, regardless of the salary cap. So, for example, the Houston Rockets just signed Omer Asik on a three-year, $25.1 million contract worth $5 million in the first two years, and $15 million in the final year.
The Bulls could have matched that offer and resigned Asik. But it would have cost them $15 million against the salary cap in that third year — which would cost the team oodles of money under the new punitive luxury tax system. Because of a big loophole, Houston is allowed to spread the cap hit of Asik’s contract over all three years, meaning it will only cost them $8 million against the cap in the third year.
It’s kind of complicated, but here’s what it means: A team like Toronto could offer a four-year, $40 million poison pill contract to Jeremy Lin, where he would make $15 million in each of the last two years.
If the Knicks matched it they’d be in salary cap and luxury tax hell in 2014-15.
They’d be paying Carmelo Anthony, Amar’e Stoduemire, Tyson Chandler, and Lin more than $10 million each, which would be allowed under the salary cap, but insanely expensive under the luxury tax rules.
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