The Rockets have verbally agreed to a three-year contract worth $24.5 million with restricted free agent Omer Asik, worth about $5 million each in years one and two, and climbing to a ridiculous $14 million in the final year. The Bulls, who have the opportunity to match the offer, would find themselves in luxury tax hell. Meanwhile, there's speculation that a team (the Raptors?) could offer a similarly backloaded deal to Jeremy Lin, which could pay him $15 million each in years three and four. The Knicks, like the Bulls, couldn't feasibly offer the same, not with the team as currently constructed.
This was not how owners pictured the Gilbert Arenas provision working.
To acquaint yourselves with yet another dimly lit junction of the NBA's labyrinthine salary structure, read Larry Coon's rundown of the Arenas rule, which was intended to allow teams to hang on to their own players. It was spurred by and named for Arenas's 2003 contract offer from Washington: $60 million over six years. Since Arenas wasn't a first-round pick, the Warriors had no exception to use on him, and couldn't match the Wizards' offer. So in the 2005 CBA, the owners made sure to include new language, which extended Bird and Early Bird rights to non-first-round picks, to make it possible for teams to re-sign homegrown stars saved from the scrap heap. It was named after Arenas, but it was for the future—out-of-nowhere guys like Jeremy Lin. (At issue last month was whether Bird and Early Bird rights could be extended to players who were picked up on waivers. An arbitrator ruled that they could.)
But the Arenas provision had a loophole, fought for by the players' union to keep younger stars from being locked in at league-average salaries for too many years. The Rockets and Raptors can only offer Asik and Lin the midlevel maximum over the first two years, but in the years after that they can offer anything they want.
This has never been an issue until the 2012 offseason. The Bulls and Knicks had, and still have, the right to match contract offers, even backloaded ones. But the cap hit is calculated differently for new and old teams. As John Hollinger explains, the Rockets' charge would be averaged over the length of the contract— $8 million annually. But the Bulls' hits would be $5 million, $5 million, then $14 million in 2014-15. And with the incredibly punitive luxury taxes added to the newest CBA, taking a bath for Asik—a great defender and woeful scorer—just isn't feasible for Chicago. Same with the Knicks, who will still have max deals for Anthony, Stoudemire and Chandler on the books when Lin's due for a pay raise in two years. That's why it's called a "poison pill" contract: you can take it, but it's not going to sit well.
It's a massive loophole that circumvents the entire purpose of the Arenas provision, but it's not one the owners will be able to close in the next CBA without bloodshed. Right now, Jeremy Lin has played roughly two months of great basketball. He can earn about $25 million from the Knicks, or $40 million from another team that has future cap space cleared. The union's not about to leave him, and future players like him, without that latter option. And the Knicks? When you sign three max players, it's kind of assumed that you're punting on flexibility.