From a purely basketball standpoint, there are very few fans and GMs who would take Raymond Felton over Jeremy Lin (and Jared Jeffries!). But Houston's offer sheet to Lin, with that massive $15 million salary in the third year, makes this about a lot more than basketball, or Linsanity. As the Knicks are currently constructed, Jeremy Lin would cost them about than $58* million in 2014-2015.
That's what Carmelo Anthony was referring to when he called Lin's contract "ridiculous," and it's sort of hard to argue.
Here's how $14.8 million in Lin's pocket skyrockets to $58.3 million in James Dolan's checkbook. It starts with a loophole in the Gilbert Arenas provision, which penalizes a team looking to match an offer sheet. In this case, the Rockets can average Lin's salary against their own cap—roughly $8.4 million a year. But the Knicks, if they were to match, would take a hit on each year's actual salary. So in 2014-2015, they'd be on the hook for all 15 million.
There's a very good chance every dollar of that would be above the cap. 2014-2015 is the final season on the deals for Carmelo Anthony, Amar'e Stoudemire, and Tyson Chandler, and the three are set to make a combined $61.5 million that season. Expect the salary cap in 2014 to be close to this season's cap of around $58 million.
The Knicks are allowed to surpass the soft cap, but it'll cost them. Considering 2014 will be the Knicks' third straight year over the cap, they'll come in for the highest tax rate allowed in the new CBA. Take a look at the "repeat offender" taxes:
- The first $5M of Lin's deal, as long as it's all over the cap, would cost the Knicks at a 2.5-to-1 ratio. So that's $5M for Lin, $12.5M in luxury tax, $17.5M all told.
- The next $5M would be taxed at 2.75-to-1. So, $18.75M in total.
- The final $4.8M, at a 3.5-to-1 tax, would cost $21.6M by itself.
All told, that's $57.85 million for one year of Jeremy Lin—$43 million of that in pure luxury tax payments. (This is exactly how the salary cap and luxury tax are supposed to work. Want to lock up three players to max deals? Don't expect any flexibility in signing the rest of a team.)
You can make that point that Lin's expiring deal would make a pretty appealing trade chip. Or that the Knicks have only themselves to blame for being in luxury tax hell. (Remember re-signing Chauncey Billups just to waste the amnesty on him a few months later?) But this is where the Knicks are now, and the choice they're faced with. You can't exactly call Dolan cheap, since he already committed to blowing past the salary cap before Lin even entered the picture. 58 million dollars is a lot of money. The last time the Knicks broke the bank on a player based off a good month of basketball, his name was Jerome James, and he barely cost half this much.
Update, 5:20 p.m. EDT: We got the luxury tax rate wrong, as the Knicks were over the salary cap this past season, but not over the luxury tax threshold. So the "repeat offender" hike would kick in in 2015-2016. ESPN, after consultation from Larry Coon, downgraded the maximum Lin would cost the Knicks to $43 million.