Jeremy Lin, JR Smith, Landry Fields and The Knicks’ Cap Situation

Currently, the New York Knicks stand around $5.6 million under the $58 million, league-mandated salary cap. Unfortunately, the roughly $52 million tied up in contracts, only locks down five players for the 2012-2013 season. In order for the Knicks to fill out their roster to 15 players, they’ll have to make some choices, as well as some creative signings.

The Knicks will have three contracts to offer (sort of): The Mid-Level Exception (MLE), the Bi-Annual Exception (BLE), as well as the Veteran’s Minimum. The MLE is valued around $5 million, should the Knicks stay under the cap – otherwise it will be closer to $3 million; the BLE is valued at $1.98 million and the Veteran’s Minimum will cost teams $1.4 million.

In the N.B.A., a team’s owner starts paying luxury tax when their roster’s salary passes the luxury tax line. That line will be around $70 million for the 2012-2013 season. However, due to a special restriction, teams have a $4 million apron they can eat into, without counting as a “tax team.” If a team is above the $74 million, which includes the $4 million apron, they will only be eligible to spend a $3 million MLE, but should the team stay under that line, they are able to offer the full $5 million. Needless to say: a big difference.

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JR Smith has a player-option of around $2.5 million, but it’s not very likely he will pick it up – even if he wants to stay in New York. Should JR opt-out of his option, then choose to re-sign with the Knicks, he would be eligible for a 20% pay-hike from his 2011-2012 salary, resulting in a roughly $3 million contract for the 2012-2013 season. That extra $500,000 is a big difference, especially in the case of JR Smith, who is supposedly running his finances dry.

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Jeremy Linsanity is a unique case. Let me start off by saying he’s not leaving. Jeremy Lin will be staying in New York for the foreseeable future. Should Lin want to return to New York, without fielding other, more lucrative offers, he could come to terms on an offer-sheet with the Knicks, even before another teams offers him one. For Lin, such a scenario could limit his salary, but New York’s marketability could entice him to take a cheaper deal to make the team better. Should Lin sign an offer-sheet with another team, however, the Knicks will still be able to re-sign him.

Because of a provision in the CBA called the “Gilbert Arenas” rule, the Knicks will be able to match any offer Lin receives, since he isn’t eligible for a contract offer that exceeds the league average salary in its first season, which, conveniently for the Knicks, is valued just under $5 million, which they could cover by giving him their full $5 million MLE.

While the Knicks can match any offer for Lin, if Lin was to sign to an offer-sheet for $3 million or less, the Knicks would be able to save the $4 million apron to potentially makes trades that take back more salary, which could prove valuable. The one other problem with that scenario is that they also cannot use their Bi-Annual exception, which, if Novak returns, will likely go to him.

To recap the Lin situation, he’ll return to New York, the question is just at what price. Keep in mind that the maximum Lin could sign for is around four years, $34 million.

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To keep everything interesting, news surfaced that the N.B.A. players union is asking an arbitrator to clarify a few free-agent rights that could benefit the Knicks this off-season. I’m not going to bore you with all the legal talk, since Mike over at Knicks Bricks covered that, but I’ll get you all up to speed.

Basically, should the players union win, the Knicks will be able to keep Jeremy Lin and Steve Novak, because the Knicks will hold their bird-rights, as well as the $5 million MLE, then fill out the remaining roster spots with minimum contracts.

Should they lose, which is looking like the likely outcome, the Knicks will not hold the bird-rights to Lin nor Novak, re-sign Lin with the MLE, try to sign Novak with the BLE, then fill out the roster with minimum contracts.

A significant difference, to say the least.

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Landry Fields, is also a free agent this off-season. In order to re-sign Landry, the Knicks will have to use roughly $5 million of the $9 million they’ll have, after signing Lin to the MLE and being hard-capped. Fields is an interesting player, because while he’s effective with a point-guard, he’s completely invisible without one. For such a player, is it wise to spend five ninths of your available spending money?

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To recap, the Knicks need to fill out their roster with limited resources. Jeremy Lin will likely be back; the question is just at what price? Should he sign for $3 million, the Knicks will have a little more flexibility – the ability to take back some contracts in a potential trade – and should he sign for $5 million, which is the more likely scenario, they’ll have the BLE and veteran minimum contracts.

Should the players union win their arbitration, the Knicks will be able to keep both Lin and Novak, since they’ll hold they’re bird rights, use the full MLE, then fill out the roster with minimum salary players.

There are a ton of puzzle pieces in play; it’s time for Glen Grunwald to arrange them correctly. He did a tremendous job last year; now’s his time to prove if it was a fluke, or if he’s truly a skilled general manager.

Either way, the Knicks should have Linsanity back in the garden next season.

  • http://twitter.com/maximi1ien theNYKid

    Jeremy Lin, Steve Novak, and JR Smith should be the priorities (in that order in my opinion anyway). I think Jeremy Lin is smart enough to understand that if he takes a little less money and maybe even a shorter contract the marketing opportunities in New York are above and beyond anything he will see in another part of the US. To be honest I don’t think he would have accomplished what he did in any other city, and he owes his rise to stardom in large part to the knicks. Not that this ever means anything in the business which is basketball.. but I could see him letting go of some dough to play with better players around him, knowing good and well that lucrative endorsement deals are to come.. JR Smith while a useful weapon to have, really had me second guessing come playoff time. On the other hand Steve Novak also looked like shit during the series vs the Heat but that doesnt surprise me considering how poor our penetration was.. ZERO open looks for him and without that he is basically neutralized. We clearly need a shooting guard that can get to the rim and take some of the pressure off of Melo and I’m not sure any of our current options fit that bill. JR at times looks like that kind of player but I question his mentality/ability to produce consistently. To conclude I don’t see any of these guys on a championship calibre team so as far as I’m concerned maybe it’s best to let some of these guys (probably the ones who are asking for more $$$ besides Jeremy) go..