I’ve gotten a bunch of questions about Jeremy Lin and his contract, so thought I’d just quickly give you all a rundown of what’s going on.
Last week, we learned that the Houston Rockets came to terms on an offer-sheet with Jeremy Lin. The reported value of the deal was four-years (with the fourth being an option), worth $28.8 million. Since it agreed to during the NBA’s moratorium period, nothing could be signed until the moratorium period ended on July 11th. As the clock struck 12:01 AM on July 11th, free-agents were allowed to sign with new teams, and restricted free-agents were permitted to sign offer-sheets. Numerous deals went down on the first official day of free-agency, but even more trickled in the following day.
Today marks the third day free-agents can ink deals, but Jeremy Lin has yet to sign his offer-sheet with the Rockets (UPDATE: It’s been signed. Terms after the jump). This is likely to do with the fact that the Rockets are going all out for Dwight Howard, and signing Lin to an offer-sheet will put some restrictions on salary they can take back – for the time being. According to Marc Stein, though, Jeremy Lin is in the process of signing the offer-sheet right now, which will leave the Knicks with three days to match it.
Some have asked why Jeremy Lin would even sign the Rockets’ deal, since he’s aware Knicks will match it. The answer is simple: Jeremy Lin cannot get the same amount of money from the Knicks, as he can from the Rockets. Since the Knicks don’t have the cap space to offer Lin such a deal, and Houston does, Jeremy Lin is using the Rockets to get the most money he can. The Knicks will be able to match any offer Lin receives – since they hold his bird-rights – but cannot sign him to such a contract outright.
It’s great, since Lin gets the money he’s worth and the Knicks get to keep the young point guard, but the one down side to the deal is that the contract the Knicks match is spread out differently for the Knicks, than for the Rockets.
UPDATE: Jeremy Lin has signed a three-year deal with the Houston Rockets worth $25.1 million. This differs from the originally reported four-year, $28.8 million deal, as the Rockets are trying to detract the Knicks from matching by making the “poison pill” year three larger. The breakdown of the contract is as follows: Year-one, Lin will make $5 million; Year-two, Lin will make $5.2 million and in year-three, Lin will make $14.9 million.
The Rockets can average out the $25.1 million deal to $8.37 million a year, while the Knicks will have to pay the above salaries.
The Knicks will match this offer, but expect them to wait the full three-days to make the Rockets hold Lin’s salary on their salary cap until they match.
Yes, the “poison pill” in year three is larger than expected, but the added luxury tax is nothing. Luckily, Dolan has no problem paying luxury tax, so Jeremy Lin’s deal will be matched.