The Stretch Provision

There’s been some chatter this morning on Twitter revolving around the stretch provision, so I thought I’d give everyone a quick explanation.

The stretch provision allows for teams to cut a player, then “stretch” out his contract for two times the remaining length, plus one additional year. As an example, let’s use Jeremy Lin.

Jeremy Lin’s deal – either paid for by the Knicks or the Rockets – will pay him $25.1 million over three years. The first two years, valued around $5 million each, are salaries to pay, but the third year’s “poison pill” of $15 million has given the Knicks fits. If Jeremy Lin is a complete bust, the Knicks could cut him after year two, and stretch out his contract two years. Under such a circumstance, the Knicks would have three-years to pay Jeremy Lin the remaining $15 million of his deal, allowing them to pay $5 million a year to the released Lin.

The stretch provision is only applicable to contracts signed under the new CBA, so for the Knicks, Jason Kidd, Raymond Felton, Marcus Camby, Steve Novak, as well as Jeremy Lin’s deal would all be eligible.

Now, I do not think the stretch provision is the best way to deal with Lin if he proves to not be worth the money, because as I’ve noted before, his $15 million expiring contract will be one of the most tradable expiring deals in the history of the NBA.

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  • KTAB

    A safety net, makes this a no decision. SIGN HIM!!!

  • watching

    It is beyond idiocy that this is even being debated. I really hope for the sake of the franchise and for us the fans all this sturm and drang represents a crazy little interlude of our Twitter Culture run amuck. This decision looks like such a no brainer.

    The McDysse, Marbury, Jerome James and Curry deals were at least arguably reasonable at the time they were made. Yes they were, in hindsight, disasters of one level of magnitude or another and each created a synergy of evil effects that when combined with the next miscalculated move ultimately reduced the Knicks to a league-wide laughing stock. The Melo deal may well have been a knee jerk overpayment and panic driven move; No one can be sure yet. But not matching Lin bears all the ear marks of a major mistake prior to its completion. This one is clear before it happens. He has to be matched.

    I really don’t want to insult Jim Dolan. I just hope he’s thinking here and not reacting angrily to something that really should have been quite predictable. That is someone offering Lin a poison pill deal and Lin agreeing to it. Lin is a basketball asset, he is a revenue asset and he is a social and marketing asset. He represents a windfall the Knicks reaped through luck as well as some attention to detail. You simply can’t walk away from that level of value for no return. I really hope the reality is that the boys at 31st and 8th don’t have to think too hard about this and that they’ve known what to do all along. It should be apparent: He has to be matched.

    If they are still worrying themselves over this I ‘d ask how Mr. Dolan, you could even contemplate not letting us have the kid on our team? After all we’ve been through with you over the years we are still here. Would you really let this happen? Can you?

    I hope they get it right.

  • joeknix

    I am a little confused. So, they can cut Lin and stretch the contract over 2 years . . . and pay him back over 3? Then what is the cap implication in penalty if they are over the tax threshhold . . . 5M for 3 years . . . or 7.5 for 2?

    Not to mention, just to sweeten the pot, the Knicks will have only Iman Shumpert under contract in the year following Lin’s 3rd year so it is very likely they’ll get the house in order financially for that season and not be subject to the tax anyway.

    OK, so now we know for sure if they let him walk it is for a reason other than money.

  • Dpaperz19

    His value has to take precedence, if Dolans ego allows Lin to leave with out any return. The salary cap will limit every team, we must attain what value there is and not worry about the salary. Luxuary tax, seriously we talking salary cap (Iverson voice).

  • kofi

    sign him or yaa will be boooo

  • guest123

    Once again the f**king knicks managment makes a bad decision by not signing JLin. Dolan’s ego is bigger than Donald Trumps. This organization does not know a winning player from hole in the wall.