The New York Knicks had until tonight at midnight to decide if they would match the offer sheet Jeremy Lin signed with the Houston Rockets. According to Howard Beck of the New York Times, the Knicks have decided not to match the offer.
When word of Lin and the Rockets reaching an agreement on this offer sheet was first announced, the Knicks were thought to without question be planning to match it. Then the Knicks traded for Jason Kidd and Raymond Felton and their plans to keep Lin went away.
Lin will make $25.1 million over three years with the Rockets. Had the Knicks matched they would have paid Lin $5 million in year one, $5.225 million in year two and then a whopping $14.8 million in the third year.
By that third season if the Knicks kept Lin they could incur a tax penalty of around $43.75 million.
That seems like a lot but the Knicks would have more than made up for that in other profits the team would see because of Lin.
The stock of Knicks parent company MSG is up 20 percent since Linsanity began, with Nate Silver of the New York Times reporting that MSG’s market capitalization has gained $600 million since that fateful day in February when Lin took over as the Knicks’ starting point guard.
So what happens to MSG if the Knicks fail to retain Lin? “As of late Monday morning, on the mere possibility that Lin might not be re-signed, MSG stock had lost about $50 million in market value,” Silver wrote. This was on a rumor — imagine what the company’s losses will be if losing Lin becomes a reality.
The Knicks would have other options too in dealing with Lin’s loaded third year. They could trade him before that season or waive him. If they were to waive him, the new “stretch provision” in the CBA would have allowed New York to stretch out Lin’s 2014-15 salary over three seasons giving them more cap room for those years and much less of a luxury tax hit.
It is hard knowing this to think why the Knicks could possibly decide against matching Houston’s offer for Lin. They’re letting a 23-year old point guard walk who took the city by storm last season and losing a ton of money in the process.
The Rockets and GM Daryl Morey are more than happy that they will get Lin. Lin will make a huge impact in terms of jersey sales and ticket sales and is a great consolation prize for Houston if they are unable to land him.
The Rockets’ point guards thrived in a pick-and-roll heavy system last season very similar to how Lin thrived under Mike D’Antoni when he first came on. It will be a better basketball fit for Lin in Houston.
The Rockets also don’t have to pay Lin the huge 2014-15 salary and risk tax penalties then. They have the cap space now and will have a cap hit of around $8.3 million each season instead.
Houston still plans to keep trying to trade for Dwight Howard. Lin may not help the situation much and could put Houston in a tougher situation than they were before to land Howard, especially if Chicago chooses not to match Omer Asik’s offer sheet Houston offered him.