Lin's third year for Rockets v. Knicks

this has been talked about to nausea, but no that is not correct.

the rockets will pay lin 25 mill spread evenly over three seasons, roughly 8.3 a year.

the knicks would pay 5 mill in the first 2 seasons, respectively, and be taxed at 1.75 per dollar on 15 mill and would have to pay 30 mil+ in the third year of the deal. i'm not sure where they got 4.25 from.

 

I think $4.25 per dollar is for repeat offenders.

 

Not quite.

http://espn.go.com/nba/story/_/page/CBA-111128/how-new-nba-deal-compares-last-one

They would have until the end of the thrid year and they might be repeat payers but looking at 90+ million in contracts Lin might be very very expensive.

Also why it became a 3 year deal not a 4 year to maximize that last year.

Bleed red Rockets Red

Fierguard

 

the luxury tax his is actually an incremental increase based on how far over the tax a team is. The tables on the right reflect Luxury Tax impact, taken directly from cbafaq.com for repeat lux tax offenders.

 

[Sheridan Hoops] If matched now, Lin's third year would cost Knicks $57 million

http://www.sheridanhoops.com/2012/07/15/hamilton-for-knicks-linsanity-may-be-too-expensive/

Though Jeremy Lin may be Houston-bound, in New York City, the Linsanity continues.

Earlier this month, news broke that Daryl Morey, the general manager of the Houston Rockets had reached agreement with Jeremy Lin on a four-year offer sheet that would pay Lin approximately $30 million.

That offer called for Lin to earn approximately $5 million in each of the first two years and approximately $10 million in each of the final two.

All along, the Knicks were expected to match any offer for Lin, but over the course of the past 72 hours, things have changed drastically.

First, on Friday, the Rockets and Lin agreed to alter their initial agreement.

Instead of giving Lin a four-year deal worth $30 million in which the fourth year was a team option, the Rockets and Lin re-worked the agreement. The new deal was only for three years. The kicker, though, was that Lin’s third-year salary would increase by about 50 percent.

For the Knicks, instead of being on the hook for $10 million to Lin in the third year of the deal, the new offer made his third year salary about $15 million. By doing that, the Rockets may have made it prohibitively expensive for the Knicks to match their offer.

Beginning in the 2013-2014 season, the era of the NBA’s “Super Duper” Luxury tax—which I’ve written about previously—will begin.

What is most important to note about the luxury tax threshold is that it is a derivative of the league’s basketball-related income (BRI). As the league’s business grows and its profit increase, so will its salary cap, average player salary, and—yes—its luxury tax threshold.

Over the past 10 years, the NBA’s BRI has increased by an average of about 3 percent, per-year. The truth of the matter, though, is that it’s impossible certainly predict what the salary cap and luxury tax thresholds will be in the future because it’s impossible to predict how much money the league will generate over the next few years.

But, if we functioned under the reasonable assumption that the league’s revenues will increase by 4 percent each year, this season’s $70 million luxury tax threshold would about $76 million for the 2014-2015 season.

The Rockets knew that for that season, the Knicks already had huge commitments to Carmelo Anthony ($24 million), Amar’e Stoudemire ($23 million), and Tyson Chandler ($15 million). And after re-signing Steve Novak, signing Jason Kidd, and trading for Marcus Camby, the Knicks tacked on about $10 million to their books for the 2014-2015 season. Meanwhile, they will hold a fourth-year option on Iman Shumpert’s rookie contract at $2.7 million.

And since the Knicks own their first-round pick in the 2013 draft, they could have another $2 million on the books heading into that 2014-2015 season.

All of that to say that the obligations to Anthony, Stoudemire, Chandler, Novak, Kidd, Camby, Shumpert, and whoever they select in the 2013 NBA Draft will amount to approximately $77 million in 2014-2015.

In all likelihood, even without Lin’s $15 million salary for that season, the Knicks will probably be a tax team. However, they are guaranteed to be a tax team if they re-sign J.R. Smith next summer and add one or two more players to their existing core.

So, even before the Knicks agreed to re-acquire Raymond Felton on Saturday night, retaining Jeremy Lin and his $15 million salary in year three was a very expensive proposition.

If, for argument’s sake, the Knicks payroll was equal to the luxury tax threshold, adding an extra $15 million for Jeremy Lin’s salary would cost the Knicks a total of $43 million. They’d have to pay Lin’s salary, and the luxury tax payment for a team $15 million over the cap—in 2014-2015—will be about $28 million.

Now, after adding Felton, retaining Lin becomes even more expensive.

If the Knicks match Lin’s offer and end up being $19 million above the luxury tax threshold because of it, they would owe $41.75 million in luxury tax penalties, and when you include Lin’s $15 million salary, his total cost could be about $57 million.

When I pointed this out on Friday, most of my Twitter followers yawned at the numbers and reminded me that James Dolan prints money and probably doesn’t care. And as true as that may be, that’s an awful lot to risk on a point guard who has such a small body of work.

But now, after re-acquiring Felton, and after Anthony called Lin’s contract offer from the Rockets “ridiculous,” evidence seems to be amassing that the Knicks will elect to allow Lin to go to Houston.

For the Knicks, whether or not they match Lin has very little to do with their salary cap situation, and everything to do with their luxury tax situation.

During the Isiah Thomas regime, the Knicks routinely paid the luxury tax.

However, one important thing to consider is that Madison Square Garden—the holding company that owns the Knicks—is now an independent and publicly traded corporation. After going public in 2010 with an initial public offering of about $20 per share, on July 13, MSG’s stock closed at almost $37 per share.

Linsanity has a lot to do with MSG’s good stock performance, and I’m no economist, so perhaps I’m way off. But, if the Knicks found themselves paying hefty luxury tax penalties, is it ridiculous to think that could have an adverse effect the company’s earnings and its profit margins?

Would that have an adverse effect on its stock price?

I’m sincerely asking because I don’t know. But it is definitely something worth knowing, and it’s definitely something worth pondering as we await the official word as to whether or not the Knicks will retain Lin.

That’s what makes this entire ordeal so compelling. The Knicks are being painted into a corner and will be forced to roll the dice—one way or another—on a player whose true value and talent is so difficult to gauge.

Linsanity may have been a flash-in-the-pan sham. But Jeremy Lin may be a future All-Star and Hall-of-Famer. Odds are, he’s something between.

But either way, we don’t know for sure. Only time will tell.

And only time will just how much James Dolan and Madison Square Garden are willing to risk in finding out.

 

more or less. at level 4 you are basically dealing with a $0.50 increase for every $5MM you spend.

So for example, if the Knicks were to exceed the Lux Tax by at total of $23MM after signing the 7 additional players you note.

they would pay a tax of $4.25 on the remaining balance til $20MM and $4.75 on the remaining $3MM.

A total tax hit of $79.25MM

the Incremental Max column on the table gives an easy breakdown of what you are paying once you meet or exceed a threshold (just have to add the previous columns together)

 

I think Monday, at the end of trading, will be the day the Knicks will decide whether to match Lin as MSG stock prices will probably be the deciding factor. If there's no dramatic change, Lin will be a Rocket...

 

The Knicks screwed themselves with some of those deals if they were serious about matching Lin. Morey played them well.

 

Knicks management is so smart. lol, it is not Lin's contract that would contribute mainly to being $19 million above the luxury tax threshold. It is the other big contracts that they have. They are going to need changes on their roaster anyway.

5mil per for the first 2 years is pretty nice to have Lin. .

 

Lmao .. some of these NYorkers are clowns .. Listening to this guy on espn radio and he keeps going on and on saying "knicks probably not matching because Lin has a big head ,changed agents " bla bla bla ... If guys didn't get contracts because they had "big heads" ... well wtf there wouldn't be many players left in the NBA.

http://espn.go.com/espnradio/playPopup?s=nyc

 

Nice overkill Morey! Coffee is for CLOSERS!!! Doesn't hurt to flex your muscles once in awhile to remind people that you have things under control.

I'm not convinced that Lin is our future, but we have to get someone, and he's certainly showed promise. He's also young, and would fit our team whichever direction we ultimately go.

Lately, I've tried to remind myself that it's not my money, so what do I care how much we offer players. As long as the end product can be competitive for a championship, spend away.

 

Lin is special, you'll like him Rocket fans.:grin:

 

Honestly, I think Morey has pissed in the tea of and figuratively raped the Knicks more times than Michael Jordan did in his career.


Morey's finding new ways to pillage New York.

 

it's actually just simple math. if you are sensationalizing the numbers it just means you are too lazy to open excel.

taking what you hear and read off of ESPN certainly doesn't help either. the answers are out there if you are willing to look.

I wish more people would form their own opinions as opposed to taking the opinions of others as fact.

 

There seems to be a lot of misunderstanding on this topic. I posted the below in the other threads, but it got kind of lost after a while. I'm thinking I should have made a thread now, but this topic fits it well.

How Much Will Matching Lin Really Cost the Knicks?

If They Match

If the below referenced article is correct, the Knicks will be approximately 17 million over the LT with just 8 players in the 2014-2015 season. To fill out the remaining roster spots, we'll add a conservative 14 million (or 2 million per 7 players). The table below depicts the breakdown of the incremental luxury taxes paid by the Knicks in this scenario.



That's ~$89,749,983 in LT alone! The LT will essentially double the salary commitment of their slightly above average team. They're looking at a total salary commitment of approximately $190 million! To use the parlance of this board, Isaiah would be rolling over in his grave.

Of course, they can do things to mitigate this cost, but the amnesty option is no longer available for them, and moving some of that salary without taking any back may prove difficult.

If They Match Lin AND Fields

They could also do more to exacerbate this problem. For instance, they could match the Landry Fields offer. This brings the LT tax number into the stratosphere at ~$108,749,978.25 and a salary commitment of ~$209,749,978.30.



In contrast, they could let Lin walk. The LT number is only ~$32,324,994.25.



In effect, with reasonable inference, matching the Lin offer could cost them $72,324,988.75 in 2014-2015 alone.

TL;DR - Morey really has Dolan's balls in a vise.



References:

http://www.cbafaq.com/salarycap.htm

http://www.nypost.com/p/sports/knicks/lin_match_stick_SaOeWm9GmE9b6FjL2sxQLO?utm_medium=rss&utm_content=Knicks

http://www.huffingtonpost.com/2012/07/03/landy-fields-raptors-offer-sheet-knicks-match_n_1647348.html