Every Monday or Tuesday from here until the beginning of training camp, I will keep you updated on the latest surrounding the New York Knicks and any potential offseason moves they are rumored to be involved in.
With the 2012 NBA Playoffs still going on though, I figured now would be a good time to actually look at the Knicks upcoming salary cap situation and how it will affect any potential moves general manager Glen Grunwald will attempt to make.
Generally I’m pretty good deciphering the salary cap, so here’s my best attempt to explain the situation the Knicks are in as of today.
Right now the Knicks are currently $5.6 million under the league-mandated $58.044 million salary cap, however on July 1, if the cap stays the same they will be $5.65 million over. That’s due to the likes of Carmelo Anthony, Tyson Chandler, Amar’e Stoudemire and others making more money next season than they did this year.
Players under contract for next season include: Anthony, Stoudemire, Chandler, Iman Shumpert and Toney Douglas.
In addition, J.R. Smith has a player option of $2.443 million, Josh Harrellson has a team option of $762,195, Jerome Jordan has a non-guaranteed salary of $762,195 and while Renaldo Balkman cleared waivers this past season, he’s still owed some salary that counts against the cap.
When it comes to free agency, the franchise’s restricted free agents are Jeremy Lin and Landry Fields, and the unrestricted pool includes: Steve Novak, Baron Davis, Jared Jeffries, Mike Bibby, Bill Walker and Dan Gadzuric.
Ideally, here’s what Grunwald is dealing with internally, before he ever even thinks about the draft or signing free agents from other teams. He must deal with Smith’s opt in or out, potentially re-signing Fields, using their mid-level exception of about $3 million (taxpayer) or of about $5 million (non-taxpayer), potentially using their bi-annual exception of $1.98 million and then spending a couple of veteran’s minimums of $1.4 million each.
Grunwald’s biggest decision though will be how much of the MLE to give to Lin.
With that being said, here’s a look at how the situation could play out for each free agent.
The Knicks will know by July 1 if Smith will opt-out of his deal. Even though Smith’s father is making a case for him to stay in the Big Apple, money will play a big part in the deal and I don’t expect him back next season.
The kicker is that money doesn’t come off the cap so the Knicks will still be a little over $3million over.
However he can opt-out and re-sign with New York for a 20 percent raise, which with the Non-Bird Exception, would put him at $3.097 million for the 2012-13 season.
In the new CBA, there’s a provision called the Gilbert Arenas Provision which limits the amount of money teams can offer a player like Lin for the first year of his deal. basically, the Arenas Provision, which you can look at here in greater detail, a way to help teams to keep their young restricted free agents who aren’t coming off rookie scale contracts.
No team can offer Lin more than the full MLE for the first year of his contract and as a restricted free agent; the Knicks have the right to match. But because New York only has Lin’s first year Bird Rights, whatever Lin signs for will count against the cap after his MLE of next. Nothing is stopping the Knicks from matching any offer but there’s also nothing stopping any team from heavily back loading a contract, which will put the Knicks in real financial trouble if they match.
However the MLE is tricky now. There is a non-taxpayer MLE of $3 million or less or the taxpayer MLE of $5 million. The trick is that if a team spends more than $3 million of its mid-level exception, then the apron ($70-$74 million) becomes a hard cap for the remainder of the season. It becomes very hard to put a winner on the floor when dealing with a hard cap.
So it would be ideal for Lin to sign for $3 million or less, but that’s doubtful, especially since other teams will offer more simply based on what he can do for attendance.
Also keep in mind that if the Knicks let Lin walk and pursue a Steve Nash or Goran Dragic, the same rules apply for the MLE. If they spend more than $3 million of it then they are going to be faced with a hard cap, which ultimately means they won’t have any flexibility to make any offseason or in-season moves that would result in them being a penny above the $74 million threshold.
My gut feeling is that they will sign Lin based on his popularity and when they are financially crippled a couple seasons from now they will try and move one of their big contracts.
The Knicks also have the Early Bird Rights on Fields and but he differs from Lin in one way- the Knicks drafted him.
Basically with Fields there will be a $5 million ceiling with him this year, but unlike Lin they won’t have to use the MLE to sign him. With Lin they have his Non-Bird Right’s so they will be forced to use the MLE.
This makes signing Lin for $3 million even more important to the Knicks.
The perfect situation would be to sign Fields for $5 mil and Lin for $3 mil. In that case they won’t be constrained by the hard cap (based on the lower mid-level exception). They can re-sign Fields, sign veteran free agents and make trades to bring in someone who’s more expensive. In other words, they can go above the apron.
But that begs the question of if Fields is worth the $5 mil investment?
However the Knicks can’t turn around and use that $5 mil for Nash, Dragic or anyone else due to the Early Bird Rights provision. So, again, only the MLE can be used for Lin, Nash or Dragic, which makes Grunwald’s decision very tough.
As for Fields, I think they bring him back as they can’t really use the money on anyone else.
The Knicks can spend $1.98 mil on a player using this, which would be ideal for Novak, but after leading the league in three-point shooting he will likely be looking to cash in for more than that, leaving the Knicks without a weapon on the perimeter.
But again using the Bi-Annual comes down to how much they pay Lin. If it’s over that $3 mil number then they can’t go over $74 million so there’s a chance they may not be able to use it. Also this is a last resort thing as if they use their Bi-Annual first then they are automatically hard capped. That’s really the only part of the CBA I don’t understand, but that’s the way it is.
Again, how much they pay Lin will determine what type of offseason (if any) that the Knicks have.
Jared Zwerling of ESPNNewYork.com predicted how things will play out for the Knicks and it doesn’t sound promising.
Currently, the Knicks are about $6 million above the salary cap, which means they’re about $9 million under the apron. If Smith opts out and the Knicks don’t re-sign him, they’ll be about $11.5 million under the apron. If they re-sign Lin for about $5 million, they’ll be about $7.5 million under the apron, which would then create the hard cap.
Then, if Fields re-signs for about $5 million as well, the team will only have about $3 million under the apron to spend on three players. Think about that. About $3 million, three players. Veteran minimum’s deals could suck that right up.
That mid-level exception is more critical than you ever thought. From the season to the offseason, Lin still remains right at the top of the Knicks’ discussion. If you’re a fan of the team, you should be rooting for him to sign for $3 million or less.
The only thing I can add onto to that thought is that it’s a good thing Isaiah Thomas isn’t still around.