Interesting column here from John Schmeelk of WFAN on how the Knicks could avoid suffering the luxury tax fate associated with the poison-pill, third-year of Jeremy Lin’s contract:
The new CBA included a provision to make it much easier for teams to release players with bad contracts. It’s called the stretch provision. Here it is right out of Larry Coon’s invaluable CBA FAQ that can be found here: cbafaq.com.
Otherwise (if the contract or extension was signed under the current CBA), the remaining guaranteed salary is paid over twice the number of remaining years, plus one, per the Stretch provision:
- If the player’s salary payments are spread-out using the Stretch provision, the team may elect to stretch the salary cap charge to match2. For example, if two seasons remain on the player’s contract when he is waived, and the payment is spread-out over five years per the Stretch provision, then the team may elect to spread-out the salary cap hit over those same five years.
In other words, the Knicks will have the option after the 2013-2014 season to waive Jeremy Lin, take his third-year $15 million salary and spread it out with its cap hit over the following three seasons. In each of those three seasons, the Knicks would have $5 million of dead money on the cap. Doing that would all but eliminate the insane luxury tax payment the Knicks would have to endure in 2014-2015, which is supposedly stopping them from re-signing Lin.
Obviously, this isn’t an ideal plan or scenario. The Knicks wouldn’t be resigning Lin with the idea of waiving him after 2013. Instead, this is simply a way out if Lin turns out to be nothing more than a backup quality point guard. Having dead money on the cap for three seasons is obviously a bad thing, but it’s nothing the franchise couldn’t survive.
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