Jeremy Lin was granted his Early Bird Rights.
Arbitrator Kenneth Dam ruled in favor of the Players Association. In turn, any player claimed off waivers have the rights, including Lin and Steve Novak. The ruling allows the Knicks to sign Lin without worrying about going over the salary cap.
This means New York has some leeway when the free-agency period begins on July 1. Because of the ruling, the Knicks do not have to use their mid-level exception to sign either player. This exception could be offered to another prized player in the market instead.
Now that the Knicks know their fate, they can move on to improving the team through free agency, without having to worry about losing sharpshooter Novak or the man responsible for sending New York into "Linsanity."
While the rumors suggest that the Knicks will attempt to lure Steve Nash to New York with whatever cap space remains—including that mid-level exception—it's hard to imagine Nash not getting a higher offer elsewhere.
Since the Knicks now have a brighter outlook on things, expect the rumors to pick up on who will come to mentor Lin, or who he will battle with for the starting point guard position.