Update Wednesday, July 4th (3:38 pm Eastern Time): According to Matt Moore at CBS.com, the Houston Rockets have offered Jeremy Lin a $30 million dollar, four year contract. If so, the Knicks will have until July 14th to match that offer.
Tuesday, July 3rd:
ESPN's Chris Broussard has reported that free agent Jeremy Lin will be meeting with the Houston Rockets on Wednesday afternoon.
For a Knicks squad that has announced a firm intention to re-sign Lin, the Rockets present a significant threat to acquiring the young point guard.
The Knicks will be able to match any offer made for Lin because they won Lin's "Bird Rights" based on a recent arbitration ruling (via ESPN). The maximum any team can offer Lin for the first year of his contract is $5 million, and the Knicks have the right to match it.
However, any team can offer Lin a multi-year "poison pill" contract.
A "poison pill" contract begins with a mid-level exception salary in year one ($5 million), but which may escalate payment between years two and three to up to $15 million a year.
It's unlikely that any team will offer Lin $15 million a year. Lin's value as a starting point guard is still in question due to a short and mercurial second year in the NBA.
Lin played starting point guard for two months as a Knick during his second year in the league.
In February, Lin averaged 20.9 ppg and eight assists a game on 47 percent shooting. However, as teams started to adjust their defenses against Lin, his March numbers declined. Lin averaged only 14 points and six assists on 40 percent shooting in March. Lin's defense is also a major liability.
Lin's promising first month as a starting point guard and his marketability in the global NBA market, should net him a significant salary jump in a multi-year contract from $5 million to around at least $8 million after the second year of the deal.
The Houston Rockets are in prime position to offer Lin this type of contract. According to Hoopshype.com, the Rockets are more than $20 million below the salary cap for the 2012-13 season.
Notably, the Rockets are also a young team in rebuilding mode, which could be perfect forum for Lin to develop his skills as the team's undisputed starter.
All things considered, the Rockets are the perfect team to take a reasonably ambitious lead on Lin.
If the Rockets offer Lin a contract that incorporates a healthy raise between years two and three, the Knicks will have a difficult time matching the offer. In the 2014-15 season, the Knicks will already owe about $60 million total to Tyson Chandler, Amare Stoudemire and Carmelo Anthony.
Adding a hefty Lin contract that same season would put the Knicks over the NBA's collective-bargaining agreement established luxury-tax threshold, which will force the Knicks to pay a hefty tax penalty.
Even worse for the Knicks, restricted free agent Landry Fields decided to sign a three-year deal with the Toronto Raptors worth $21 million. The Knicks will most likely be unable to match the Raptors' offer to keep the young two guard.
However, the Knicks will have to spend some fraction of the $7 million they cannot afford on Fields to shore up what is currently a thin roster at the 2-guard position. That will make it even harder for them to match the market value for Jeremy Lin.