New York Knicks: How a Steve Nash Sign-and-Trade Would Work with the Salary Cap

Ever since the NBA season ended, rumours have been linking Steve Nash to the New York Knicks.

Reuniting the future Hall of Famer with his former partner in crime, Amar'e Stoudemire, and allowing promising young point guard Jeremy Lin to develop behind Nash could have a number of benefits for the Knicks.

Reports are coming in now from AZ Central of a potential sign-and-trade with the Suns that would give Phoenix a package of Landry Fields, Toney Douglas, Dan Gadzuric, Jerome Jordan and $3 million in return for the two-time MVP.

Such a trade would allow the Knicks to offer Nash a salary of around $10 million, which would be much more competitive and realistic than the $3 million they would otherwise be able to offer with the mid-level exception.

Considering what they would be giving up, this seems like a great trade for the Knicks on the surface, but questions are still arising as to whether or not it would inhibit the Knicks' activity in the rest of free agency.

With this trade taking place and Nash being given a $10 million contract, the Knicks total payroll for 2012-13 would look roughly like this:

Amar'e Stoudemire - $19.9 million

Carmelo Anthony - $19.5 million

Tyson Chandler - $13.6 million

Steve Nash - $10 million

Iman Shumpert - $1.7 million

Josh Harrellson - $0.8 million

Total - $65.5 million

So the Knicks would be over the salary cap of $58 million, still needing to add another six (more likely seven due to Iman Shumpert's injury) players to the roster to meet the NBA minimum of 12.

In the case of Jeremy Lin and Steve Novak, the two players can be added to the team regardless of the salary cap due to their Early Bird rights.

The team would also be able to sign J.R. Smith to a salary of $2.8 million regardless of the cap, thanks to a non-Bird exception allowing him a 20-percent pay raise over last season.

After that, the Knicks would be able to round out the roster with players worth only the veteran's minimum, which ranges between $0.8 million and $1.4 million and would likely include Jared Jeffries. 

Using predicted salaries for Steve Novak, Jeremy Lin and Jared Jeffries, the payroll would look roughly like this:

Amar'e Stoudemire - $19.9 million

Carmelo Anthony - $19.5 million

Tyson Chandler - $13.6 million

Steve Nash - $10 million

Jeremy Lin - $5 million

Steve Novak - $3 million

J.R. Smith - $2.8 million

Iman Shumpert - $1.7 million

Jared Jeffries - $1.4 million (minimum salary for a 10+ year veteran)

Josh Harrellson - $0.8 million

Total - $77.7 million

So, still needing to add two or three players to the roster, the Knicks would be above not only the salary cap, but above the luxury tax threshold of $70 million and the "apron" of $74 million.

There is one problem regarding the apron: If a team spends the $5 million mid-level exception, their salary cannot exceed the apron, as explained by Tommy Dee and Moke Hamilton on The Knicks Blog.

However, since the Knicks will have acquired Nash via sign-and-trade, the Knicks will not have actually used the mid-level exception of $5 million.

As a team above the apron, they would instead have access to the $3 million "taxpayer" exception, allowing them to fill out the roster. They would not, however, have access to the bi-annual exception on top of that.

Typically, being above the apron would make a team miss out on the protection of the Gilbert Arenas provision, which in this case allows for the Knicks to keep Jeremy Lin and Steve Novak. However, since the Knicks have their Early Bird rights, this will not happen.

With a talented 10-man roster like the one above, the Knicks could potentially attract the likes of Marcus Camby to join the team for the veteran's minimum, which would really help them to go on a championship run.

Essentially, regardless of whether or not the Knicks acquire Steve Nash, they will still be able to keep Jeremy Lin. The only question is whether or not they would want to match a backloaded offer for the point guard.

Either way, exceeding the luxury tax level is always expensive for owners, and for as much criticism as he gets, James Dolan would be worthy of a lot of praise for allowing a roster as strong as this to be created.

2012-13 salary information from HoopsHype. CBA and cap information from Larry Coon's Salary Cap FAQ.