July 16 (Bloomberg) -- The New York Knicks may be better off if they let Jeremy Lin sign with Houston instead of matching the Rockets’ offer for the point guard, sports executives said.
Lin has agreed on a three-year, $25 million deal with the Rockets that will pay him $14.8 million in the third year, ESPN reported. The Knicks have until midnight tomorrow to match the offer or let the restricted free agent leave.
Lin, a Harvard University graduate who is the first Taiwanese- or Chinese-American to play in the National Basketball Association, expanded the marketing opportunities for the team and the league into the world’s biggest market when he took over as the Knicks’ floor leader. He started 25 games and would have to maintain the standard he achieved in his first season with the team to justify such a financial commitment, Steve Mills, a former president at Madison Square Garden, said in a phone interview.
“Whatever the numbers are for salary and luxury taxes, you can assess that pretty quickly and decide if it’s worth it,” Mills said yesterday in a phone interview. “But if he doesn’t pan out to be as good a player as he seems he’s going to be, that contract constricts the Knicks in their future basketball decisions.”
If the Knicks agree to match the Houston offer, they would have to pay Lin, Carmelo Anthony, Amar’e Stoudemire and Tyson Chandler a combined $75 million in 2014-15. Next season, teams have to pay the NBA $1 in tax for every $1 their player payroll exceeds $70.3 million.
ESPN reported yesterday that it was unlikely the Knicks would match the offer, citing two unidentified people in the team’s organization.
“Maybe the Knicks have made the decision that it will have too big an impact in the third year on the salary cap,” Bob Gutkowski, the president of Madison Square Garden Inc. from 1991-94, said in a telephone interview. “Putting that poison pill in for the third year may also be a sign that Lin didn’t want to play for the Knicks anymore.”
The Knicks may be covered at point guard without Lin. They agreed to sign guard Raymond Felton from the Portland Trail Blazers, the Houston Chronicle said, citing his agent, Tony Dutt. They also acquired Jason Kidd, a 39-year-old guard who is second in assists in NBA history, from the Dallas Mavericks, and Pablo Prigioni, 35, from the Spanish league. Kidd yesterday was charged with driving while intoxicated after crashing his car into a telephone pole in the Hamptons.
Jonathan Supranowitz, a spokesman for the Knicks, declined to comment in an e-mail on Lin’s future.
Lin was cut by the Golden State Warriors and the Rockets before the Knicks picked him up in December. He had a base salary of about $762,000 last season.
The 23-year-old Lin became a sensation when the Knicks elevated him from benchwarmer in February amid injuries. Lin helped New York to win six straight games after he entered the starting lineup two days after scoring 25 points in a win over the New Jersey Nets on Feb. 4.
Lin started in 25 of his 35 games for the Knicks, averaging 14.6 points and 6.2 assists. He had surgery in April to repair a meniscus tear in his left knee and missed the opening-round playoff series with the Miami Heat, which New York lost 4-1. Coach Mike Woodson said the injury wouldn’t affect the team’s decision to keep him.
The Knicks may be more concerned with Lin’s ability to direct a contending team than balking at payments ESPN put at $5 million and $5.23 million in the first two years, said Stan Kasten, a former executive with the NBA’s Atlanta Hawks who is now an owner of baseball’s Los Angeles Dodgers.
“In years one and two, they’ll easily make the money back from the fans packing the newly renovated Garden to see someone they want, because he’s so popular,” Kasten said in an e-mail. “My question is, how do they really feel about him as a player?”
Lin’s rise to prominence boosted business for the Knicks. Ticket prices surged, while the team’s parent, Madison Square Garden Co., settled a carriage-fee dispute with Time Warner Cable Inc. and doubled advertising rates on MSG as its shares hit a record.
Lin’s jersey became a top seller in the NBA’s online store, Coca-Cola Co. added courtside advertisements in Chinese at Madison Square Garden and the team owner fielded inquiries from Asia-based companies seeking an affiliation with the franchise.
“The business guys probably said there’s a lot of money tied up in this guy from the marketing standpoint and that had to go into the formula,” Gutkowski said. “But I always have to caution that he only began 25 games and he could have been a marketing phenomenon this year, maybe the beginning of next year, and then sustained a bad injury or not be the player you thought he was.”
Because of that risk, the marketing department probably couldn’t produce reliable forecasts that would justify paying Lin almost $15 million in 2014-15, Richard Peddie, the former chief executive officer of Maple Leaf Sports and Entertainment, said in an e-mail.
“Very few players can move the revenue dial on their own,” Peddie said. “And besides, New York is already loaded with stars that will help sell tickets and sponsorships. Net, net, I would not do the deal for business reasons.”
The Rockets originally offered Lin a four-year agreement that was worth $9 million in each of the last two years, according to ESPN. They may have been persuaded to revise that because of their experience with Yao Ming, a center from China who retired a year ago after eight years with Houston.
“The Rockets have some experience of trying to extract revenues out of the Asian market,” Mills said. “So they probably thought it’s worth going as far as they can from a business perspective to get Lin.”
Lin, who trademarked the term “Linsanity” in May, has again shown his acumen by renegotiating his deal with the Rockets, Gutkowski said.
“If the Knicks don’t pick him up, he overplayed his hand with them but he’s got a fair amount of money from the Rockets,” Gutkowski said. “To get a $25 million contract, that’s not too shabby.”
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