Jeremy Lin's contract & the salary cap?

[Mr October]

I thought balloon payments had long been ruled out by the NBA's CBA. I had thought wage increases were limited to about 7.5% for bird free agents, and 4% for all others.

How is it that Houston can structure a deal to pay Lin: $5, $5, and then jump to $15?

[Mr October]

And whatever rule this is that allows it, I don't like it. Its going to help GM's hurt their teams in yet a different way, and take away a restricted's teams ability to match. 

[European NBA fan]

I thought balloon payments had long been ruled out by the NBA's CBA. I had thought wage increases were limited to about 7.5% for bird free agents, and 4% for all others.

How is it that Houston can structure a deal to pay Lin: $5, $5, and then jump to $15?

It's actually constructed that way to give Lin's former team a chance to keep him with the MLE. Otherwise the Rockets could just offer him 8M $/year and the Knicks couldn't match.

[Fafnir]

I thought balloon payments had long been ruled out by the NBA's CBA. I had thought wage increases were limited to about 7.5% for bird free agents, and 4% for all others.

How is it that Houston can structure a deal to pay Lin: $5, $5, and then jump to $15?

Its under an exception to the normal rules via the Gilbert Arenas provision.

He's been in the league less than three years so he can't possibly have any bird rights. But if he only signed a two year contract and was awesome he might be worth more than the MLE or early bird rights on the open market. So since the rookie scale limits earnings for 4 year for first round picks they did the same with other players. The salary is only limited for two years to the MLE level and then it can go to the maximum salary level for the player's years in service.

The offering team must have the cap space to fit the average salary for the life of the contract to make the offer. But since the Knicks don't have the salary cap space to sign him and must use the Gilbert Arenas exception to do so the balloon hits only in the third/fourth for them.

[Fafnir]

And whatever rule this is that allows it, I don't like it. Its going to help GM's hurt their teams in yet a different way, and take away a restricted's teams ability to match. 

They can still match, its just more expensive. Its actually a limit on how much the Rockets can offer Lin in the first two years.

[Mr October]

http://www.cbafaq.com/salarycap.htm#Q44

Here is a link in the Larry Coon FAQ. I had no idea that in the 3rd year you can balloon, so long as the average payment over the 3-4 years fits under your initial cap space.

Wow that 3rd year can be dangerous. In the case of the Knicks, after luxury tax, that 3rd year of Lin would cost them about 30+ million. Crazy!

edit: Lin after tax would cost the Knicks 30+ million