Explaining Jeremy Lin’s “ridiculous” contract

Linsane contracts!

Melo recently had a funny quote in regards to Jeremy Lin:

It’s not up to me. It’s up to the organization to say that they want to match that ridiculous contract that’s out there.

It’s a it interesting to see Melo call a contract that averages out to $8.3 million a year “ridiculous” but there are of course some peculiarities. Between Gilbert Arenas and the changes to the recent CBA a lot of craziness surrounds the question of re-signing Lin.

The Gilbert Arenas provision — which was ironically instated to make it easier for teams to retain their second round and undrafted players when their rookie deals expired — allows a player’s contract to balloon in the third year of their new contract. In Jeremy Lin’s case this will be a jump from $5.2 million to $14.5 million!

Next, the new CBA has changes to how teams over the luxury tax are impacted in two ways. First, the luxury tax is now progressive. Each additional $5 million a team is over the luxury tax will progressively cost them more. The near $15 million that Jeremy Lin would make would cost an additional $37.5 million dollars.

Except, that’s not the right way to look at this. Justin Rao had a great point on the value of clutch shots winning games. Yes, the clutch shot is responsible for winning the game but every other made shot in the game should count equally for the win! The same is true for any luxury penalties. It’s not Lin’s $15 million that puts the Knicks in the red, it’s every dollar of every Knick player. Of course, some Knicks will be making more than others. Let’s take a quick look at how the Knicks will look in 2015. Salaries taken from Hoopshype. Camby, Novak and Felton are estimates from rumor mills.

PLAYER SALARY % 2014-2015 LUXURY HIT TOTAL
Carmelo Anthony 27% $23,530,000 $11,805,899 $35,335,899
Amare Stoudemire 26% $23,410,988 $11,746,186 $35,157,174
Tyson Chandler 16% $14,596,888 $7,323,816 $21,920,704
Jeremy Lin 16% $14,500,000 $7,275,204 $21,775,204
Steve Novak 4% $3,500,000 $1,756,084 $5,256,084
Raymond Felton 4% $3,333,333 $1,672,460 $5,005,793
Jason Kidd 3% $3,030,000 $1,520,267 $4,550,267
Iman Shumpert 3% $2,761,113 $1,385,356 $4,146,469
Marcus Camby 1% $1,025,890 $514,728 $1,540,618
Total 100% $89,688,212 $45,000,000 $134,688,212

Thanks to The Bob for pointing out an earlier mistake. The Knicks will not be repeat luxury tax offenders as they were below the luxury limit the past season (2011-2012 for those in the future) Thanks for the catch!

We now have a cost for each player on the Knicks. As their base salaries almost hit $90 million  we can estimate the luxury tax hit at around $45 million (it’s a bit high but we don’t know the exact luxury level for 2014-2015). We can also break down how it is distributed. So, Lin does have a contract that balloons from below the league average to $22 million. Let’s go one step further. What if every Knick managed to put up their best numbers from the last two seasons? In Lin’s case I estimated he could match his best per-minute numbers (which were oddly in Golden State) and could somehow stay on the court for 2500 minutes. Let’s take a look how our overpaid Knicks break down now. I used Arturo’s value of a win to estimate how valuable each player would be worth to the Knicks. Wins Produced numbers taken from the NBA Geek.

PLAYER BEST CASE WINS ARTURO VALUE COST VALUE
Jason Kidd 11.8 $17700000 $4,550,267 $13,149,733
Marcus Camby 8.9 $13350000 $1,540,618 $11,809,382
Raymond Felton 6.9 $10350000 $5,005,793 $5,344,207
Tyson Chandler 16.5 $24750000 $21,920,704 $2,829,296
Steve Novak 3.0 $4500000 $5,256,084 -$756,084
Iman Shumpert 1.7 $2550000 $4,146,469 -$1,596,469
Jeremy Lin 8.2 $12300000 $21,775,204 -$9,475,204
Carmelo Anthony 5.8 $8700000 $35,335,899 -$26,635,899
Amare Stoudemire 4.2 $6300000 $35,157,174 -$28,857,174
Total 67.0 $89550000 $134,688,212 -$45,138,212

Now, I understand the above chart has more than a few problems. It assumes the Knicks could be a 67 win team. This is highly unlikely for a variety of reasons. First, I doubt that Camby, Kidd, Felton, Melo and Amare will play at their top levels. Second, I am also skeptical that Lin will play at the linsanely high standard I placed. Finally, the Knicks are overloaded at both the point guard and center position. These two positions are where they’d get their most value too.

Melo is not out of line to call Lin overpaid though. Even if he could hit his best numbers and sustain them for a season, he’d cost the Knicks over $9 million! However, the real culprits of the Knicks luxury dilemma are Melo and Amare. Combined they’d be responsible for over $55 million of the $45 million dollar hit the Knicks would take. We also can’t forget that without their lofty contracts the Knicks wouldn’t even be blinking at re-signing Lin.

Summing up

Melo is not entirely wrong that re-signing Lin would be expensive to the Knicks. Of course, the reason the Knicks are in such a position is that they offered Melo and Amare expensive and long term deals. Also, by amnestying Chauncey Billups, who had only one year left on his contract, the Knicks shot any flexibility in the foot. Melo is not wrong to pass the blame to others either though. Any NBA player has a very short amount of time to maximize their earnings. It’s foolish to assume that any of them would pass on the chance to make max money. In the end the Knicks can’t afford Jeremy Lin. Of course, they can’t afford the team they have now. The problem is they overpaid for overrated talent. Although that’s nothing new, I’m sure Knicks fans find it “ridiculous”

-Dre

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