Houston's four-year offer to Jeremy Lin includes a team option in the fourth year. He will make $5 million in year one, $5.2 million in year two and $9.3 million in each of years three and four. The back-loaded offer is designed to hit the Knicks hard on the luxury tax.
As you can see, Lin's contract is backloaded, with most of the money spread into the third and fourth years of the deal. This occurs because Lin is a restricted free agent who's been in the league only one or two seasons. The Rockets can only offer Lin a certain amount of salary up to the current non-taxpayer mid-level exception.
This Lin deal is the example If one team tries to sign a restricted free agent from the original team, they will try and structure the deal such that the original team will have to pay a hefty luxury tax fee at the end of it. The contract is used generally to exploit the salary cap and new luxury tax rules to ensure the team that possesses the original free agent will have to pay a hefty financial burden to try and keep their player. In this case, Lin.
So while the Rockets aren't likely to keep Lin, the Knicks are sure going to have to dip deep into their salary to try and keep him. The good news is the Knicks can now use their Bird exception to match this offer, and they probably will.
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