Linsanity: Jeremy Lin’s Salary and Contract Situation

Jeremy Lin is the new sensation in the NBA.  Since he started his first game as a Knick six games ago, he’s averaging 26.8 points and 8.5 assists.  That’s better than Lebron James (23.3 points, 7.2 assists), Kobe Bryant (25.3 points, 4.5 assists), and pretty much every other superstar in the NBA over the same span.  Not to mention the fact that the Knicks are 6-0 with Lin as a starter and are moving up the playoff ranks–they just slipped into eighth in the East.  Until up to two weeks ago, Lin was a relatively unknown player who was sleeping on his brother’s and teammate’s couches.  He has been cut from two teams this season and now he is balling out of control, on the verge of superstar status.  Such a ”rags to riches” transition prompts the questions that everyone, especially Knicks fans, want to know.  What is Jeremy Lin getting paid and what is his contract situation? 

For the 2011-2012 season, Jeremy Lin’s salary is $762,195, all of which is now guaranteed.  Since this season is shortened, Lin is really only making about 80% of that, which is $609,756.  Lin’s contract was guaranteed by the Knicks on February 10, 2012 (the date set by the collective bargaining agreement as the deadline that teams had to make the decision to cut a player or guarantee his contract).  Before February 10th, however, Lin’s contract was not guaranteed, meaning the Knicks could have waived him and would have owed him nothing.  Had Baron Davis not been injured, that might have happened.  But it didn’t so Lin can (and did) move off his brother’s couch.  It was reported that Lin recently moved into the Trump Tower in City Center in White Plains, New York, a suburb outside of the city and near the Knicks’ training center.  He’s obviously happy about his contract becoming guaranteed; a two-bedroom in Trump Tower goes for about $4,500 a month. (Update: It’s now being reported that Lin is renting an apartment on the 38th floor of the W Hotel in downtown New York that was originally listed for $13,000 a month. That’s $156,000 a year, or 25.5% of his salary.  I thought this guy was a Harvard economics major!)

Lin's teammate Landry Fields tweeted that this was the couch Lin slept on before torching the Lakers for 38 points.

Lin is in the second year of a two-year contract he originally signed with Golden State.  At the end of this season, he becomes a restricted free agent.  As a restricted free agent, the Knicks will have the right to match any offer made to Lin by another team.  But, as a player with two or less years of experience, other teams will only be able to offer Lin the NBA “average salary” (around $5 million) for the first two years.  This is called the “Gilbert Arenas Provision.”  The Gilbert Arenas provision does, however, allow teams to “backload” a deal after the second year of a contract, but there are certain salary cap limitations that make this unlikely.  Nonetheless, the Knicks would likely be able to match any such deal. Further, if Lin keeps playing at his current rate, he probably won’t want to sign on to a $5 million deal for more than one year.

The Knicks will also have access to the full mid-level exception, which applies to teams that are over the $58 million cap, but under the $70 million luxury cap, which the Knicks fit snuggly into.  (The Knicks don’t have access to the bi-annual exception–available every two-years, obviously–since it was eliminated for teams over the cap in the 2011 CBA.)  The mid-level exception would allow the Knicks to sign Lin for 4 years at $5 million (and growing 3 percent annually) per year.  Teams only get to use the mid-level exception once per year. 

Lin does not qualify for the Early Bird exception, which is for “early qualifying veteran free agents” who have not been waived or changed teams (as a free agent) for two years.  For players that qualify for this exception, their team can offer the player any contract they want. 

So, in sum, under any of the possible scenarios where Lin is resigned by the Knicks–and all signs point that he will be–he will be making about $5 million next season.  Any speculation past next season is too early at this point since Lin can control the length of the contract he signs.  If he keeps his phenomenal play up, I see him signing a one-year deal at the maximum $5 million range, then playing well to keep his stock up.  At the end of next season, Lin should be able to cash-in during free agency since there will be no restriction on how much he can make other than the league max salary for players with 0-6 years of experience, which is $12,922,194. 

Surprisingly, Lin currently has a shoe contract with Nike that he signed while at Golden State.  Although the exact amount is unknown, it’s reportedly not much at all.  Nike has Lin locked in to another year on the shoe contract, so it’s unlikely that he’ll be able to profit from the type of endorsement that generally lands NBA stars the most money anytime soon.  With his popularity, I think it’s pretty safe to say that Lin is going to be just fine when it comes to scoring endorsements in other areas in the meantime.  It’s already proven that the “Lin brand” sells, just ask the NBA.  Since February 4th, Lin’s jersey is the best selling jersey in the league. 

By: Todd Davis

Todd Davis is a business litigation attorney in Miami, Florida and obtained his law degree with an emphasis in sports law.

11 thoughts on “Linsanity: Jeremy Lin’s Salary and Contract Situation

  1. Good for him…..he has truly surprised everyone. If the Houston Rockets would have let him play, they would have known just how good he was and not cut him loose. These Texas teams seem to always make bone-headed decisions only to later regret them. They (the Rockets) need someone with his skills and abilities. Too bad, I guess, for the Rockets. I hope that Jeremy enjoys a long and prosperous career and hopefully will not receive a side-lining injury.

    • The idea that Texas teams made bone-head decisions is a bone-head argument. Its not like they needed Lin. San Antonio has Tony Parker, Mavs with Jason Kidd, and Houston with Kyle Lowry(and Jonny Flynn at the time). None of those team would even think of keeping Lin for a position that they didn’t need a player for. The Knicks were just dumb lucky that they signed a PG because they’re starter was down

  2. Lin has definitely become the NBA’s hyped-up, international superstar this season so he should be rewarded with a higher salary; but I think its interesting to see everyone congratulate Lin on his future salary increase but judge top executives (aka the 1%) who make less than that. Kenneth Rogoff writes an article about this topic that’s worth reading through:

  3. Pingback: EC PLAYOFFS RD 1 : (2)MIA HEAT vs (7)NY KNICKS - Page 5

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