During yesterday's live chat, I received a number of questions about the Knicks' cap situation heading into next season, and how it would affect their ability to re-sign free agents. It's definitely an interesting and complex case, and it's worth taking a more extended look at it now that the team's season has ended.
The Knicks currently have just five players on guaranteed contracts for next season, which would typically result in a good deal of cap flexibility. In New York's case though, three of those players – Carmelo Anthony ($20.46MM), Amare Stoudemire ($19.95MM), and Tyson Chandler ($13.6MM) combine for over $54MM, almost the entire $58.04MM cap. Iman Shumpert's and Toney Douglas' salaries are far more modest, but still put the 2012/13 team salary at $57.72MM heading into the summer.
If the Knicks want to match offers for restricted free agent Jeremy Lin, they'll almost certainly need to use their full $5MM mid-level exception. To be eligible for the full MLE, the team will need to keep its 2012/13 salary commitments below the "apron" — about $74.3MM, or $4MM above the luxury tax threshold. This leaves the Knicks about $16.58MM to spend on at least eight players.
The Knicks will have the opportunity to re-sign both Lin and Landry Fields, but rival teams can offer those players first-year salaries of up to $5MM each, per the Gilbert Arenas provision. If New York is forced to match offer sheets at that price, it will leave the team with only $6.58MM of wiggle room below the apron, with six players still to sign. And that's assuming J.R. Smith doesn't exercise his $2.5MM player option, which would reduce the team's flexibility even more.
New York has some options, but not many are both realistic and appealing. With no amnesty clause and no way to restructure contracts downward, reducing Stoudemire's cap hit is virtually impossible. Anthony and/or Chandler would have trade value, but the Knicks likely wouldn't have any desire to move their top scorer or the reigning Defensive Player of the Year.
If James Dolan and Knicks ownership were willing to become a taxpaying team, the Knicks could easily re-sign Fields, Smith, and Steve Novak. But crossing the tax line would reduce the club's mid-level exception to $3MM, meaning New York would be powerless to match an offer sheet for Lin if the starting salary exceeded that amount.
Needless to say, it'll be a fascinating offseason in New York, as the Knicks decide which free agents are worth hanging on to at the expense of the others. I'd be shocked if Lin wasn't back, so unless a couple guys are willing to take discounts to stay, many of the team's other free agents may be on their way out of the Big Apple.