The New York Knicks have decided not to match the Houston Rockets 3 year/$25.1 million offer made to Jeremy Lin. So Lin is now headed to the state of Texas and gets a lot closer to Rusty Hardin in case he ever needs a good lawyer.
Some have been saying that the Knicks were nuts not to match the offer strictly from a revenue standpoint. Lin has massive appeal, can be used to target the lucrative Asian market - domestically and abroad - and has sold a bunch of merchandise, tickets, beer and food. And what of the MSG stock price, owned of the Knicks - didn't he help that and won't it be hurt by his departure?
It is true that Lin has had a substantial and positive impact on the Knicks. However, his departure is expected to only have a marginal impact on MSG's bottom line. By the calculations of some, Lin may have accounted for less than 1% of MSG's revenue, which also owns the Rangers and Liberty.
As for ticket sales, the Knicks already sell out most of their games, and having Lin in the lineup won't change that. From a merchandising standpoint, while Lin was responsible for a bump in sales, ultimately the revenue generated is insignificant to MSG's bottom line. And don't forget that merchandising revenue is also shared with other teams, further diluting the pot for MSG.
When Lin joined the Knicks, MSG's share price went up 36%. Now, it's down 8% according to the Wall Street Journal. Analysts believe the stock will settle down and Lin will not ultimately be responsible for its fate.
Another point - the Lin contract is structured in such a way that it would cost the Knicks between $35 and $45 million in luxury tax payments. That is not money well spent - particularly given that the entire contract is work $25 million. Fiscally, very tough to justify since this ends up being about a 3 year/$65 million contract.
Let's also remember that Lin is largely unproven. He's only played 64 games and sat out 17. He also only played in 35 games last season for the Knicks. So there are questions as to whether he is a great player or a good player that had a really good season.
Lin did help somewhere though - he got Time Warner and MSG to work out a deal to get the Knicks back on television. A dispute regarding subscriber fees resulted in the Knicks not being on television. Lin's appeal was so great that the sides felt tremendous pressure to work out their differences. Commissioner David Stern even encouraged the sides to work towards a resolution given how important it was to get Lin on television. New York Governor Andrew Cuomo and Attorney General Eric Schneiderman also stepped in. Ultimately, the sides worked it out and subscribers are now paying $4.50 a month to watch the MSG and MSG Plus channels.
From an emotional standpoint, some Knick fans won't be happy. From a fiscal standpoint, it is tough to argue that the Knicks should have matched Houston's offer.