Wednesday, July 18, 2012

Linsanity Is Over

For someone who's Harvard educated Jeremy Lin made a very poor decision for himself. The overnight sensation signed an offer sheet worth $25,100,000 over the next 3 years to play for the Houston Rockets. The deal calls for Lin to make $14,800,000 in the 3rd year of his contract. People in the sports world refer to this as a "poison pill." If the New York Knicks were to match the offer it would cost them in excess of $30,000,000 in luxury tax money down the road.

Seattle fans are all too familiar with the "poison pill" scenario. The Minnesota Vikings signed Seahawks left guard Steve Hutchinson to an offer sheet. The offer sheet had a clause in the contract that guaranteed the entire deal if he wasn't the highest paid lineman. At the time the Seahawks had signed left tackle Walter Jones to a huge contract and couldn't match the parameters of the deal.

The difference in these two "poison pill" cases is Steve Hutchinson was an all pro. I can name 10 point guards off the top of my head (Derick Rose, CP3, Deron Williams, Rajon Rondo, Russell Westbrook, Tony Parker, Kyrie Irving, John Wall, Steph Curry, Steve Nash) that are better than Jeremy Lin. The move was madr for PR amd marketing reasons as much as basketball ability. 25 games is not a very large body of work to guarantee that kind of financial compensation for one season.

Although $25,1000,000 sounds like a lot of money it's chump change from a sports economics perspective. New York is the media capital of the world and basically created Linsanity out of thin air. If Lin would have put up the same numbers in Utah, Sacramento, or Milwaukee he never would have graced the cover of Time magazine. His story took on a life of its won because he was a New York Knick. Lin has probably cost himself hundreds of millions of dollars in endorsement money because the interest level in Houston pales in comparison to the Big Apple. He'll be a story, but not as big as when he was playing in Madison Square Garden. The city embraced him and Jeremy became arrogant. In the long run he'll realize it was a mistake.

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