I believed that JLin would be our Restricted Free Agent and we could make a Qualifying offer and match any other offer. I asked Larry Coon and he confirmed this and added that the Arenas Rule would restrict what other teams could offer. Lin could get the Early Bird Rights 104.5% of his salary this year.
38. What is the "Gilbert Arenas" provision?With the previous CBA it was sometimes possible to sign restricted free agents to offer sheets their original teams couldn't match. This happened when a player was an Early Bird or Non-Bird free agent (see question number 19) and the team didn't have enough cap room to match a sufficiently large offer. For example, Gilbert Arenas was Golden State's second round draft pick in 2001, and became an Early Bird free agent in 2003. Golden State therefore could only match an offer sheet (or sign Arenas themselves) for up to the average salary (see question number 25), which was about $4.9 million. Washington signed Arenas to an offer sheet with a starting salary of about $8.5 million, which Golden State was powerless to match.
This loophole was addressed in the current CBA (although not closed completely -- see below). Teams are now limited in the salary they can offer in an offer sheet to a restricted free agent with one or two years in the league. The first-year salary in the offer sheet cannot be greater than the average salary (see question number 25). Limiting the first year salary in this way guarantees that the player's original team will be able to match the offer sheet by using the Early Bird exception (if applicable -- see question number 19), or Mid-Level exception (provided they haven't used it already).
The second year salary in such an offer sheet is limited to the standard 8% raise. The third year salary can jump considerably -- it is allowed to be as high as it would have been had the first year salary not been limited by this rule to the average salary. Raises (and decreases) after the third season are limited to 6.9% of the salary in the third season. The offer sheet can only contain the large jump in the third season if it provides the maximum salary allowed in the first two seasons. In addition, the offer must be guaranteed and cannot contain bonuses of any kind.
If the raise in the third season exceeds the standard raise (8% of the salary in the first season of the contract), then they place an additional restriction on the team. In order to determine the size of the offer the team can make, they don't fit just the first year salary under the cap. Instead, they must fit the average salary in the entire contract under the cap. So a team $8 million under the cap is limited to offering a total of $24 million over three years, $32 million over four years, or $40 million over five years. If the offer sheet does not contain a third-season raise larger than 8% of the first-season salary, then they only have to fit the first year salary under the cap.
Putting this all together, if a team is $11 million under the cap, wants to submit a five year offer sheet, and wants to provide a large raise in the third season, they can offer a total of $55 million. If the average salary is $5 million, then the second year salary will be $5.4 million (8% raise). This leaves $44.6 million to be distributed over the final three seasons. With 6.9% raises in years four and five, the entire contract looks like this:
Season Salary Notes
1 $5.0 million Average salary amount
2 $5.4 million 8% raise over season 1
3 $13.907 million This is the amount that yields $44.6 million over the final three seasons with 6.9% raises*
4 $14.867 million Raise is 6.9% of season 3 salary
5 $15.826 million Raise is 6.9% of season 3 salary
Total $55 million Average is $11 million, which equals the team's cap room
