Jeremy Lin, Houston Rocket?

We all enjoyed a nice laugh this afternoon when Glen Grunwald and the rest of the major players in the Knicks front office went missing in an apparent attempt to dodge the Rockets' offer sheet. This was just the Knicks way of screwing it to the Rockets after the Rockets screwed it to the Knicks with the massive offer sheet, we all surmised.

Turns out, there may be more to the story. Starting early this evening, word started to circulate that the Knicks were talking to Raymond Felton about rejoining the Knicks, potentially letting Lin go. Then Mark Haggard, an ABC sportscaster from Conway, South Carolina, tweeted that Felton had informed him that a deal was close to send him to New York, and that the Knicks matching of the Lin offer "is off."

This report was met with much skepticism from the basketball community. After all, it was just a small town reporter with fewer than 200 followers to his name. BS, right?

Then came the bombshells.

Knicks close to obtaining point guard Raymond Felton in sign and trade with Blazers, source tells Y! Sports.

— Marc J. Spears (@SpearsNBAYahoo) July 15, 2012

Jeremy Lin appears close to being a Houston Rocket with Raymond Felton to NY deal close to being done, sources tell Y!

— Marc J. Spears (@SpearsNBAYahoo) July 15, 2012

Another source insists #Knicks won't match Lin's offer sheet.

— Marc Berman (@NYPost_Berman) July 15, 2012

Jump for some analysis on the developing story!

Assuming this deal goes through and the Rockets land Lin for a three year deal worth upwards of $25 million, the Rockets have to be happy. They clearly made the changes in the offer sheet with the expressed purpose of discouraging the Knicks from matching, so the Rockets must be pleased to get their player.

If the Lin contract seriously hindered the Rockets' ability to swing a Howard trade, there would have been no reason to re-work the contract. The Rockets wanted Lin, and now it appears that they will get him.

As I noted on Twitter (shameless plug), the Rockets will still be in great shape to take on the Magic's bad contracts in a Dwight Howard trade, even if they land both Asik and Lin. The Rockets could simply slot Chris Duhon's contract into the trade exception created by the Kyle Lowry trade and generate a trade exception large enough for Jason Richardson or Glen Davis' deal in a sign-and-trade with Phoenix. As Larry Coon noted, the Lowry trade exception does not exist. I'll have to check on this, but I believe this is because the Rockets' cap space exceeded the size of the trade exception, making the exception disappear.

The Rockets, however, will still have some $20 million in cap space to use even if the Knicks let Lin go. And if the Bulls allow Asik to go to Houston, the Rockets can still offer some $10-12 million in cap space to take on bad contracts from the Magic.

Cap wise, the biggest downside to the Lin signing is that the Rockets could potentially be out of luck to offer two maximum contracts next summer to free agents. Part of the Rockets' proposed plan to keep Howard was to convince another top free agent (Chris Paul?) to team up with him in Houston. Depending on the number of bad contracts the team takes on in a Howard deal, that scenario may now be impossible.

Remember this when you react. The Knicks deal with Felton isn't even yet done, and a Felton sign-and-trade would not preclude the Knicks from also retaining Lin (though it seems unlikely). Look before you leap, people.