To bring in Lin, the Lakers will need to go under the salary cap for the first time since 1996. To do so, the franchise will likely need to renounce the rights to Pau Gasol, prior to completing the trade with Houston.
The Lakers have Gasol's "Bird Rights," which enables the team to go over the salary cap to re-sign him -- but not without a cost.
Even unsigned, Gasol takes up $20.6 million of the Lakers' space. To clear the necessary $8.4 million in cap to get Lin, the Lakers will assuredly need to renounce Gasol's rights, wiping that $20.6 million immediately off their salary cap. An unlikely alternative to renouncing Gasol would be to trade Steve Nash and his $9.7 million final season to a team without any returning salary.
Even renounced, the Lakers can still use their remaining cap space (at least $10 million) to re-sign Gasol, and can still sign and trade the veteran forward/center to another team.
Lin will actually earn $14.9 million from the Lakers this season, but he will count as just $8.4 million against the Lakers' salary cap.
When the Rockets acquired Lin in 2012, the Knicks only had his "Early Bird" or partial rights -- which opened a quirk of the NBA's collective bargaining agreement, allowing the Rockets to fashion a complex offer with a significant balloon payment in the third year.
Under normal circumstances, a player cannot be signed with such a massive jump in pay. Despite his near $15 million price tag, in all other aspects, Lin is considered an $8.4 million player (cap space, tax computation, trade value, etc.).
If Gasol was re-signed without his rights to a one-year deal, the franchise would re-gain his full Bird Rights next summer.
In a similar move, the Dallas Mavericks renounced the rights to Dirk Nowitzki to make an offer to Rockets restricted free agent Chandler Parsons. Nowitzki has already agreed to re-sign with the Mavericks, and will via Dallas' available cap room.
The Rockets need to move Lin as part of their plan to sign Miami Heat free agent Chris Bosh, while retaining Parsons, who signed an offer sheet with the Mavericks on Thursday. Houston has three days to decide on Parsons and the wherewithal to acquire Bosh and keep Parsons if they can act quickly.
The Lakers' acquisition of Lin, who is in the final year of his contract, will help the Rockets while giving the Lakers a steady point guard and a future draft pick.
The teams will also need to renounce their mid-level exception ($5.3 million), bi-annual exception ($2.1 million) and their Steve Blake traded-player exception ($2.8 million) to get under the cap. Those exceptions do not return if (and when) the Lakers hit the $63.1 million salary cap, although at that point the franchise will gain a $2.7 million room exception.