When the news became official in late June, the Knicks' front office was quite excited about its offseason plans and options. Jeremy Lin was very much in the middle of them and the email that arrived from the league office seemed to guarantee he would be in New York for years to come.

Yes, Lin's free agency would have to be dealt with. But the free agency period, starting July 1, seemed for the Knicks to be a case of merely adding to its roster, not subtracting from it.

Less than three weeks later, Lin was the new point guard for the Houston Rockets, after an unforeseen turn of events that has left hard feelings all around. Now the parties are moving on to see who gets the last laugh.

In the memo that arrived on on that last business day in the NBA fiscal year, June 29, the league and the National Basketball Players Association announced an agreement on a dispute that involved Lin and Steve Novak, two Knicks who were to become eligible for free agency. The agreement assured the Knicks would hold the Bird rights for each player -- a matter that had been unresolved because of some conflicting language in the new collective bargaining agreement -- and would be able to re-sign both free agents without losing the flexibility to add other players.

The Knicks would be able to keep their taxpayer's midlevel exception of $3 million. And according to sources, and they had a bevy of names they planned to chase using sign-and-trade options. Using some prudent long-term planning, the Knicks had assembled a cadre of players on non-guaranteed contracts for the 2012-13 that could be used in such deals.

Steve Nash -- like Lin, a point guard -- was at the top of their free agent wish list, but they knew that in any case they could retain Lin, and they were confident they would. The Knicks told the 23-year-old phenom that they wanted him back and saw him having a major role -- Knicks coach Mike Woodson had spoken of Lin openly as the incumbent starter, although the Nash pursuit clouded that. And the Knicks had reason to be confident, as they had the right to match any contract offered to Lin from another team, given his status as a restricted free agent.

The Knicks took the position than many teams do with restricted free agents, inviting such players to test the market and even get an offer sheet from another team. And while they knew this would benefit Lin, who as a so-called "Early Bird" free agent could get a bigger offer from another team than from the Knicks, they still signaled throughout that they would match any offer he received.

For these reasons, the Knicks actually never made Lin a formal contract offer, sources say.

A week into free agency, news arrived that Lin had agreed to a four-year offer sheet with the Houston Rockets that included $19.5 million guaranteed (and a fourth year with a team option, taking the total offer to $28.8 million). The Knicks felt this was a reasonable price.

While Lin would not be able to sign the offer sheet until July 11 or later, because of league rules, the Knicks were confident they would match the offer sheet, and this stance was widely reported. In interviews, Woodson said the Knicks would "absolutely" match the offer. Nash was already off the market, and the NBA world -- and the legions of Lin fans -- assumed that Lin's return to New York was a mere formality.

But the Rockets had a surprise up their sleeves. Perhaps spurred by Woodson's comments, they raised the guaranteed amount of the offer (while lopping off the unguaranteed fourth year), taking it from $19.5 million to $25.1 million. Still, an increase of $5.6 million (plus attendant luxury tax penalties) over three seasons wasn't expected by most observers to deter the Knicks.

While waiting for the offer sheet to arrive, and even avoiding delivery for a day or so, the Knicks had their own surprise in store -- they moved forward with free agent point guard Raymond Felton, a former Knick, and reached an agreement on Saturday, July 14. Rumors spread that the Knicks might not be bringing Lin back after all, and that new stance was confirmed over the weekend by ESPN's Stephen A. Smith, talking to sources close to the Knicks.

What happened?

Somewhere in the process, hard feelings developed on each side. As Chris Broussard reports, the Lin camp felt a lack of enthusiasm from the Knicks that seemed to them like disrespect. At the same time, the Knicks were stung by Lin's willingness to work out a $14.9 million salary in the third year of the offer sheet -- while a backloaded offer for Lin had been widely expected to arrive from some team, the sizable increase became a stumbling block. While from the Houston point of view it was good strategy, and while the Lin camp was going about the business of getting the best offer it could, the Knicks were displeased.

Lin would later tell Sports Illustrated that he had hoped to return to New York, but the new offer changed the Knicks' perspective. Despite his amazing popularity and the potential business benefits to the company -- which have been much debated -- the Knicks found the new offer too rich for their tastes, especially with Felton and free agent signee Jason Kidd ready to step into the point guard position.

"Only Jeremy and his agents know for sure what their motive was," one league executive said. "But it does appear like they overplayed their hand if he truly hoped to stay in New York. They got the strong impression that the Knicks would match anything. They didn't anticipate [New York] had a backup plan."

According to Knicks sources, the team believed that Lin and his representatives were trying to squeeze the team that gave him his big break. Despite the good vibes around Lin during the season, the Knicks questioned if he was truly being a team player, particularly in terms of the contract negotiations. From the Knicks' perspective, it appeared Lin might've been working against them and perhaps taking them for granted.

The Knicks' other major acquisitions had shown a strong desire to be in New York. Amare Stoudemire had said yes when LeBron James, Dwyane Wade and Chris Bosh had said no. Carmelo Anthony stonewalled the New Jersey Nets and other teams because he only wanted to be in New York, forcing his way there in a trade.

“ Only Jeremy and his agents know for sure what their motive was. But it does appear like they overplayed their hand if he truly hoped to stay in New York. They got the strong impression that the Knicks would match anything. They didn't anticipate [New York] had a backup plan.

” -- League executive on Lin situation

Knicks owner James Dolan has been considered by many to be the key player on the Knicks' side of this saga, and that's a fair assessment -- he's a powerful, engaged owner. While the secretive Knicks will likely...