This is a win for the Knicks, because it means their salaries will not count against the cap.
Here is the NBPA statement. News story here.
New York, NY—June 22, 2012: Arbitrator Kenneth Dam today affirmed the National Basketball Players Association’s position that players claimed off waivers retain their valuable “Bird” and “Early Bird” rights when they become free agents. As a result of the arbitrator’s decision, Jeremy Lin and Steve Novak of the New York Knicks will enter the 2012-13 free agency period with “Early Bird” rights, and Chauncey Billups of the Los Angeles Clippers and J.J. Hickson of the Portland Trailblazers will enter the 2012-13 free agency period with full “Bird” rights. Future players claimed off waivers will likewise benefit from today’s ruling.
“Bird and Early Bird rights are the lynchpin of our Soft Cap system, and we’re pleased that Professor Dam recognized that a player does not forfeit these important rights unless he makes an affirmative decision to sign with a new team as a free agent,” NBPA Executive Director Billy Hunter said. “Players fought hard for a Collective Bargaining Agreement that allows maximum flexibility for free agent players while also permitting teams to retain their core free agents, and today’s decision affirms both of these important principles.”