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Jose Alvarado #5 of the New York Knicks

If you’re not sure how things could play out if popular New York Knicks guard Jose Alvarado is allowed to his free agency, consider where things stood back in February. That was when Alvarado was put on the trade market by the Pelicans, who were fielding calls from a handful of contenders seeking to trade for the fifth-year veteran, including the Spurs (who probably really regret not being more aggressive on that pursuit), the Rockets and the Lakers.

The Knicks had the winning trade bid for Alvarado, of course, dealing off two second-round picks and short-timer Dalen Terry to bring Alvarado back home to MSG. Alvarado averaged 6.6 points and 3.8 assists in 28 games for the Knicks, before having an up-and-down postseason until the Finals came around, and Alvarado shone with his intensity, defense and clutch play-making.

Alvarado has a player option for the 2026-27 season, and agreed to push the exercise date of that option back to Friday June 26, to give the Knicks more time to figure out their financial situation. But make no mistake, if Alvarado opts out of the $4.5 million remaining on his contract for next year and hits the market, he will get more expensive–and that would be very bad news for the Knicks.

Knicks Would Compete With Contenders for Jose Alvarado

There are a few reasons for this. First is that, if Alvarado opts out, there will be no shortage of attractive offers for him in free agency. As one Eastern Conference exec said, “Oh, it would be a cluster. He’s the kind of guy you want on the bottom half of the roster if you’re a contender. So all the teams that were after him before will be after him again, and they can all bump him to $6 million with an (cap) exception or go higher, go into the midlevel for him. And you’d have to add some teams to that mix, too.”

At the deadline, the teams in the mix to trade for Alvarado outside of the Knicks included the Rockets, Spurs, Lakers and Pistons. Those teams would be likely to pursue him again in free agency. There would be other offers, too, perhaps from the likes of the Hornets, Sixers and Warriors.

Knicks Sticking With 2nd Apron Stance?

Bumping up Alvarado from $4.5 million scheduled for next year to $6 million (or slightly more) per year on a longer term might be enough for the Knicks to bow out for apron reasons. It’s not a huge raise, of course, but the Knicks are already about $13-15 million away from the luxury tax’s second apron, and that is before Mo Diawara’s contract kicks in, and before decisions are made on Jordan Clarkson, Landry Shamet and Mitchell Robinson.

Knicks owner James Dolan, even in the afterglow of a Larry O’Brien trophy, said last week he would not go into the second apron to keep this bunch together. If that’s the case, the Lakers have little chance of bringing back Shamet and Robinson.

Jose Alvarado Could Benefit by Waiting a Year

And maybe that means Alvarado is out, too. If the Knicks are treating the second apron as though it is a hard cap, and if Alvarado does opt out, then the Knicks will almost certainly be outbid for Alvarado’s services.

But there is one side possibility the exec broached for Alvarado. It could be beneficial for him to stay put in New York for this year, play well, enjoy his time in front of his hometown fans, and boost his value more for next summer, when he can again be a free agent and there will be more cap space available.