The New York Knicks face a critical financial decision regarding guard Jose Alvarado, who must decide on his player option by June 26. If he opts out to enter free agency, his market value is expected to rise, creating a significant salary cap challenge for the team.
Alvarado, acquired from the Pelicans at the trade deadline, became a key contributor during the Knicks’ championship run with his defensive intensity. He is scheduled to earn $4.5 million next season if he exercises his player option. However, should he decline it, he would enter the open market where several teams are prepared to offer more, potentially starting at $6 million per year.
An Eastern Conference executive described the potential market for Alvarado as a significant challenge for New York. “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.”
This presents a major problem for the Knicks. Team owner James Dolan has stated he will not exceed the NBA’s second luxury tax apron to keep the roster intact. The Knicks are already projected to be $13-15 million below that threshold before making decisions on other players like Jordan Clarkson, Landry Shamet, and Mitchell Robinson. A new contract for Alvarado, even a modest raise, could push them over that line, forcing them to let him walk.
The teams that showed interest in trading for Alvarado previously—including the Rockets, Spurs, and Lakers—are expected to be suitors again. Alvarado could also choose to opt into his final year, play for his hometown team, and test free agency again next summer when more teams may have cap space available.
