Knicks Halt Contract Talks With Key Players to Avoid Luxury Tax Penalties
Owner James Dolan prioritizes financial flexibility over early extensions for championship roster.
The New York Knicks have paused contract extension negotiations with key players, including Karl-Anthony Towns and Josh Hart, as owner James Dolan seeks to avoid significant NBA luxury tax penalties ahead of the team's title defense. The team announced that contract discussions will be postponed until later in the season, with the sole focus currently on preparing for the upcoming NBA schedule.
Dolan has expressed concerns about the team's payroll exceeding punitive luxury tax thresholds, particularly the "second apron," which carries restrictions on trades and free agency. This financial strategy has already led to the departure of center Mitchell Robinson, who signed with the rival Boston Celtics for three years and $47.4 million.
Towns is currently under contract through this season with a player option for 2027-28, while Hart is set to earn $21 million this season with a team option for the following year. Both players had been hoping to secure new deals before the start of the season. Josh Hart acknowledged the business aspect of the league, stating that if extensions are not resolved by February, "it might be a different conversation."
Dolan reiterated his stance in June, emphasizing his unwillingness to exceed certain payroll limits, particularly the $222 million second apron. He likened entering that financial zone to being "suicidal" due to its significant limitations.
The Knicks are scheduled to begin their title defense on October 20 against the Philadelphia 76ers at Madison Square Garden. The team's championship run last season was aided by Jalen Brunson's decision to sign a contract extension for less than the maximum amount.
According to ESPN's Brian Windhorst, maintaining the core of the championship team may require Towns and other key stars to accept below-market value contracts. Windhorst suggested that if Towns and Hart were willing to take "a little bit of a haircut" on their potential earnings over multiple seasons, the team could remain competitive for several more years.