Knicks Pick Up Billups’s Contract

The Knicks announced Wednesday that they would retain Billups for 2011-12 at his full salary of $14.2 million. They had until Friday to waive him, a move that would have cost $3.7 million.

Either way, the Knicks would be limited in free agency this summer, which made retaining Billups the most practical move.

“Chauncey is an extremely talented and experienced point guard,” , the team president, said in a statement. “We are very happy to have him back.”

Walsh referred to Billups, Amar’e Stoudemire and as “a great nucleus” to build around. The challenge now is acquiring new talent with little salary-cap room and few trading chips.

The Knicks have about $60 million in committed salary for the 2011-12 season, which would exceed the current cap of $58.5 million. With the labor deal expiring June 30, and with no progress in negotiations, there is no telling what the new cap will be.

But assuming a similar system, and a static cap, the Knicks could have created only about $8 million of room. They would still need a point guard, and Billups would be the best one available.

rules prohibit any prearranged deal in which Billups would agree to be waived and return for a lesser salary. Even if Billups re-signed for less, it would not leave the Knicks enough room to make an impact signing.

In fact, the Knicks might have just as much or more to spend by using the midlevel exception, assuming it remains in the new labor deal. That exception, which can be split among multiple players, was worth $5.8 million this season.

Keeping Billups gives the Knicks other options. His large expiring contract could be valuable as a trading chip next season. If Billups stays, his salary will drop off of the payroll in 2012, helping the Knicks drop below the cap.

At the moment, the Knicks have $43 million committed to four players in 2012-13: Stoudemire, Anthony, Toney Douglas and Renaldo Balkman. That amount will change when the Knicks add a first-round pick in June and presumably a free agent or two this summer.

The 2012 free-agent class could include two of the best point guards, Chris Paul and Deron Williams, as well as , the league’s top center.

Walsh’s status remains the most pressing area of concern. His contract expires June 30, unless the team picks up a one-year option by Saturday or signs him to an extension. Walsh is due to meet with , the Madison Square Garden chairman, to discuss his future and is seeking assurances that he will have full autonomy if he returns.

Walsh and Coach have not spoken to the news media since Sunday, when the Knicks were eliminated from the playoffs in a four-game sweep by the .

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