New York Knicks owner James Dolan has paused contract negotiations with several key players as he looks to avoid the NBA’s steep luxury-tax penalties on payroll spending.
That decision means Knicks stars Karl-Anthony Towns and Josh Hart will have to wait for the new deals they hoped to secure before New York begins its title defense this season.
“As an organization, our entire focus is on preparing for the upcoming season and delivering another year for our fans to be proud of,” the team said in a statement. “As a result, we will not be negotiating contract extensions until later in the season and will remain solely focused on preparing for the start of the season.”
The Knicks will open their championship defense at Madison Square Garden against the visiting Philadelphia 76ers on October 20.
After New York defeated the San Antonio Spurs in the NBA Finals, Dolan acknowledged concerns about the team’s salary commitments. He said he wanted to avoid the hefty luxury-tax penalties that could come with adding more money to the payroll.
Along with postponing talks with Towns, Hart and backup guard Deuce McBride, Dolan allowed center Mitchell Robinson to leave for the rival Boston Celtics on a three-year, $47.4 million contract.
Knicks owner James Dolan and the players celebrate after defeating the Spurs in the Finals
Karl-Anthony Towns and Josh Hart attend the NY Knicks parade at Fanatics Fest NYC 2026
Towns is under contract through this season and is scheduled to earn $57 million. He also holds a $61 million player option for 2027-28, when he could choose to enter free agency. Hart will make $21 million this season, while the Knicks hold a $22.4 million option on the veteran wing for the 2027-28 campaign.
“You have situations like that and you never know what’s going to happen,” Hart said at the start of training camp. “But for me, as long as I wear this jersey, I’m going to play as hard as I can for my guys and the city, so hopefully we can figure that out. But we know it’s a business, and we know if some of these things aren’t figured out by February, it might be a different conversation.”
MORE ON THIS: Kelly Stafford, Wife of Rams QB Matthew Stafford, Opens Up About Plastic Surgery Pressure
Dolan discussed his concerns with WFAN in June, shortly after the Knicks won their first NBA championship since 1973.
“We cannot go into the second apron,” Dolan said, signaling his intention to keep the Knicks’ payroll below $222 million this season.
The NBA operates with a soft salary cap, which is set at $165 million this season and includes several exceptions. However, the league’s luxury-tax system is structured in increasingly punitive tiers. Once a team exceeds the $201 million tax threshold, it can face further penalties for spending above $209 million, known as the first apron, and $222 million, the second apron.
Towns is currently signed through this season, when he’ll make $57 million, and has a $61 million player option for 2027-28, when he can elect to become a free agent
Only a small number of NBA teams have crossed the second apron, a threshold that restricts both free-agent moves and trades. Teams can also face the league’s dreaded repeater tax if they remain above the luxury-tax line for multiple consecutive seasons.
“I don’t know if we’ll be able to,” Dolan told WFAN when asked whether the Knicks could keep their championship roster together. “We’re willing to stretch, but there’s certain things in the NBA that you’d have to be suicidal to do. One of them is the second apron.”
Jalen Brunson’s decision to accept a contract worth $113 million less than a full maximum extension in 2024 helped the Knicks end a 53-year championship drought.
If New York is to remain at the top of the NBA, however, Towns and other important players may need to agree to similarly team-friendly contracts, according to ESPN’s Brian Windhorst.
“If Karl Towns is willing to take a little bit of a haircut, you know, $7-10 million over the course of multiple seasons and Josh Hart is also extension eligible this summer, if both of them are willing to take a little bit of a haircut, you could see this core staying together for three, four, five years,” Windhorst said in June.
