May 6, 2012; New York, NY, USA; New York Knicks shooting guard J.R. Smith (8) shoots over Miami Heat small forward Shane Battier (31) during the second half of game four in the Eastern Conference quarterfinals of the 2012 NBA Playoffs at Madison Square Garden. Knicks won 89-87. Mandatory Credit: Debby Wong-US PRESSWIRE

New York Knicks swingman J.R. Smith finally made a decision on his contract status for the 2012-13 season and as many expected, Smith will opt-out of his current contract with the club.

Howard Beck posted the following via Twitter:

JR Smith will decline Knicks option but intends to re-sign for longer term w/NY, source says. Story posting soon.

— Howard Beck (@HowardBeckNYT) June 25, 2012

Knicks fans shouldn’t get too upset though. Smith will still likely re-sign with the team. As per the new CBA, he can re-sign for up to a 20 percent raise, which is what he will likely do as Marc Berman posted on Twitter.

Source said today J.R. Smith will not opt in at tomorrow’s deadline, leaving him free agent. But likely will re-sign with 20 percent raise.

— Marc Berman (@NYPost_Berman) June 25, 2012

That could be good and bad news for the Knicks though.

It’s good because that’s one depth piece they don’t have to worry about when free agency begins. However it’s bad news if general manager Glen Grunwald dips into his $5 million mid-level exception to sign Smith.

As I’ve documented plenty of times, the Knicks will need that to fill other holes including a veteran point guard and possibly a frontcourt player. Giving a portion of that to Smith means less they have to spend during the offseason. If the Knicks spend more than $3 million of that, they will be hit with a hard cap of around $74 million for the season.

That will make improving the club during the season next to impossible.

However by declining his option, Smith becomes an unrestricted free agent July 1. That means any team can sign him and you can bet there will be teams with deeper pockets than the Knicks currently have.

In New York, Smith can fill a role similar to what he did last season, especially with Iman Shumpert on the shelf until possibly January, but at what cost?

The best case scenario is that Smith signs for a 20 percent raise and that’s it.

They don’t want to be dipping into the MLE for him, but that’s what will likely happen at this point if Grunwald plans to keep Smith in a Knicks uniform.

Personally I’m not a fan of bring Smith back and I like using the MLE in a wiser fashion. The Knicks have enough guys on the team that like to hold onto the ball and when Smith and Carmelo Anthony are on the floor together, the ball does not move at all. That’s not to mention Smith’s poor decision making and awful shot selection.

But having said that he brings some good things to the table as well and the Knicks can (and have) do much worse.

The beginning of free agency is less than a week away and it will be interesting to see what the market will be for Smith,

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