Shortly after he returned from China and signed with the Knicks, J.R. Smith told Chris Tomasson of FOX Sports Florida that he anticipated picking up his second-year player option and remaining with the Knicks. I was a little skeptical at the time, since the option will only be worth about $2.5MM, and Smith should easily be able to land a longer and larger deal on the open market.
So it's not a huge surprise to see Alex Kennedy of HoopsWorld reporting that Smith is expected to turn down his option for 2012/13. According to Kennedy, Smith will seek a multiyear deal, with the Timberwolves, Clippers, and Magic among the teams likely to have some interest.
If Smith does opt out of the second year of his contract, the Knicks will have difficulty re-signing him. Even if New York doesn't pursue a big-name free agent, the team may need to use its mid-level exception to retain Jeremy Lin, leaving little to offer Smith, who wouldn't have Bird rights.
When Smith came back from China, most of his NBA suitors could only offer portions of their mid-level or mini mid-level exceptions, meaning he had to sign for a discount to join the Knicks. In 2010/11, Smith earned $6MM+ for the Nuggets. While he may not find a multiyear guarantee that pays him $6MM+ annually, he should at least be able to easily exceed the $2.5MM on his option year.