11:39pm: The Cavs are indeed in pursuit, as well as the Wizards, but the Bulls are still the favorites, reports Shams Charania of RealGM (on Twitter).
9:26am: LeBron James would like the Cavs to sign Mike Dunleavy, but the small forward is highly likely to re-sign with the Bulls, reports Marc Stein of ESPN.com (Twitter links). James, though he’s opting out of his deal, has been very much engaged with Cavs management about the roster and is expected to re-sign. Dunleavy is also reportedly drawing interest from the Clippers.
Chicago apparently wants Dunleavy back, though there’s a limit to how much the Bulls would pay the client of outgoing Wasserman agent Arn Tellem. The Bulls are also highly likely to retain Jimmy Butler, whom they’ve made a maximum qualifying offer. Should Butler end up signing for the max, it’s likely the Bulls will have already exceeded the projected $81.6MM tax line even without a contract for Dunleavy.
The Cavs will probably end up paying an even heavier tax burden, and they’ll almost certainly be limited to offering Dunleavy the $3.376MM taxpayer’s mid-level exception. The Bulls have Early Bird rights to Dunleavy, so they’ll likely be able to pay him as much as about $6MM next season if they want to.