LeBron James' free agency decision, explained

By exercising an early termination option on his contract, LeBron James will be a free agent. Here's what that actually means.

LeBron James exercised an early termination option on his contract, which will make him an unrestricted free agent on July 1. This was not an unexpected move, but James' decision sets forth a chain reaction that will have a ripple effect across the rest of the league. At the very least, things are not likely to remain status quo in Miami.

WHAT'S AN EARLY TERMINATION OPTION?

In simpler words, it's a player option. (There are differences, but they are not significant). LeBron, Dwyane Wade and Chris Bosh all signed similar six-year deals in 2010 with ETO's after this season. All three have options after next season, as well, allowing them to all become free agents at the same time if they choose. In theory, the Heat could also rework the trio's contracts to lower their cap numbers and bring in more players.

The opt-out also makes them eligible for huge extensions. We won't know the salary cap particulars for the 2014-15 season until July 1, but LeBron could be looking at a new contract that starts around $22 million per season. It's worth noting that all three players took less than the max amount in 2010, which allowed Miami to retain Udonis Haslem.

IS THIS A BIG DEAL?

Potentially. With LeBron in play, he immediately becomes the undisputed No. 1 target for every team that has ever harbored an illusion about having him on its roster. We've heard reports that the Bulls and Rockets (to name two) have plans to move contracts and create space for Carmelo Anthony. Obviously, they would go the extra mile if it meant signing James.

There are other potential destinations, as well. The Lakers have a barren roster and tons of potential cap space. The Clippers could get into the act. The Cavaliers like to think they have a chance at bringing him back. Once you start going down the list, you can make a case for just about every team in the league to open space and try to convince LeBron to come play for it.

By opting out, James has created options for himself and leverage with the Heat. Remember that few people thought teaming up with Wade and Bosh was a realistic possibility until it actually happened.

DOES THIS MEAN HE'S GONE?

Heavens, no. For months, there has been speculation that Bosh and Wade would also exercise the options on their contracts and create an avenue for the Heat to add another impact player -- like Melo -- or a stronger supporting cast.

NBA Free Agency

LeBron returning to Miami is still the most likely scenario, but it will be interesting to see what Wade and Bosh do with their contract decisions. Wade is a south Florida icon and doesn't seem likely to leave. Bosh has said that he enjoys living in Miami. They don't have to opt out.

But the Heat need reinforcements. Their lack of depth was exposed in the Finals when they lost to the Spurs in five games, and Wade looks like he has lost a step or two. If the trio returns, there will need to be changes. LeBron's decision makes that theoretically possible.

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