Jose Alvarado to sign three-year deal with Knicks after declining $4.5 million player option

The New York Knicks are reportedly keeping Jose Alvarado in the fold for the long term. According to Yahoo Sports, Alvarado will sign a three-year contract to remain with the Knicks after declining the $4.5 million player option attached to his current agreement for the 2026-27 NBA season.

The decision reframes what had been a one-season fork in the road for Alvarado. Player options typically give teams and players a near-term certainty, but choosing to decline can be a report that the player wants a steadier multi-year commitment. In this case, the reported outcome is a new Knicks deal rather than a return to free-agency uncertainty.

Alvarado’s Knicks tenure began after a midseason trade from the New Orleans Pelicans, a move that put a reserve guard into a playoff-relevant rotation. While the broader circumstances of that trade are not detailed in the report, the timing matters: New York acquired him during a stretch when roster fit and role clarity can carry extra weight for coaching staff and front office planning.

As a player option holder, Alvarado had the ability to keep his existing arrangement intact for 2026-27 by taking the $4.5 million option. Instead, he is expected to move to a three-year structure with the Knicks, which likely smooths out both sides’ planning across the next several seasons. The report attributes the development to SNY NBA insider Ian Begley via Yahoo Sports.

For the Knicks, retaining Alvarado on a multi-year basis helps preserve depth at the guard spots, particularly with a player whose value often comes from day-to-day rotation production rather than as a primary star. For Alvarado, staying in New York also avoids the disruption of changing teams again after the midseason move, keeping his role and development trajectory more stable.

Still, this is not an official NBA transaction report within the information provided here, so the final contract terms beyond the reported length should be confirmed by an NBA or team release before being treated as fully settled. What can be watched next is whether New York’s remaining offseason roster-building continues to prioritize guard depth and whether Alvarado’s role becomes more defined as the team shapes its long-term rotation.