Sources told ESPN.com that Smith and the Cavs came to terms Friday night on a new pact that will guarantee the mercurial shooting guard $45 million over the next three seasons.
The fourth season of the contract is not fully guaranteed, sources told ESPN's Brian Windhorst, at which point Smith will be 34. But he will have an opportunity to earn the full value of the contract if he makes the Cavs' roster for the 2019-20 season.
Sources told ESPN.com that, after weeks of scant progress, interest this week from the Philadelphia 76ers in Smith might have helped sparked negotiations with the Cavaliers. The Sixers have roughly $27 million in salary cap space and, as seen during the summer under new general manager Bryan Colangelo, made a legitimate push to try to sign Manu Ginobili away from the San Antonio Spurs.
The Sixers have a growing need in the backcourt in the wake of a recent wrist injujry suffered by veteran offseason signee Jerryd Bayless.But bringing Smith back was described as no less than an absolute must by Cavs star LeBron James, who went public last month with his disappointment about the ongoing impasse just four days into training camp.
The deal struck Friday will push Cleveland's payroll to a league-record $125 million for the coming season with a luxury-tax bill in the $30 million range. The Cavs paid a league-record $54 million in taxes last season, but the NBA's well-chronicled offseason salary-cap spike will ultimately lead to a lower tax bill for 2016-17.
The Cavs and Smith had been in talks since the veteran guard declined his $5.3 million player option for the 2016-17 season in July, becoming an unrestricted free agent after averaging 12.4 points, 2.8 rebounds, 1.7 assists and 1.1 steals while hitting 204 3-pointers in 77 starts last season.
Cavs coach Tyronn Lue had also been vocal about the need to get Smith signed and in camp. It was clear that Smith, who James recently referred to as "a leader of the team and for me personally,"never wanted to go elsewhere, given how he's been spending as much time with his Cavs teammates as possible this month away from the court.
When the sides were unable to strike a deal in time for the start of camp, Smith became the fourth Cavs player in the past 10 years -- joining Anderson Varejao, Sasha Pavlovic and Tristan Thompson -- to have contract negotiations drag well into October.