Smith has spent the year overseas playing in the Chinese Basketball Association, and is one of the better free agents available to NBA teams.
The Chicago Bulls, Orlando Magic and Los Angeles Lakers are also teams who are interested in signing the 26-year-old guard.
What does it mean?
Who should Smith sign with?
Smith is one of the better sixth men in basketball because he can provide instant offense off the bench with his quality outside shooting and explosive drives to the basket. There are many teams who could use him off the bench.
Teams who may be looking to make a trade in order to bolster their roster may look at signing Smith as a better alternative.
The Knicks can offer him more than the Clippers can—they can only offer him the veteran's minimum—but New York is also willing to offer a player option for next season, which could be a large part of Smith's decision.
While Smith would likely make far more than $2.5 million as an unrestricted free agent this summer, the security of that player option for next season could be an important factor in his decision, according to a source.
The longer Smith waits, the less money he will make because pro-rated contracts lessen after each passing game. That being said, the longer he waits, the greater the possibility that a team with more money to offer—like the Indiana Pacers—could show more interest.
However, Larry Bird doesn't actually need to add someone like Smith to his Pacers roster.
I would expect Smith to make his decision soon, and it will come down to either playing for money or for a shot at a championship. The Clippers give him a better chance to win a title this season than the Knicks do.
The Clippers could really use Smith because, ever since Chauncey Billups was lost for the season due to an Achilles injury, L.A. has needed some more scoring and someone who can shoot from the outside.
One thing that could sway Smith to join the Clippers is that he will likely get a good amount of playing time because of the Billups injury.
Clippers point guard Chris Paul talked about the team's chances of signing Smith this week. He told ESPN:
"I think our chances are very high," Paul told ESPN.com's Marc Stein earlier this week. "Who knows J.R. better than me?
"Also, he knows he'll have the opportunity to play here," Paul said. "He can only make us better."
The Knicks need another scorer off the bench, but with Jeremy Lin's emergence as a star point guard, the need for New York to sign Smith isn't as high as it was a few weeks ago.
Smith will have options from several teams, and his offensive skill set makes him an important player to many contenders.
Nicholas Goss is an NBA featured columnist at Bleacher Report