UPDATE: Tuesday, Jan. 7 at 11:15 a.m. ET by Ethan Norof
The Boston Celtics have also confirmed the transaction.
--End of update--
UPDATE: Monday, Jan. 6 at 8:40 p.m. ET by Grant Hughes
According to Stein, the Lee-for-Bayless swap might now involve a third team: the Oklahoma City Thunder:
Apparently, Ryan Gomes is now rumored to be on the move:
Stein suspects the Thunder might have another roster tweak in mind, which is why they'd get involved by including Gomes.
---End of update---
To absorb Lee's contract, the Grizzlies would need to use the remainder of the trade exception (worth roughly $7.5 million) they created in Jan. 2013 when they sent Rudy Gay to the Toronto Raptors.
If not, Memphis could always throw in a smaller contract to make the move work from a financial standpoint, which A. Sherrod Blakely from Comcast SportsNet points out.
In 30 games for Boston this season, Lee is averaging 7.4 points and 1.6 rebounds per game while shooting 44.2 percent from three-point range, which ranks 10th-best in the NBA.
On the other side of the spectrum, Bayless is putting up 8.0 points and 2.0 assists per game in 30 games for Memphis.
This isn't the first time Lee's name has been tossed around in potential trades. He was mentioned as a possible piece in a deal for Omer Asik earlier in the season.
Lee has two years remaining on his deal after this season worth roughly $11 million, while Bayless is an expiring contract at $3.1 million.
Memphis is tied for 21st in the league in three-point shooting at 34.3 percent. They've been relying heavily on Mike Conley (33.6 percent) and Mike Miller (43.4 percent) for their outside shooting, so Lee will certainly be an asset in that department.
He's expected to be pulled from Boston's lineup before the team faces the Oklahoma City Thunder on Sunday night, per Stein's report.
Bayless gives the Celtics yet another option at point guard as Rajon Rondo continues to rehab from his injuries.
Follow NBA Featured Columnist/Live Blogger Christopher Walder on Twitter at @WalderSports