The Magic are declining to exercise the club option on reserve center Moe Wagner, but both sides are interested in discussing a new contract for his return as a free agent next week, a league source told the Sentinel on Saturday.

By not entering the second year of the two-year, $16 million contract he signed last summer, the Orlando big man will become an unrestricted free agent.

While other teams in the league may try to sign Wagner as a free agent, the Magic's decision to decline the $8 million club option leaves them with financial flexibility – something the franchise has grown fond of under President of Basketball Operations Jeff Weltman.

Just because Orlando didn't exercise the club option doesn't mean Wagner doesn't play a role in their future. The sides can now work to negotiate a new contract to keep him, something they've done twice before.

And that is the expectation, according to a league source.

By declining Wagner's club option, Orlando's projected salary cap increases to around $52 million, which could allow the Magic to sign an influential free agent.

Wagner arrived in Orlando in April 2021 after spending the first three years of his career with three different teams (Lakers, Wizards and Celtics). He re-signed with the Magic that summer and did so again last year.

Wagner, the 25th pick in the 2018 NBA Draft, has now found a home in Orlando and has thrived in his role as a reserve center. This season, he posted career highs in points (10.9 points), effective field goal percentage (63.6%), rebounds (347), assists (96), steals (39) and blocks (21).

In addition to the option to decline or choose the club option, the Magic could also have postponed the guarantee date by mutual agreement.

Negotiations between teams and their own free agents began the day after the NBA Finals (June 18), but talks between teams and any other future free agents cannot begin until June 30 at 6:00 p.m. ET.

Teams can begin signing free agents at 12:01 p.m. ET on July 6.

Jason Beede can be reached at [email protected].