Sources: Suns, Nash working on deal

LAS VEGAS -- Friday's re-signing of Grant Hill and Steve Nash's subsequent congratulatory messages via Twitter are the latest signals that the Phoenix Suns will achieve their No. 1 priority this offseason by securing Nash's signature on a contract extension.

Nash, though, is still weighing his options.

Sources with knowledge of the negotiations told ESPN.com that the sides are still working out the terms of a two-year contract extension and that the two-time NBA Most Valuable Player -- who wanted to see what sort of roster maneuvering Phoenix accomplished before committing to finishing his career in the desert -- has not ruled out playing out the final year of his contract next season to become an unrestricted free agent in July 2010.

Suns owner Robert Sarver said via e-mail Friday that he awaits the response to the team's latest formal presentation to agent Bill Duffy made earlier this week. The Suns' two-year extension offer is believed to be worth in the region of $20 million.

Sarver said further negotiations are scheduled for next week when Suns officials and Duffy are in Las Vegas for the NBA's annual summer league here.

"I am hopeful," Sarver said. "[Nash] likes Phoenix and we like him."

The expectation remains that the sides will eventually reach an extension agreement. Via his Twitter account Friday, Nash appeared to drop a couple hints by welcoming the signings of Hill and Channing Frye and sending birthday wishes to Suns swingman Jared Dudley.

Yet it's also believed that Nash still has questions about the Suns' ability to reload roster-wise in the next year or two to make a return to the Western Conference elite within the three years an extension would span.

As for Hill, knowing that he'll definitely be playing alongside Nash next season -- along with the Suns' beefed-up offer -- was enough to convince him to stay in Phoenix instead of signing with the New York Knicks or Boston Celtics.

The Suns certainly could move Nash this summer if they wanted, but they've made it known to anyone calling with trade interest -- most notably Portland -- that they will not part with Nash even if he insists on playing out his current contract to have the right to shop himself in the summer of 2010.

In the event Nash did choose to take that route, Hill's new two-year, $6.2 million contract contains an opt-out provision that will enable him to return to free agency next summer as well.

"It's important for Grant that Steve be there next year," Hill's agent, Lon Babby, told reporters during a conference call Friday. "I know they have had conversations, so I think he's quite confident that the team that's coming back next year is going to be a highly, highly competitive team, and obviously that would include Steve Nash. But you need to get those [extension] specifics from the Suns."

Nash's public comments on the subject, such as his Friday tweets, have generally given Phoenix hope that he is preparing to spend the next three seasons in the desert -- which would take him to age 38 -- in spite of the Suns' recent slide in the West. During the opening of another Steve Nash Sports Club in his native Canada last week, Nash said: "I still believe in everybody there and still think we can build a winner."

But Nash also made mention during that news conference in Vancouver of the "financial constraints" that prompted the Suns to trade Shaquille O'Neal to Cleveland for two expiring contracts (Ben Wallace and Sasha Pavlovic) after O'Neal's first and only full season as a Sun resulted in a 46-36 record that featured the midseason firing of coach Terry Porter and a failure to make the playoffs.

"We maybe don't have the deep pockets of some of the other teams," Nash said.

Since the O'Neal trade, Phoenix has drafted Earl Clark with the 14th overall pick and made two relatively cap-friendly signings Friday in Hill and Frye. They've also flirted with trading Amare Stoudemire, but NBA front-office sources said that the Suns were already strongly leaning toward taking Stoudemire completely off the trade market before Stoudemire's disclosure via Twitter on Friday afternoon that he was undergoing another eye surgery.

The Suns later announced that it was a minor outpatient procedure stemming from his Feb. 20 surgery to repair a detached retina in his right eye and that Stoudemire will be able to resume workouts in 10 days.

"It was a routine drainage of a small amount of residual fluid that was simply the next step," team ophthalmologist Jay Schwartz said in a statement.

The Suns explored trading Stoudemire in February and again recently in conjunction with the draft but had begun to tell other teams that they were inclined to keep him for another season to play in the up-tempo system that has been restored under new coach Alvin Gentry.

"They were in that mode," one rival executive said of the Suns' stance, which was reached even though Stoudemire is likewise eligible to be a free agent in July 2010 and has been openly disappointed about the Suns' reluctance to sign him to a contract extension.

The Arizona Republic reported on its Web site Friday that the Suns are also in the midst of contract buyout talks with Ben Wallace that would pay Wallace roughly $10 million of his $14 million salary next season. Such a buyout would save Phoenix some $8 million when including luxury-tax payments but would also rule out the Suns' ability to use Wallace's contract to trade for New Orleans center Tyson Chandler.

Chandler is the sort of mobile big man, when healthy, that Nash has said Phoenix needed. But taking on Chandler's contract, which expires in 2010-11, would restore some of the same cap problems that Phoenix had when O'Neal was still on its books.

If the Suns buy out Wallace and waive Pavlovic, as expected, trading O'Neal could save the Suns nearly $18 million in payroll rollbacks and luxury-tax obligations, according to the newspaper.

Marc Stein is a senior NBA writer for ESPN.com.