Pacers to decline option on Lance Stephenson

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Shelburne 'bummed' for Stephenson (0:42)

Ramona Shelburne says if the Pacers are declining Lance Stephenson's team option, they must have better players in mind. (0:42)

The Indiana Pacers will make Lance Stephenson an unrestricted free agent by declining the team option on his contract for the 2018-19 season.

Stephenson, a fan favorite, was due to make $4.3 million.

"This was a very difficult decision, but as free agency begins on July 1, we want to have flexibility so that we can prepare for all of our available options,'' Pacers president of basketball operations Kevin Pritchard said Monday.

With the move, the Pacers open up enough cap space to go after two of their prime free-agent targets: Tyreke Evans and Will Barton.

The Pacers' cap situation is fluid because of Thaddeus Young's $13.9 million player option and Al Jefferson's partially guaranteed $10 million contract. The Pacers currently project to have anywhere from $10 million to $30 million in room.

The team hasn't closed the door on re-signing Stephenson once other free-agent priorities are addressed.