The stakes on these talks are enormous because the teams believe a deal for Leonard would likely clinch a free-agent commitment out of LeBron James to the Lakers. James has until late Friday night to opt out of the final year of his contract with the Cleveland Cavaliers.
The Spurs have wanted to find a way to repair the franchise's relationship with Leonard, but an overwhelming Lakers offer could convince San Antonio to part with its franchise star, league sources said.
The Lakers are using the Paul George and Kyrie Irving trades as proportional models for a Leonard deal, but San Antonio understands that this trade, for all intents and purposes, means both Leonard and James would come to the Lakers; and it will likely command a massive package of young players and draft picks for Leonard, a two-time All-NBA first-teamer and a two-time NBA Defensive Player of the Year.
The Lakers are in no rush to sign the 25th overall pick in Thursday's NBA draft, Michigan forward Mo Wagner, to his rookie scale deal, which would allow the Lakers to include his draft rights into a trade package, league sources said. Wagner couldn't be traded for 30 days once he signs his rookie deal.
The Lakers also are pursuing an additional first-round pick on the trade market, offering to incur a salary dump of contracts to get a pick, league sources said.
As ESPN reported earlier, there's a race to secure Leonard before James is faced with making a decision in free agency, especially with concern that Oklahoma City Thunder forward Paul George is no longer assured of signing with the Lakers, league sources said.
Another James preference that could impact free agency -- assuming he chooses to opt out before Friday's deadline -- is that he wants to make a decision quickly in July free agency, league sources said.
The Boston Celtics, Cleveland Cavaliers, Philadelphia 76ers and LA Clippers are among teams that have made offers to the Spurs for Leonard, league sources said. The Lakers, the franchise Leonard wants to be traded to, did not have an encouraging initial conversation with the Spurs, ESPN reported recently.
If Leonard can convince the rest of the teams interested in trading for him that he'll only be a one-year rental before signing with the Lakers in 2019, the Lakers could have the most compelling trade package to offer San Antonio.
The situation has become similar to where the Lakers were with the Indiana Pacers last year, when George informed the Pacers that he intended to sign with the Lakers as a free agent in 2018. As such, the Lakers never made a substantial offer to Indiana -- such as the No. 2 pick in the 2017 draft or Brandon Ingram -- as they expected George would come to them this year in free agency. But now, after last summer's trade to Oklahoma City, George is seriously considering a return to the Thunder, as well as the possibility of joining the Lakers or others.
The Lakers could be risking a scenario of James staying in Cleveland or going elsewhere and the Spurs trading Leonard to a destination where he becomes comfortable and hedges on joining the Lakers next year.
The Lakers have been weighing the conservation of young assets and future draft picks against the possibility of getting shut out in free agency. The Lakers hoped to lure James and George in free agency, which would give them more leverage in Leonard trade talks -- or simply for the ability to wait until next year to sign Leonard.
The price for Leonard would be substantial. The Lakers could have to surrender a combination of former first-round picks -- from Ingram, Kyle Kuzma and Josh Hart -- and future first-round picks and perhaps restricted free agent Julius Randle in a sign-and-trade agreement.
The Spurs also could push the Lakers to take an unappealing contract off their books. Those are all deal points that would be applicable to leverage, which belongs to the Spurs as long as Lakers president Magic Johnson and general manager Rob Pelinka haven't delivered yet on the promise of a blue-chip free agent.
Johnson told reporters in Los Angeles on Tuesday that he would step down as the team's president of basketball operations if he couldn't deliver superstars via free agency or trade over the next two summers.
While James and George have until Friday to exercise their player options on the final years of their contracts and become unrestricted free agents, Leonard can't opt out of his contract until next summer.
Thus far, the Spurs haven't been responsive to all teams that have inquired about Leonard, nor have they ruled out the possibility of trading him to any league destination, sources said.
James hasn't ruled out a return to Cleveland, but his chances of staying with a reshaped and upgraded roster are murky.
The Cavaliers have been working on several trade and salary-cap-clearing possibilities to be aggressive in free agency, but they have been stymied in attempts to meet or discuss scenarios with James, league sources said. James had been clear that he wouldn't engage with the Cavaliers throughout the pre-draft and pre-free-agency process, and he has stayed consistent with that posture.
James' unwillingness to commit beyond the 2017-18 season made it challenging for Cavs management to execute a trade for George last summer, because George wanted a James commitment beyond next season to make one of his own, league sources said. One George-to-Cleveland deal fell apart when the Cavs declined to make a future first-round pick unprotected, a concession they wouldn't make without assurances from James.
It is unlikely that the Cavaliers would have traded Kyrie Irving with James and George together on the Cleveland roster.
Now, the longer the Cavaliers go without clear communication with James, the less chance they can find ways to upgrade the roster to James' satisfaction. Cleveland would love to get involved with George's or Chris Paul's free agencies in concert with re-signing James, but because the Cavs are likely to be deep into the luxury tax, they will be barred from receiving players in sign-and-trade deals, which makes getting involved in the free agency of stars nearly impossible.
Cleveland has inquired about Leonard, sources said, but the Cavaliers probably don't have the assets to top the rest of the market.
Leonard has been adamant that he doesn't want to step into the San Antonio locker room again, and the Spurs have been adamant that they won't be forced into a trade, or a timetable, prior to the February trading deadline, league sources said. No team talking with the Spurs about Leonard has found them to be in a rush to make a deal.