It was kind of a pipe dream anyway, but LeBron isn’t going to sign the extension that the Cavs have offered, according to the Cleveland Plain Dealer.

“I signed a contract in 2006 with an option,” he said. “It would make no sense for me to sign that contract if I didn’t keep my options open. I’ll let you fill in the blanks.”

James is playing this one the right way. If he re-ups now, then he loses the leverage necessary to keep GM Danny Ferry’s feet to the fire in terms of bringing in some long-term help. Shaquille O’Neal is fine for a year or two, but he’s most definitely a short-term fix.

The bad news is that with the long-term commitment the team made to Anderson Varejao, the Cavs aren’t projected to have any cap space next summer if they’re lucky enough to re-sign LeBron. It looks like Ferry sees the writing on the wall — with the salary cap likely dropping to $50-$51 million next season, he wasn’t going to have enough money to sign LeBron and another superstar, so he re-signed Varejao to make this year’s Cavs team as good as possible in the hopes that a Finals appearance or a championship would be enough to keep LeBron in Cleveland.