The New York Knicks and Karl-Anthony Towns are heading toward a major decision point—one that could reshape the franchise's future. While the team is laser-focused on extending their playoff run, the clock is already ticking on a contract situation that carries a hefty $120 million price tag.

Towns has two years and $120 million remaining on his current deal after this season, though that includes a player option for the 2027-28 campaign. That means he could opt out and hit free agency in 2027, putting the Knicks in a position where they need to act—either by locking him up with an extension or exploring a trade.

According to ESPN's Brian Windhorst and Tim Bontemps, this offseason represents a natural crossroads. An acquiring team would want to bring Towns in early enough to negotiate their own extension, making a potential trade more appealing if the Knicks decide to move on.

"They're probably in a spot with KAT that they should either extend him or look to trade him," one Eastern Conference executive told the ESPN duo. "If this playoff run convinces everyone this is a good fit, maybe they can get him to take a little discount off his max like Brunson did and help them keep the core together."

The financial stakes are real. New York already has nearly $170 million in combined salary committed to Jalen Brunson, OG Anunoby, Mikal Bridges, and Josh Hart for the 2027-28 season. Signing Towns to a max contract this summer would almost certainly push the Knicks into the dreaded second apron territory—a luxury tax threshold that severely limits roster-building flexibility.

Is Towns worth that kind of investment? That's the question the Knicks front office will need to answer. And the answer may depend entirely on how far this playoff run takes them. If the chemistry clicks and the team makes a deep postseason push, a team-friendly extension could keep the core intact. If things fizzle out, a trade might be the smarter play—and there's no shortage of teams that would love to add a versatile big man like Towns to their roster.

For now, all eyes are on the playoffs. But behind the scenes, the Knicks and Towns have a $120 million reason to start thinking about what comes next.