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The move had been long expected. Arenas has repeatedly said he would forgo the final year of his six-year, $65 million deal so that he could re-sign with the team for an even larger amount.
Arenas can begin negotiating with any team on July 1. While he has expressed a desire to remain with the Wizards, he has also said he won't return unless the team also re-signs Antawn Jamison, who is also set to become a free agent.
Wizards president Ernie Grunfeld has said he wants to re-sign both Arenas and Jamison.
Arenas, a three-time All-Star, missed most of last season after two operations on his left knee. He has averaged 22.8 points, 5.5 assists and 4.2 rebounds in his seven-season NBA career.
[Associated Press; By BERNIE WILSON]
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