Paul only has to take a $26 million hit if he leaves the tam that he's playing for to sign with a team that has the cap space to give him a max deal; New York does not have that cap space, thanks to Amar'e & 'Melo grabbing every dime they could.Correct me if I'm wrong but I'm pretty sure the new CBA makes it so Paul (and for that matter Howard) would have to take at least a $26 million dollar hit no matter what - if either of them signs with any team other than the one who holds his rights prior to free agency. This is a test case, for the new CBA. It is hoped that those millions will keep stars with their current teams, but there is a good chance it won't work. Whether Paul signs with the Knicks or another team Paul will still make huge money. With the potential Knicks deal, for example, he would still average nearly $15 million a year and the supposed $45 million deficit would be at least partially made up for the fact that he would become a free agent one year earlier (meaning over the course of 5 years the difference is more likely to be far less). In NY there would also be substantial revenue to be gained through increased advertising, further cutting down any difference. Its also important to remember that just last year Bosh and James each took $15 million dollars less to sign with Miami - so its not like taking less to win is unprecedented.
I suppose the Hornets might be inclined to roll the dice with Paul - after all, unless they can convince him to consider other options they can't get much back from NY anyway. This would be a big contrast to Howard's circumstances. By all accounts it appears Howard wants to go to LA, and LA is also probably the team with the most to offer in return. Considering this, while it make some sense for New Orleans to keep Paul, it would be fairly shocking if Howard isn't traded..
And, no, the fewer guaranteed years when you're 6' 175, live at the rim and have an existing knee problem isn't a bonus. Because one good injury and that 4/55 contract is all that there is. Guys like Paul have a long history of falling off the cliff somewhere between the ages of 30 and 32, and Paul is already 26. It's a gigantic gamble with next to no upside for Paul when he could simply re-sign with whatever team trades for him and make more than twice the money.