The Knicks became favorites yesterday to win the Tracy McGrady Sweepstakes before today’s 3 p.m. trading deadline and make their cap-clearing coup when the Bulls dropped out of the bidding last night to make a trade with the Bucks.
But in another bizarre twist early this morning, an Internet report stated a desperate Rockets general manager Daryl Morey recruited the Kings in a hastily arranged McGrady deal that centered on Kevin Martin. The report said that the Knicks might be added as a third team as the Kings flip McGrady to the Knicks. (Martin was pulled from the second half of last night’s game).
The changing landscape of the McGrady Sweepstakes never ends, as Morey has sought bargaining leverage throughout the process.
Morey wanted to make his proposed Knicks’ deal, but the Rockets and Knicks were engaged in rough negotiations yesterday. Team president Donnie Walsh demanded protection on the first-round picks involved in the original mega-deal. Both sides claim it could be a deal-breaker and McGrady could stay put.
The Knicks put themselves in better shape to do the McGrady blockbuster because they formally will announce today they have traded Nate Robinson to the Celtics for Eddie House and J.R. Giddens and possibly either a first or second-round pick.
Walsh acknowledged the McGrady impasse when asked if he’s confident he will have more cap space by 3 p.m. today.
“It’s no different until I do a deal that would do that — a fair deal,” Walsh said.
The Knicks also are shopping Al Harrington to Chicago as they still have their eye on the Bulls’ Tyrus Thomas.
But the Knicks remained in position to secure McGrady and enough 2010 cap space to sign two maximum free agents this summer — LeBron James and a prime-time player.
In the original two-team package, the Knicks give up rookie Jordan Hill, Jared Jeffries’ contract, Larry Hughes, a 2012 first-rounder and Houston’s option to exchange 2011 first-round picks. Walsh asked for having the first-round picks protected through the six spot.
Jeffries played just six minutes last night after supposedly reinjuring his knee. The Knicks did not want to risk it.
Trading Hill and Jeffries means the Knicks save $9.4 million in 2010 cap room.
Meanwhile, the Knicks completed a minor deal in trading exiled Darko Milicic to Minnesota for Brian Cardinal, who will be waived to make room for the two Celtics.
Walsh took a veiled shot at the Rockets regarding the public gamesmanship regarding the McGrady deal.
“It’s been a one-way pipeline,” Walsh said. “Sometimes I read the offer in the paper before it’s made.”
Yesterday, the Cavaliers moved to make James even happier in Northeast Ohio by acquiring star forward Antawn Jamison in a blockbuster deal. That should increase the urgency of Walsh getting more cap space.
The Knicks and Rockets were in a staredown on the picks involved. The Rockets told the Knicks it was a deal-breaker and they would take the Bulls’ lesser offer. Then the Bulls pulled out.
“It is who will blink first,” a source debriefed on the negotiations told The Post yesterday afternoon before the Kings emerged.
“The Knicks have been burned before in not protecting their picks in the Eddy Curry trade,” the source said. “They don’t want to make the same mistake.”
“Hypothetically you always love draft picks,” coach Mike D’Antoni said. “But you [do what you] got to do. . . . We’re going to set it up to where we’re going to take our best shot.”
The Knicks also moved Robinson as a favor to their most popular player they don’t plan to re-sign and were ready to limit his minutes for rookie Toney Douglas.
Robinson’s camp had nudged this along, no longer wanting Robinson to play for D’Antoni either.
“We’re going to be fair to people, too,” D’Antoni said. “We want to play young guys and stuff. But we wouldn’t be opposed to helping people out who are here on one-year deals.”
Sources say Robinson is tired of D’Antoni’s eye rolls and waving of the arms whenever Robinson makes a mistake.
Marc.berman @nypost.com