Allan Houston's decision to retire with two years left on his contract could save the Knicks as much as $72 million, although it will not provide any salary cap flexibility.

Houston retired for medical reasons - a chronic knee injury - so the N.B.A.'s insurance carrier will pay 80 percent of his remaining salary, or $32 million over the next two seasons. The Knicks will pay the other $8 million.

Typically, a team must also pay a deductible equivalent to 41 games of salary, but the Knicks already satisfied that requirement last season, when Houston played only 20 games.

What is not known is how much the Knicks will save in luxury-tax payments, which the team is expected to apply for as soon as Tuesday.

Teams that are over the luxury-tax threshold pay a dollar-for-dollar tax, meaning Houston's contract would cost an additional $40 million. But the Knicks will ask the league to remove Houston from the salary cap - and thus remove the luxury tax burden - on the premise that he was forced to retire because of injury.

A league doctor will determine when that injury first occurred. Based on that date, the league will determine when Houston's salary will be removed from the cap. Houston has not played since Jan. 19 - and he sustained the injury months before that - so it is conceivable the league will grant some cap relief for this season.

Alternatively, the league could keep part or all of Houston's salary on the books this season, but grant relief for the 2006-7 season.

Even without Houston's salary, however, the Knicks' payroll would exceed $100 million this season and $80 million in 2006-7. The current salary cap is $49.5 million.