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Cavaliers' head coach Tyronn Lue makes his way through the crowd as he celebrates with fans who line up along Lakeside Avenue in front of City Hall during the parade on Wednesday, June 22, 2016, as they celebrate their victory of the NBA finals. (Lisa DeJong/The Plain Dealer)

(Lisa DeJong )

CLEVELAND, Ohio. - Head coach Tyronn Lue and the Cleveland Cavaliers have begun conversations on negotiating a contract extension, league sources informed cleveland.com.

Both sides are confident that a pact can be reached relatively soon.

Lue, 39, never signed a new deal when he took over for the fired David Blatt in January, He was working under a four-year, $6.5 million deal as Blatt's top assistant, and essentially bet on himself by not signing the three year, $9.5 million deal etched out for him to be the head coach by the team and his representatives.

Assistant coach Larry Drew had a team option for the 2016-17 that was picked up recently, league sources revealed to cleveland.com.

Lue's maneuver, first reported in April by ESPN.com, paid off -- Lue guided the Cavs to their first championship. LeBron James endorsed him as the "greatest coach in the world." Recently, the Toronto Raptors, whom Lue and the Cavs bounced from the Eastern finals, gave coach Dwane Casey a new three-year, $18 million deal.

Lue stands to make far above Casey's annual $6 million salary. The league's highest-paid coaches are San Antonio's Gregg Popovich (five years, $55 million), and Lue's old boss, Clippers coach Doc Rivers (five years, $50 million). The Wizards are paying Scott Brooks $35 million over five years, as is Dallas with Rick Carlisle.

While awaiting the finalization of a lucrative pact, Lue is in his hometown of Mexico, Missouri this weekend for a parade in his honor. The catch, if there is one, is that Lue technically already has a contract -- the one he signed as Blatt's top assistant -- so there may not be urgency to get his new deal done before, say, the Cavs' player free agents are signed.

James is a free agent, though he has said he's returning to the Cavs, as is J.R. Smith. Cleveland apparently lost free agent center Timofey Mozgov to the Lakers for four years and $64 million, and Milwaukee agreed on an offer sheet for four years and $39 million with restricted free agent Matthew Dellavedova that the Cavs may not match.

The first day free-agent players can sign with teams is July 7. Las Vegas Summer League begins July 8, and there remains a possibility that Lue could be overseeing his summer squad at that time without a deal in place.