The Memphis Grizzlies are hopeful of coming to terms on a contract extension with former All-Star forward Zach Randolph before free agency starts July 1, according to sources close to the situation.

The Grizzlies are hopeful of coming to terms on a contract extension with former All-Star forward Zach Randolph before free agency starts July 1. Garrett W. Ellwood/NBAE/Getty Images

Randolph must decide by June 30 whether to opt out of the final season of his contract, which is valued at $16.5 million, but sources told ESPN.com that the Grizzlies are working to hammer out the specifics of an extension with Randolph before the 32-year-old is exposed to other potential bidders.

If the Grizzlies are intent on lowering Randolph's salary starting next season, such a deal would have to wait until after July 1 to be completed and require Randolph to opt out, become a free agent and sign a new long-term deal at a reduced rate. If the Grizzlies are prepared to wait until the 2015-16 season for Randolph's salary to be reduced, they could extend him for up to three years at lowered terms after he opts in for 2014-15 at the $16.5 million.

Either way, Grizzlies officials are expressing confidence that Randolph is staying in Memphis, where he continues to be regarded as an adopted Memphian after his role in restoring the Grizzlies to Western Conference contender status and embracing the community so strongly in the wake of the Pau Gasol trade to the Lakers in 2007.

"It's going forward," Grizzlies interim general manager Chris Wallace told the Memphis Commercial Appeal this week. "We're very excited about what Zach's done in the past and hope to have him here in the future. This has really been a terrific boon for both sides.

"He's obviously meant a great deal to us on and off the court. And Memphis has worked for him. This has been, by far, the best stop for him since he's been in the NBA. So we're working towards that goal [of a new contract]."

Randolph told ESPN.com as far back as November that he wants to play out the rest of his career in Memphis and hopes to establish a lifelong relationship with the franchise similar to what divisional rivals Tim Duncan and Dirk Nowitzki have in San Antonio and Dallas, respectively.

"I'd like to be here," Randolph told ESPN.com at the time. "I'd like to retire here.

"If I've got to make some sacrifices to be here, I would. I still can play. I can still help a team out. I want to win a championship. I've made all the money in the world. I just want to win. I don't know yet [about opting in or opting out], but Memphis is my home. If they trade me tomorrow, I'm here. I just bought a new house. My daughters go to school [in Memphis]. That's my home."

Amid the recent upheaval in Memphis, starting with the ouster of team CEO Jason Levien and coach Dave Joerger's near departure to the Minnesota Timberwolves, Grizzlies owner Robert Pera and Joerger have been vocal about wanting to re-sign Randolph.

Randolph averaged 17.4 points and 10.1 rebounds last season, helping Memphis win 50 games in Joerger's first season as the successor to Lionel Hollins despite Marc Gasol's early season knee injury. But the Grizzlies have to be mindful of Gasol's looming free agency next summer when they deal with Randolph and restricted free agent-to-be Ed Davis this summer.