Less than two months after the conclusion of their best season in 26 years, the Washington Wizards were dealt a devastating blow when Larry Hughes informed the team that he won't return. The free agent guard, coming off the best season of his career, has agreed in principle to a five-year deal with the Cleveland Cavaliers and will sign with the team when the NBA's moratorium concludes on July 22, his agent, Jeff Wechsler, said yesterday.

"The deal was right and Larry felt comfortable with it. So, we've decided to continue with [the Cavaliers], and we've told the Wizards that he's not coming back," Wechsler said.

Wechsler would not discuss the specifics of the deal, but it is believed to be worth between $65 million and $70 million.

Hughes's imminent departure appears to be the latest heartbreak for a franchise that seemed headed in the right direction after advancing to the playoffs for the first time since 1997 and winning a playoff series for the first time in 23 years. The Wizards have been teased by the talents of Chris Webber and Juwan Howard, endured a failed experiment with Michael Jordan and watched others -- Ben Wallace, Rasheed Wallace and Richard Hamilton -- leave the franchise and become the championship nucleus for the Detroit Pistons.

For Hughes, who formed the league's highest-scoring trio with former Golden State teammates Gilbert Arenas and Antawn Jamison, the Cavaliers offered a financial package too rich to pass up. And for the Wizards, the price was too steep. A source with knowledge of the negotiations said the Wizards offered Hughes a six-year deal worth $54 million ($9 million per year) when the free agency period began on July 1. Sources close to Hughes said he was upset by the initial offer, which was gradually increased until the team finally reached a ceiling of $72 million over six years ($12 million per year), which is more than Arenas makes. Wechsler told the Wizards on Thursday that that wasn't enough to retain Hughes's services.

"Larry Hughes's agent informed us that Larry is not returning to Washington," Wizards President of Basketball Operations Ernie Grunfeld said in a statement. "He rejected our final offer which we regarded as very fair and very meaningful. We have a lot of outstanding players on this team including All-Stars Gilbert Arenas and Antawn Jamison, and we will add players that will continue to make us a very competitive ball club. Our goals remain the same which is to be a perennial playoff contender."

Grunfeld refused to comment further. For the Wizards to offer Hughes similar compensation over six years, it would factor out to a six-year deal between $78 million and $84 million, which would've made him the highest-paid player on the roster. Jamison ($13.8 million) and Arenas ($10.2 million) already eat up about half of the Wizards' salary cap, which is expected to be about $49 million next season.

In his seventh NBA season, Hughes helped lead the Wizards into the postseason for the first time in eight years and averaged 22 points, 6.3 rebounds and 4.7 assists. He also led the league in steals at 2.89 and was named to the NBA's all-defensive first team.

Hughes's timing could not have been better. Entering his prime at age 26, he also entered a free agent market in which shooting guards were the most coveted commodity. "Some people probably wish my deal was up last year," Hughes said with a grin near the end of the season. "I kind of raised the stakes a little bit."

Drafted eighth by the Philadelphia 76ers in 1998, Hughes spent 21/2 seasons in Golden State before joining the Wizards in 2002. Prior to last season, Hughes's career high averages were 18.8 points (in 2003-04), 5.5 rebounds (1999-00) and 4.5 assists and 1.9 steals (in 2000-01).

Last season, Hughes formed arguably the best back court in the league with Arenas, who blossomed into an all-star last season. Hughes and Arenas combined to average 47.5 points per game last season, the most among any pair in the NBA, and they also ranked first and sixth (1.74) in steals, respectively. In Cleveland, he will join forces with the league's brightest young star in LeBron James.

"Gilbert Arenas is a great player and LeBron is a great player. Hey, all the players with the Wizards were great. But we all understand how this works and when you're forced to go out to the free agent market, anything can happen," Wechsler said. "He loved playing for the Wizards, they were a great team. He likes all the people there in the organization, but this is a time for him to move on to an opportunity that he has, and he decided to move forward with that."

Cleveland, which could lose James to free agency in 2008, had to make a splash to prove it was committed to building a winning team. The Cavaliers haven't been to the playoffs since 1998 and were unable to get either Seattle's Ray Allen or Milwaukee's Michael Redd, two all-star players who re-signed with their teams.

Hughes perhaps would've made the all-star team for the first time this season, but he suffered a fractured right thumb on Jan. 15 against Phoenix. The Wizards went 10-11 without Hughes last season.

The Wizards said all season that they had every intention of signing Hughes this summer. After the Wizards were swept in the second round of the playoffs by Miami, Hughes said he wanted to return to Washington, where has spent the past three seasons, but he added that he would test the market. "This is where I want to be," Hughes said. "At the same time, I'm unrestricted. . . . I'll explore my options and I do think I have options."

Hughes added: "I would like any role where I'm on a winning team. . . . If it's somewhere else, I think I will have to prove myself a little bit."

The news couldn't come at a worse time for the Wizards, who will also have to deal with the future of restricted free agent and former No. 1 overall pick Kwame Brown. Brown, who was suspended the final six games of the playoffs, could be used as trade bait in a deal to land a shooting guard -- but there is a slight possibility that Brown could remain with the team if they cannot get equal return value.

If they choose not to re-sign Brown, the Wizards could have about $9 million to spend on free agents but they are left with limited options at shooting guard with Allen and Redd gone. The last remaining notable talent at shooting guard is Suns restricted free agent Joe Johnson, who has several suitors but isn't expected to leave Phoenix.

Cuttino Mobley and Latrell Sprewell, whom Grunfeld once acquired when he was general manager of the New York Knicks, also are available. Swingman Jarvis Hayes is an option to replace Hughes. He started 18 games in place of Hughes and the team went 9-9. But Hayes is recovering from a fractured right patella and isn't expected to return to full strength for a few months.

Larry Hughes's deal with the Cavaliers is believed to be worth between $65 million and $70 million.