The source said a few other teams are still in the mix, likely the Miami Heat, Houston Rockets, Dallas Mavericks, San Antonio Spurs and Brooklyn Nets -- the latest team to join the race for the unrestricted free agent big man.
One of the NBA's best defensive centers, the highly sought-after Camby is aiming to make a decision in the next couple of days.
Camby was scheduled to meet with the Heat on Saturday, but he postponed it to allow the team to work on a potential sign-and-trade with the Rockets. But according to sources, the Rockets are only currently interested in dealing with the Knicks.
Sources told ESPN.com that New York has had discussions with the Rockets about Camby, as well as the Mavericks about a sign-and-trade for free agent Jason Kidd, who agreed to join the Knicks earlier this week. The Knicks are hoping to make a sign-and-trade deal for one of them and use their $3.09 million mid-level exception to sign the other.
On the other hand, the Heat's mid-level exception will be going to Ray Allen, and a source would be "shocked" if Camby signs anywhere for the veteran's minimum of $1.4 million.
That financial factor is one of the biggest reasons why the Knicks have the edge over the Heat and are the early favorite to land the 38-year-old Camby, who played in Houston toward the end of last season after being traded from Portland.
In addition to the opportunity for a higher salary, a source close to Camby said the center is drawn to the Knicks because he has a "great relationship" with general manager Glen Grunwald. He was the assistant general manager in Toronto in 1996 when the Raptors made the center the second pick in that year's NBA draft.
Camby, who played for the Knicks from 1998-2002, also wants to compete and win, and New York is in the position to do that next season. Camby once played on the biggest stage with the Knicks. He was their starting center in the 1999 NBA Finals -- replacing the injured Patrick Ewing -- against the Spurs.
If Camby ends up going to the Heat or signs with another team, the Knicks would likely prioritize re-signing unrestricted free agent Jared Jeffries. He would be a good bargain at the veteran's minimum of $1.4 million considering his defensive presence last season. Jeffries drew a total of 26 fouls and 10 charges -- both tops on the Knicks -- and that was even while missing 27 regular-season games with right knee problems.
If the Knicks lock up Kidd and Camby, it's likely they'll turn their attention to re-signing Steve Novak, J.R. Smith and matching Jeremy Lin's offer sheet with the Rockets for four years, $28.8 million. The consensus feeling is that the Knicks will not let Lin go for whatever amount.
Two sources familiar with the Knicks' free-agency plans said they can't see them matching Landry Fields' offer sheet with the Toronto Raptors for three years, $20 million because it is out of their price range.
If that is the case, the Knicks will need to use an available $1.4 million veteran's minimum to sign another shooting guard, especially with Iman Shumpert out until January.
Jared Zwerling is a contributor to ESPNNewYork.com.