In a stunning move, Bibby, whom the Wizards acquired from Atlanta last week in a trade for Kirk Hinrich, gave up his entire salary for next season. The 32-year-old point guard had one year and $6.2 million left on his deal.
"He sacrificed some money in order to win a championship," said David Falk, Bibby's agent. "Once you're past 10, 11 years in the league, you want to be in a situation where you can win. He's got some attractive options open to him."
"It's surprising," Wizards coach Flip Saunders said. "But I guess you have to give the player credit. Sometimes when you're in the latter part of your career, there's other things that become important, and so you hope the agenda for him is to win."
Bibby will clear waivers on Wednesday. While Falk said Bibby has not made a decision yet about which team he will join, one source close to the situation said he's headed to Miami.
The source also said Miami is the front-runner for Troy Murphy, but sources on Tuesday told ESPN.com's Marc Stein that Murphy is signing with the Celtics. The Heat will have to cut as many players as they sign, and the source said Carlos Arroyo and Jamaal Magloire are the likeliest candidates.
However, Falk, who doesn't represent Murphy, maintained that nothing has been agreed to.
"I've been in touch with six or seven of the top teams," he said. "Nothing can be done until he clears waivers."
For Washington, the deal is a sweetheart one that will knock next season's payroll down to roughly $38 million, which is $20 million below the current salary cap.
"It's gives us unbelievably great financial flexibility next year," Saunders said. "We're not right now a team that's in a playoff-type situation. I think it's a win-win situation."
To fill Bibby's vacated spot on the roster, the Wizards re-signed guard Mustafa Shakur for the remainder of the season. Shakur played on two 10-day contracts with the Wizards earlier this season and averaged 3.3 points and 2.2 assists in six games.
Chris Broussard covers the NBA for ESPN The Magazine. The Associated Press contributed to this report.