After balking at the chance to join Indiana following last week's trade with Dallas, the 36-year-old Jones said he didn't want to play this season. The Pacers granted his wish Wednesday.
Team officials and Jones' agent agreed to free Jones from coming to Indiana in exchange for additional room under the NBA's salary cap.
"Eddie Jones will not join the Pacers, but the franchise will recoup the ability to sign another player as a result of an agreement reached today," the team said in a statement released Wednesday night. "The Pacers worked with agent Leon Rose and reached an agreement that lowers the salary-cap figure for the one season remaining on Jones' contract."
That clears up additional room to sign a veteran player to a minimum contract without triggering the NBA's luxury tax.
It also means the Pacers could add another player to a roster that has already undergone a major facelift.
Six-time All-Star forward Jermaine O'Neal and Shawne Williams have been traded, and the Pacers would still like to trade guard Jamaal Tinsley, who has three years and $21 million left on his contract. Tinsley has not been at training camp while the team tries to work out a deal, and he's had repeated run-ins with the law.
The new-look Pacers include center Josh McRoberts, guards T.J. Ford and Jarrett Jack, forward Maceo Baston and shot-blocking specialist Rasho Nesterovic. Plus, they have added rookies Roy Hibbert and Brandon Rush.
But the Pacers, who are clearly rebuilding, were hoping to add some experience to their roster when they dealt Williams, a first-round pick in 2006, to Dallas. Jones seemed the perfect fit, but never made it to Indy.
The Pacers also acquired two second-round picks and cash in the deal.