"The Knicks decision to retain Chauncey Billups at a steep price could be an indication that Donnie Walsh is starting to regain his power within the organization.

Walsh, who is in talks with Garden chairman James Dolan about a contract extension, announced Wednesday that the club is picking up the option year on Billups' deal, worth $14.2 million. The Knicks had until Friday to decide whether to keep Billups or buy out his contract for approximately $4 million. The Daily News reported in February that Billups had received a verbal guarantee from the organization that it would keep him.

"We have made a decision to keep Chauncey Billups for the upcoming 2011-12 season," Walsh, the Knicks president, said in a statement Wednesday. "Chauncey, Amar'e (Stoudemire) and Carmelo (Anthony) are a great nucleus, as we continue to look to improve our team going into the offseason. Chauncey is an extremely talented and experienced point guard - we are very happy to have him back."

Billups, who turns 35 in September, was inconsistent after arriving in New York via Denver in the Anthony trade. He never fully recovered from a deep thigh bruise in early March and was forced to sit out the final three games of Boston's first-round sweep after hurting his left knee in the final minutes of Game 1.

On Saturday, Walsh had expressed confidence that Billups' health will not be an issue next season. Billups also had the support of the team's two most important players, Stoudemire and Anthony.

"I know for a fact he's gonna get his knee healthy and he's gonna be ready to go for next season," Stoudemire said on Monday. "I've enjoyed playing with him this year. And so if Chauncey's back that'd be great for us. He brings great leadership to the team so I look forward to it.""