Dallas set to extend Nowitzki and Terry

According to a report in the Dallas Morning News, the Mavs will re-sign forward Dirk Nowitzki and guard Jason Terry shortly after free agents and teams can begin negotiations.

The negotiation period begins at 12:01 a.m. (et) on Saturday morning.

Nowitzki is scheduled to earn $15.1 million next season and $16.3 million in 2007-08 and Dallas is expected to extend his deal for three more seasons through 2010-2011.

According to NBA rules, the All-Star can be extended at any number up to 10 1/2 percent more or less of $16.3 million. He is expected to receive the maximum raise.

Nowitzki averaged 26.6 points and nine rebounds per game last season.

Terry, the Mavs’ second-leading scorer last season at 17.1 points per game, is scheduled to become an unrestricted free agent but Dallas has earmarked the explosive guard as the team’s No. 1 priority in the free agency period.

After the Mavericks lost in the NBA Finals to Miami Heat, Terry indicated he expected to re-sign with the Mavericks. He earned $6.66 million last season.

Teams and players can have dialogue starting Saturday morning but players can’t officially sign contracts until July 12.