According to those with knowledge of the situation, Van Gundy has been offered the job by the Kings, but Orlando is his top choice.
I assume something is going to break on this today -- likely from the Orlando side.
The Magic want to wait for Donovan to cave and agree to not coach in the NBA for the next five years. They can't reasonably offer Van Gundy the job until that hurdle is passed. Which leaves Van Gundy twirling in the wind. I assume Orlando says 'Eff it' and makes SVG an offer like now.
Update [2007-6-5 18:7:25 by TZ]: Brian Schmitz has an update on his Orlando Sentinel blog: Van Gundy, and by extension the Magic, are on a deadline. If the Magic don't sort out the Donovan stuff real soon, Van Gundy will guarantee himself a job by taking the Kings job... but he'd prefer to have the Magic job. Timing is everything, I guess you'd say.
I've also been led to believe Geoff Petrie is still in Orlando, where he participated in (err, watched?) a draft workout held in conjunction with several teams.
Update [2007-6-5 18:49:32 by TZ]: One last update: ESPN's Andy Katz reports the following:
Sources told ESPN.com that negotiations were continuing in earnest on Tuesday. The Magic and Donovan both want to move on, and as of late Tuesday both sides were trying to work out details of terminating the contract that the coach signed on Friday. Chances are all issues will be resolved by Wednesday.
Multiple sources said Donovan and the Magic have agreed upon a non-compete clause, requiring Donovan to refrain from coaching in the NBA for five years as one of the terms of his release from the contract.
This looks to open the door for the Magic to offer Van Gundy a contract earlier Wednesday, leaving Sacramento in the lurch. Scott Brooks gets the biggest bump, with Terry Porter and (apparently) P.J. Carlesimo still alive. I wouldn't rule out Kurt Rambis, obviously, but he would appear to be a longshot.
Who knew Billy Donovan would have us on the edge of our seats?