The leading candidate for Barbosa’s services, apparently, is Flamengo, Brazilian basketball champions in 2008 and 2009 who play in Rio de Janeiro. The club’s soccer side recently brought soccer star Ronaldinho back to the fold to finish his career after his run in Europe.

Another possibility is the Brazilian club Corinthians.
Raptors president Bryan Colangelo said he just learned of the possibility of Barbosa leaving in recent days: “They are weighing options,” he said via text message from Europe where he’s scouting draft prospects. “There is no word from the agents on that yet.”
"Adam Smith's invisible hand will do it's job. That will determine where we will go," said Arturo Barbosa via e-mail. “Leandro loves to compete and this competition will be based on a competition in the markets."
If I am BC, this is where I offer no extension or one for 4 years and $6M for all four years (i.e. $1.5M per season).

I would much prefer a Wilson Chandler or Arron Afflalo to Barbosa on the free agent market.

However, cap room is not just about free agents, it would significantly help on the trade front. With him opting out, that is $7.6M in salary the Raps could take from a team over the salary cap without having to send any back.