The Denver Nuggets have found themselves in a difficult financial spot this summer. While it was apparent that the Nuggets would be forced to pay a considerable amount in taxes, the team was committed to finding ways to save enough money to retain Peyton Watson this summer. Now, the circumstances seem to have changed.
Over the weekend, the Oklahoma City Thunder presented Nuggets restricted free agent Spencer Jones with an offer sheet in an effort to pry him away from Denver. Needless to say, signing Jones would seem like a lesser priority than retaining Peyton Watson. However, according to ESPN’s Shams Charania, Denver has matched OKC’s offer sheet.
“The Denver Nuggets are matching the Oklahoma City Thunder’s two-year, $12 million offer sheet on Spencer Jones, retaining the key forward in restricted free agency, sources tell ESPN. Nuggets valued keeping their homegrown player whom they landed on an undrafted deal in 2024,” Charania reported.
This comes as shocking news, to say the least. While Jones has proven himself valuable after averaging 5.5 points and 3.3 rebounds per game on 50.4% shooting from the field and 39.6% from beyond the arc, it is fairly clear that OKC forced Denver’s hand with this decision.
By signing Jones, the Nuggets’ payroll has increased to $220.1 million, which leaves them with only $1.6 million before going over the second tax apron. When factoring in bonuses and Peyton Watson’s $6.5 million qualifying offer, ESPN’s Bobby Marks expects the payroll to balloon to approximately $229 million, implying that the Nuggets would have to pay $68 million in tax penalties.
This isn’t favorable for the Nuggets or Peyton Watson. Given that the two parties were already struggling to see eye to eye on a potential deal, signing Jones at this stage doesn’t necessarily send across the best message. When also noting the sheer lack of cap flexibility, it is apparent that Denver won’t be able to match Watson’s demands for a contract worth roughly $28 million annually.
Uncertainty Surrounds Peyton Watson’s Future
As mentioned earlier, the current situation doesn’t bode well for Peyton Watson in the slightest. Aside from his ongoing contract discussions failing, there is a greater possibility that Watson may be in a relatively vulnerable position during negotiations.
As a restricted free agent, the 23-year-old has limited leverage while making decisions. Typically, this would leave the door open for suitors to step in and make large offers to potentially force the Nuggets’ hand. However, due to Denver’s rapidly diminishing cap space, teams now have the luxury to be more direct. With virtually no ammunition to match an offer sheet, the Nuggets may be forced to let the forward walk.
While this could spell disaster for Denver’s offseason efforts, there is still a way for the Nuggets to retain Watson. Unfortunately, it would require some huge sacrifices.
Currently, the Nuggets are projected to go deep into luxury tax territory. However, if Denver can offload some salary soon, the team may regain some flexibility to either re-sign the 23-year-old or even sign-and-trade him for valuable assets.
The two players that are viewed as potential trade candidates are Cam Johnson and Aaron Gordon. When factoring in Johnson’s $23.0 million contract and Gordon’s $31.9 million cap hit, parting with either one could help the Nuggets clear just enough cap space to bring Peyton Watson back. Still, it is worth noting that this would not help them reduce their overall tax penalty.
As things stand, there are a handful of teams that have shown interest in Peyton Watson, with the Los Angeles Clippers emerging as a particularly intriguing landing spot.
Given the cap flexibility at their disposal, the Clippers are more than capable of matching Watson’s demands. While there is no indication of how willing Denver would be to match such an offer sheet, the Nuggets’ need to shed salary as soon as possible is dire.
Although the 23-year-old is coming off a tremendous season where he averaged 14.6 points, 4.9 rebounds, 2.1 assists, 0.9 steals, and 1.1 blocks per game, retaining Watson does not seem as worthwhile. Given that Denver is currently built to contend for a title, parting with core rotation players who possess valuable playoff experience seems counterintuitive. Regardless, the Nuggets’ stance is unlikely to change.
