The Denver Nuggets are staring at an offseason squeeze that could get expensive in a hurry.
At the center of it is Jonas Valanciunas, whose $10 million contract has become a possible escape hatch for a team trying to create room. Waiving the veteran big man would help Denver trim salary, especially since reports indicate only two million has been guaranteed this season. But that move alone may not be enough to solve the bigger problem sitting on the roster.
The real pressure point is Peyton Watson. The restricted free agent forward is reportedly seeking a deal worth more than $25 million per year, and Denver has interest in keeping him.
Watson’s rise last season made that easy to understand. In a larger role, he put up 14.6 points, 4.9 rebounds, 2.1 assists, 0.9 steals, and 1.1 blocks per game, flashing the kind of two-way upside that naturally draws attention around the league.
Still, the math is brutal. Nuggets insider Vic Lombardi laid out the cost of a simple path forward, writing:
“According to @BobbyMarks42, if the @nuggets simply waived Valanciunas and then signed Peyton Watson to a $25 million/year contract, they would get hit with a tax penalty of $177 million. That’s the cost of the repeater tax. ONE HUNDRED SEVENTY SEVEN MILLION.”
That figure tells the story. Denver is already carrying a payroll of $219.4 million, which sits just $1.6 million below the second apron.
With only 12 active players on the roster, including one two-way contract, there is very little breathing room to work with. Even if Valanciunas’ salary comes off the books, Watson’s next deal would push the Nuggets deep into the second apron and trigger a tax bill that would be hard to justify for a team trying to save money.
Because Watson is a restricted free agent, Denver can match any outside offer. But that safety net doesn’t make the situation easier.
The Nuggets have also shown a willingness to explore sign-and-trade scenarios involving Watson, with the Los Angeles Clippers mentioned as a possible partner. That kind of move could bring back assets and create cap flexibility, but it would also mean Denver likely loses the 23-year-old this summer.
The other obvious route would be moving a bigger salary, such as Cam Johnson’s $23 million, to open enough space to keep Watson. Even that, though, would be difficult to pull off.
For now, Denver’s offseason is caught between two competing goals: stay in the title hunt and keep the books from exploding. Right now, doing both with Peyton Watson still in the fold looks like a very tough ask.
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