The Denver Nuggets are staring at a messy salary-cap problem, and the addition of Lonnie Walker IV has only made it worse.
Walker’s $3.3 million deal pushed Denver over the second apron, and reports say the team’s luxury tax bill will jump from $68.6 million to $85.1 million. That number comes before the Nuggets have even settled on a new contract for Peyton Watson, which leaves the front office with a tightening squeeze and very little room to maneuver.
Watson, 23, put together a strong 2025-26 season and made a real case for himself with his all-around impact. He averaged 14.6 points, 4.9 rebounds, 2.1 assists, 0.9 steals, and 1.1 blocks per game, showing the kind of two-way upside that made him valuable to both Denver’s front office and ownership. But even with that internal support, the financial picture has made keeping him difficult.
Denver has shown every sign it wants to re-sign the forward, but the talks with his camp have reportedly not gone smoothly. With the team already above the second apron, a sign-and-trade involving Watson may be one of the cleanest ways for the Nuggets to get back under that line.
The catch is brutal: because Denver is above the second apron, it cannot take back salary in a trade. If Watson goes, the Nuggets would likely be looking at draft compensation only.
That would be a painful outcome for a player whose value clearly exceeds that kind of return.
Even then, moving Watson alone may not be enough. Another idea floating around is dumping Zeke Nnaji’s $7.4 million contract to create the space Denver needs. If that happens, the Nuggets would have enough room to add another veteran minimum player and carry 14 players on the active roster while staying below the second apron.
On paper, Nnaji is the easier piece to move. He appeared in 52 games last season, but his numbers were modest: 3.7 points and 2.6 rebounds per game, along with shooting splits of 47.0% from the field and 25.9% from three-point range. His salary could still help in trade construction if Denver were matching money, but in the current situation, clearing that deal may be more about flexibility than value.
The real issue is whether Watson can be kept at all. There had been rumors that Denver made Aaron Gordon, Christian Braun, and Cam Johnson available in trade discussions, and each of those contracts sits above $20 million per season.
Gordon’s deal, in particular, is listed at $31.9 million this season. Moving one of those salaries would open up the kind of space Denver would need to bring Watson back.
But timing matters, and the Nuggets appear to have waited too long. Any move now would come with heavier consequences than it would have earlier, when Denver was still below the second apron.
Watson is also drawing outside interest. Reports say the Clippers and Cavaliers are in the mix, with the Hawks also mentioned as a possible suitor. And because Denver is above the second apron, it cannot aggregate players in a trade, which means any deal involving Watson and Nnaji would need a third party to take on one of those contracts.
There is still one more wrinkle: Watson could choose to take his $6.5 million qualifying offer and play out the season in Denver. That would hit the Nuggets’ payroll even harder and also shrink whatever return they could get for him in a trade.
For the Nuggets, every path looks expensive, complicated, or both.
In Other News...
Nuggets Add Another Wing As Denver's Offseason Debate Heats Up
The Nuggets kept adding to their offseason board this week, bringing in veteran wing Lonnie Walker IV on a one-year, $3.3 million deal as they continue to reshape the back end of the roster. Denver now has 14 players, and Walker arrives with recent experience overseas after spending time in the Israeli Basketball Premier League and EuroLeague following his last NBA action in the 2024-25 season.
Walker joins a busy stretch of roster churn that has already included signings of Alpha Diallo and Marvin Bagley, plus the draft additions of Trevon Brazile and Bryce Hopkins. The Nuggets also retained Spencer Jones and Tyus Jones, leaving the bigger conversation centered on how all of these pieces fit as Denver weighs depth, flexibility and the best way to support its core moving forward. [Read more 🡒]
Nuggets Take A Needed Swing At Their Backcourt Problem
The Nuggets have been looking for another answer in the backcourt, and they found one in Lonnie Walker IV. Denver agreed to a one-year, $3.3 million deal with the guard, who is coming back to the NBA after a stint overseas with Maccabi Tel Aviv. A former first-round pick, Walker spent last season with the Philadelphia 76ers before heading abroad.
For Denver, the move is less about splash and more about necessity. Backcourt depth has been an obvious need as the new season approaches, and Walker gives the Nuggets another experienced option to sort through as they try to fortify a rotation that could use more reliable guard minutes. Whether he becomes more than that will depend on how quickly he settles back in, but the fit makes sense for a team trying to patch a clear hole. [Read more 🡒]
Lonnie Walker Move Just Gave The Nuggets Needed Flexibility
The Nuggets added a little more breathing room this week by bringing in Lonnie Walker IV on an Exhibit 10 training camp deal, a move that gives him a chance to fight for a roster spot without forcing Denver into anything long term. For a team always balancing depth, flexibility and money, it is the kind of low-risk addition that can matter once camp starts and the competition tightens up on the wing.
Denver still has 13 players on the roster, and the signing does not increase its luxury tax obligations, which keeps the front office from having to make a bigger financial commitment just to see what Walker can offer. If the Nuggets need another body on the perimeter, or if other wing options thin out, this gives them a built-in look at a proven NBA athlete without closing off future moves. [Read more 🡒]