The Denver Nuggets entered the offseason with major roster woes. Although the franchise still boasted a formidable core, featuring the likes of Nikola Jokic, Jamal Murray, and Aaron Gordon, the team’s looming salary cap issues were bound to raise concerns.
Needless to say, Denver is due to make some drastic changes. Although players like Murray, Gordon, and Cam Johnson find themselves on the trade block, the Nuggets have shown a greater inclination to begin their moves by waiving Jonas Valanciunas.
Offloading the veteran big man’s salary could help Denver re-sign restricted free agent forward Peyton Watson, who is demanding upwards of $25 million annually. While this would be possible, Nuggets insider Vic Lombardi shed light on how costly this transaction could be for the team. He wrote:
“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.”
Waiving Jonas Valanciunas’ $10 million contract isn’t much of an issue. With reports indicating that only two million has been guaranteed this season, the remaining amount coming off the books is certainly helpful. But in the larger scheme of things, the surplus from Watson’s new extension would push Denver deep into the second apron. A hefty $177 million tax bill would be largely unfavorable for a team looking to save some money.
As things stand, the Nuggets have a payroll of $219.4 million, just $1.6 million short of the second apron. When noting that they have only 12 active players on the roster (one two-way contract), the situation seems even more dire.
The Nuggets May Not Be Able To Retain Peyton Watson
The Denver Nuggets’ stance on their roster moves this offseason has been fairly clear – everyone other than Nikola Jokic is available in trade talks. While this would also imply Peyton Watson’s availability, there has been some commitment from Denver’s end that suggests they wish to retain the 23-year-old forward.
The Nuggets’ investment in Watson is understandable. Last season, he demonstrated considerable growth after earning a larger role in the rotation. With averages of 14.6 points, 4.9 rebounds, 2.1 assists, 0.9 steals, and 1.1 blocks per game, the 23-year-old showcased notable two-way upside, which likely led to interest from other teams, too.
Due to Peyton Watson’s restricted free agency status, the Nuggets have the luxury to match any offer made by another suitor. However, given their limited cap space, this route isn’t favorable.
On that note, the Nuggets have shown a willingness to engage in sign-and-trade deals involving Watson. With teams like the Los Angeles Clippers emerging as potential trade partners, Denver could explore different ways of gaining assets and cap flexibility in return for Watson. Still, this inevitably implies that the Nuggets won’t be able to retain the 23-year-old this summer.
While offloading a player like Cam Johnson ($23 million) could give them the necessary flexibility to re-sign the two-way wing, facilitating a trade would prove challenging.
Overall, Denver’s front office will find itself in a tricky position. Although there is a desire to contend for a title, it is difficult to maintain the current core without sacrificing Peyton Watson.
