Nuggets still trying to re-sign Peyton Watson amid sign-and-trade buzz

The Nuggets haven’t given up on bringing back restricted free agent Peyton Watson.

According to Tony Jones of The Athletic, Denver’s current offer to Watson is worth $70 million over five years, not the four-year, $70 million proposal that had been previously reported.

That works out to an average annual salary of $14 million, well below the more than $25 million per season Watson was reportedly seeking earlier in free agency. That figure is similar to the five-year, $125 million extension teammate Christian Braun signed with Denver last year.

Watson, 23, enjoyed another strong season in 2025-26, appearing in 54 games before injuries kept him out of the playoffs. Braun was also limited by injuries, playing in just 44 regular-season games after his breakout campaign the previous year.

Either way, the Nuggets still appear to hold most of the leverage. Few teams have the salary cap flexibility to present Watson with an offer sheet that would force Denver into a difficult decision.

Instead, any serious pursuit would likely have to come through a sign-and-trade.

Jake Fischer of The Stein Line reported the Nuggets remain open to discussing sign-and-trade possibilities, though their asking price hasn’t changed. According to Fischer, Denver continues to seek the equivalent of two first-round picks in return.

Milwaukee, the Clippers and Hawks have all been mentioned as potential destinations.

The Bucks may have the cleanest path thanks to a sizable trade exception, though they would still need to create additional financial flexibility before making a competitive offer.

The Clippers also have the ability to construct a deal, particularly if a Watson trade could be folded into their pending Kawhi Leonard transaction. That path remains complicated, however, since Leonard’s deal has yet to be finalized.

Atlanta would likely need a third team to help facilitate any agreement because of Denver’s salary restrictions.

The Nuggets are currently operating above the NBA’s second tax apron after matching Spencer Jones‘ offer sheet earlier this offseason, limiting the type of salary they can accept in a trade.

Jones also reported that Denver is exploring ways to shed salary elsewhere in hopes of creating enough financial flexibility to keep Watson. 

Keeping him won’t come cheap. ESPN’s Bobby Marks recently estimated that signing Watson to a contract beginning at roughly $23 million annually would push Denver’s luxury tax bill to about $231 million.

Even if Watson were to play next season on his $6.5 million qualifying offer, the Nuggets’ projected tax payment would still rise well above its current estimate.