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Nuggets get Peyton Watson update that adds fuel to Cavaliers rumors

The Peyton Watson sign-and-trade alarm bells are starting to ring for Nuggets fans.
Jan 5, 2026; Philadelphia, Pennsylvania, USA; Denver Nuggets guard Peyton Watson (8) reacts to his score against the Philadelphia 76ers during the first quarter at Xfinity Mobile Arena. Mandatory Credit: Bill Streicher-Imagn Images
Jan 5, 2026; Philadelphia, Pennsylvania, USA; Denver Nuggets guard Peyton Watson (8) reacts to his score against the Philadelphia 76ers during the first quarter at Xfinity Mobile Arena. Mandatory Credit: Bill Streicher-Imagn Images | IMAGN IMAGES via Reuters Connect

The Cleveland Cavaliers have been in pursuit of Peyton Watson for a few weeks now. However, their own salary cap space issues have prevented them from making a true run at him. Well, the first domino that needed to fall to clear cap space to start the process of coming after Watson has fallen. And per the latest report, the Cavs are working on knocking down the remaining dominoes that need to fall to pry Watson, the restricted free agent, away from the Denver Nuggets. The pursuit is real.

"The Cavs are definitely trying to get Peyton Watson. They're definitely trying to do it," Brian Windhorst said.

On the most recent episode of Brian Windhorst and the Hoop Collective Podcast, Windhorst, perhaps the most prominent Cavs insider of them all, made the statement that set off alarm bells for Nuggets fans. We've been hearing the rumors all summer. But when it's Windhorst that says anything about the Cavs, it carries much more weight. And the fact that it coincides with an actual move to clear salary makes it sound even more ominous.

The Cavs are setting themselves up to snag Watson

The Cavs are trying to avoid the NBA's second apron tax penalty, which they violated last year by making a run at a championship after trading for James Harden at the trade deadline. So, of course, some financial moves needed to be made. Trading Dennis Schroder to the Hornets for Tre Mann and saving $6.8 million this year against the cap was step one. And if anyone would know what that means, it's going to be Windy.

And a big note about the cost-cutting trade of Schroder: the Cavs didn't have to trade any draft capital as part of the deal. They'll need that to help pry Watson away, of course. And the final domino, likely a Max Strus trade to clear all or some of his $16.6 million, would send Nuggets fans into high-alert status.

It wouldn't be a done deal, but Windhorst doesn't think Jonathan Kuminga, the other rumored target of the Cavs, will be dealt by the Atlanta Hawks. So that just leaves the Nuggets and Watson as the reason for the Cavs to start knocking the dominoes down.

The Nuggets could get squeezed by the Cavs

The Nuggets haven't offered Watson what he wants in negotiations for his contract extension thus far, and they might not. But that doesn't mean the Cavs won't. And if the Cavs do, that means the Nuggets have to match the deal or trade Watson. But the rumors so far are that no team has offered the Nuggets their reported asking price of at least one first-round pick, plus a "good player" in return.

But getting a player back in return hard caps the Nuggets at the second apron, which they are currently over, and would require another team to absorb someone like Zeke Nnaji's contract to make the deal work. This could force the Nuggets' hand to take less than they want back for Watson, just to get under the second apron. The Nuggets are currently the only team in the NBA over the second apron.

But now, with as good a confirmation as you can get outside of a team official, it seems like only a matter of time before we hear about the next domino falling, and an offer being made to Watson by the Cavs, which would put the Nuggets on the clock.

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