One thing looks to be certain for the Denver Nuggets after the sign-and-trade of restricted free agent Peyton Watson. The Nuggets don't want anything to do with the tax bill that was staring at them if they matched the four-year, $88 million deal offered by the Cleveland Cavaliers. We already knew that was likely the case. But now the question left for Nuggets fans is whether the Nuggets want to avoid not only the second apron but also the first apron. Which could mean an even bigger chip gets dealt to lower their tax penalties. How much are they looking to avoid?
BREAKING: Cleveland, Denver and the Clippers have agreed on a trade sending Peyton Watson to the Cavaliers, Max Strus to LA, and an unprotected 2031 Cavs first-round pick and a 2032 Kings second-rounder to the Nuggets, sources tell ESPN.
— Shams Charania (@ShamsCharania) August 19, 2026
Watson will sign a new four-year, $88… pic.twitter.com/hXqL3JvsU4
The Nuggets have paid about $59 million in luxury taxes over the prior three seasons before 2025-26, when they made their first big cost-cutting move and traded Michael Porter Jr. and a 2032 first-round pick to the Brooklyn Nets for Cameron Johnson. An unprotected pick, too.
And the way things are looking for the Nuggets, slowly going the way of the Milwaukee Bucks, that pick could wind up being particularly valuable. But the trade helped the Nuggets still be competitive while ducking the luxury tax for one season.
Retaining Watson and making no other changes to the roster, running it back with just 14 roster spots filled, with Watson at number 14, would have cost the Nuggets a staggering $230 million-or-so tax bill if Watson was paid the $22 million this season that his average value comes out to. For comparison, the largest luxury tax bill ever paid was in 2023-24 by the Golden State Warriors at $181 million and change. There was no way the notoriously cheap Nuggets were going to pay that.
What is the Nuggets' plan from here?
So, running it back didn't happen for the Nuggets. Not in the form that makes sense to most fans. They're only bringing back seven players who were members of the rotation last year, including all five starters. They'll have at least five new faces when the 14th roster spot gets filled. But likely more new faces.
They're still facing an approximate tax bill of $68 million while being about $1.3 million over the second apron. You can see where this is going, right? Dumping Zeke Nnaji would get the Nuggets the breathing room to sign a veteran like DeMar DeRozan on a minimum contract, plus there should be just enough room for another vet.
But the Nuggets would still be facing around $60 million in taxes, plus most likely have to part with either their newly acquired first-round pick from the Cavs or some or all of the second-round picks the Nuggets added this summer just to dump Nnaji.
If no team bites on Nnaji and attached draft capital, then it's Christian Braun, Cameron Johnson, Aaron Gordon, or Jamal Murray that gets dealt. At least now the Nuggets have one of, if not the best, starting fives in the league. But it feels like it's in jeopardy. Kroenke Sports Entertainment, the richest ownership group in sports, may want to save a few million bucks. Sad.
The Nuggets have steadily gotten worse over the last few seasons. It could get even uglier moving forward if KSE wants to be really cheap this season.
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