Lately, there has been some optimism that the Nuggets might actually defy the odds and go over the second apron. Ownership has made it clear that they want to bring back Peyton Watson, and that to do so, they’d need to dump salary (likely Cam Johnson or Christian Braun) to manage the move without going over the second apron.
But in recent days, there have been some signs of hope as Marc Stein and Jake Fischer indicated that the team is not operating like they need to dump salary, and still intends to match any offer for Watson.
That would be very exciting, and there’s reason to believe this may be happening thanks to some internal pressure being applied subtly by Nikola Jokic putting off signing an extension for another year. And that pressure has, perhaps, been ramped up in the last few days by the possibility of LeBron James signing in Denver.
Nuggets going to have to pay if they want LeBron James
James would likely want his fellow Klutch Sports client, Watson, to be there in Denver, and it’s hard to imagine LeBron choosing to take a huge pay cut to play for a team that’s going to salary dump a starter just to make room for Watson, and thus, the sudden reported change of heart from the Kroenkes.
And yet, I’m not buying it. I would love them to pay. I think they should. I believe it would be disgusting to willingly make the team worse during Jokic’s prime for financial reasons. So, maybe I’m just being cynical, but I can’t believe they are going to pony up the money to make it happen.
Denver got out of the tax last year, but they need to do it again to duck the repeater tax, which means for every dollar the team is over the tax, they owe three. The idea of ducking the tax completely is crazy, and that would mean losing two starters, or one and not bringing Watson back at all. That kind of cost-cutting would be a bold move considering Jokic can be a free agent next summer and would surely eliminate the Nuggets from contention for LeBron.
No way Nuggets pay $177 million luxury tax bill
But the reality of going into the second apron while paying the repeater tax is a bridge too far for me. As Bobby Marks pointed out on the Hoops Collective podcast, if the Nuggets waive Jonas Valanciunas, sign Watson to a contract starting at $25 million, and make no other moves, their tax bill for next season would be $177 million.
According to @BobbyMarks42,
— Vic Lombardi (@VicLombardi) July 6, 2026
if the @nuggets simply waived Valanciunis and then signed Peyton Watson to a $25 million/year contract, they would get hit with a tax penalty of $177 million dollars.
That’s the cost of the repeater tax.
ONE HUNDRED SEVENTY SEVEN MILLION.
That’s not the money they’ll owe in salary, which would be over $225 million; it’s the taxes they’d owe on top of that. For some perspective, the most any team has ever paid in luxury taxes is $176.9 million in the 2023-24 season by the Warriors, trying to cling to their Steph Curry-Klay Thompson-Draymond Green dynasty core.
Are the Kroenkes really going to break that record for a team that just lost in round one? I’ll believe it when I see it. I don’t mean to be a wet blanket or rain on this parade, but as much as I’d love to see the team bring everyone back and try to compete for another title, I think it’s much more likely that they’re bluffing, trying to drive up the price for Johnson/Braun in trades, and trying to drive down the price of Watson in restricted free agency by driving teams off the scent.
I really hope I’m wrong, but actions speak a lot louder than words, and the actions of this ownership group haven’t convinced me they’re about to pay a record-high tax bill.
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