How Nuggets' Peyton Watson Talks Are Impacted by Cavaliers Trade

At the beginning of the 2026 offseason, there was a clear expectation that the Denver Nuggets would re-sign restricted free agent Peyton Watson. However, as the two sides stand far apart in contract negotiations, sign-and-trade talks have continued to ramp up.

The Cleveland Cavaliers, Milwaukee Bucks, L.A. Clippers, and Atlanta Hawks have been mentioned as the most likely suitors for Watson if the Nuggets decide to take the sign-and-trade route, but one team is now standing out more than the others. Last week, the Cavaliers traded Dennis Schroder to the Charlotte Hornets in exchange for Tre Mann, which saves them nearly $7 million and gives them a much better shot at Watson.

Just in: The Cleveland Cavaliers are trading Dennis Schroder and cash to the Charlotte Hornets for Tre Mann, sources tell ESPN. pic.twitter.com/MNhjejPxJQ
— Shams Charania (@ShamsCharania) August 14, 2026

The Cavaliers were already mentioned as a "serious candidate" to land Watson, per ESPN's Dave McMenamin, and this Schroder trade could simply be a precursor to that larger move.

How this trade impacts Watson's free agency

After the trade, The Athletic's Joe Vardon and Sam Amick reported that this deal increases Cleveland's chances of acquiring Watson from Denver.

"With the Cavs in pursuit of Denver Nuggets restricted free agent Peyton Watson, the Schröder deal opens up salary space that could bring them closer to a sign-and-trade deal. A league source close to Watson said this trade improves the odds of him landing with the Cavs," Vardon and Amick reported. "... The trade puts Cleveland $29.7 million below the first apron, but the Cavs would still need to clear cap room via another trade to add both Watson and Harden realistically."

The Cavaliers' offseason priority seems to be re-signing James Harden, as the 11-time All-Star is still sitting in free agency, but adding Watson on top of that is obviously the ideal scenario. However, as Vardon and Amick explain, they would likely need to make another trade before bringing in both Harden and Watson.

ESPN's Ramona Shelburne shared a similar sentiment, saying how Cleveland's Schroder trade "maybe gives them a little more in the Peyton Watson sweepstakes."

Denver Nuggets guard Peyton Watson against Cleveland Cavaliers center Jarrett Allen — Jan 2, 2026; Cleveland, Ohio, USA; Denver Nuggets guard Peyton Watson (8) looks to drive on Cleveland Cavaliers center Jarrett Allen (31) during the first half at Rocket Arena. | IMAGN IMAGES via Reuters Connect

Of course, dumping Schroder's salary gives them a much better opportunity to afford Watson, but we need to remember that they will still need to present the Nuggets with a worthwhile sign-and-trade offer. Whether it be a package centered around Max Strus, Sam Merrill, Jaylon Tyson, or draft capital, the Nuggets have to field an offer that makes parting with Watson worth it.

What should Denver do?

While the Cavaliers are picking up steam in the Watson sweepstakes, the Nuggets are fighting an internal battle with their restricted free agent. The Nuggets' latest contract offer for Watson is reportedly around $70 million for four years ($17.5 million AAV), which is well below his expected asking price of $25 million per year.

Ideally, the Nuggets and Watson could find the middle ground and maybe ink the 23-year-old to a four-year deal worth around $80-88 million ($20-22 million AAV). The bottom line is that the Nuggets want to keep Watson in Denver, but if they cannot agree on a long-term deal, then they might have no choice but to find the right sign-and-trade offer.

If the Cavaliers send the right offer in, then we could certainly see the Nuggets send Watson to Cleveland, but for now, we should hold out hope that he simply returns to Denver.

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