Latest on Peyton Watson and Nuggets in Free Agency

The Denver Nuggets appear motivated to get something done with Peyton Watson.

Jan 13, 2026; New Orleans, Louisiana, USA; Denver Nuggets guard Peyton Watson (8) reacts to making a basket against the New Orleans Pelicans during the fourth quarter at Smoothie King Center. Mandatory Credit: Matthew Hinton-Imagn Images | Matthew Hinton-Imagn Images

The Denver Nuggets have a major pending free agent situation on their hands heading into this offseason with their two-way wing, Peyton Watson.

Watson, after four years in Denver and coming off a career-best season, is due for a new contract this summer as he heads to restricted free agency.

By having his restricted free agent rights, the Nuggets will be in prime position to retain him, so long as they're willing to pay the bill that comes with it after a career-best year.

To this point, that payday looks like it will come from the Nuggets in due time, and they'll be committed to do what it takes to make the deal happen.

According to The Denver Post's Bennett Durando, retaining Watson will be a top priority for Denver's front office this offseason—even if it forces them to move off one of their current starters in a corresponding move.

"One of the Nuggets’ top priorities will be retaining restricted free agent Peyton Watson, and if they do, at least one current starter is almost guaranteed to be sacrificed in a corresponding cost-cutting move," Durando wrote.

Peyton Watson Likely to Return, But Sacrifices To Be Made

With the Nuggets having Watson's restricted status and Bird rights, they do have the ability to not only match whatever deal he's offered on the open market, but can go over the league cap to do so. That puts Denver in a favorable position to keep him onboard regardless.

And there's no question they'll need to do all they can to keep him. Watson is the exact spark of athleticism and defense this rotation desperately needs for both now and the future, which was made clear in how Denver came up short in their first round series loss the Minnesota Timberwolves without him.

But with how expensive the Nuggets' roster is without Watson's new deal, there's no doubt the roster would surge past the league's luxury tax threshold; a mark that Denver has historically not surpassed in its team-building efforts.

Therefore, to accommodate Watson's steep incoming price, the Nuggets would likely need to shed one of their big contracts in the starting five to free up room on the books and avoid paying that extra tax. That can also allow them to stay below the first apron, as they had been this past season.

Mar 22, 2026; Denver, Colorado, USA; Denver Nuggets guard Peyton Watson (8) smiles before the game against the Portland Trail Blazers at Ball Arena. Mandatory Credit: Ron Chenoy-Imagn Images | Ron Chenoy-Imagn Images

In doing so, though, the choices of who the Nuggets could deal to shed that money get slim pretty quickly.

Nikola Jokic won't be going anywhere, and Christian Braun's Poison Pill keeps him off the market until July. His cirrent trade value probably makes that idea pretty tough anyways

That leaves Jamal Murray, Aaron Gordon, and Cameron Johnson as prime candidates to keep an eye on as pieces to shed that salary, the last of those three being the most likely to be on an expiring contract that's the easiest to move at over $23 million.

It sets up for what's bound to be a pivotal, yet unpredictable offseason ahead for the Nuggets and some of their core pieces. But as for Watson, signs seem to point to a return to Denver being the most likely outcome.

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