Signing Peyton Watson Could Put Nuggets in Historic Financial Position

The Denver Nuggets were in a tough financial position before the offseason got underway, and by re-signing Spencer Jones to a two-year, $12 million deal, they slid into the second apron with a projected luxury tax penalty of $68 million, the highest in franchise history. However, this is all with two roster spots still to fill.

Peyton Watson is still sitting in restricted free agency, expected to earn a new contract with the Nuggets worth around $18-25 million per year. If the Nuggets re-sign Watson without making any other money-saving moves, though, they will be in a historic financial position.

There have only been six instances where an NBA team has paid over $100 million in luxury tax penalties. Even if the Nuggets sign Watson to his qualifying offer, worth just $6.5 million, they will be projected to pay $112 million in tax penalties. If they sign him to a deal worth $23 million per year, their tax bill would skyrocket to $231 million, the highest in NBA history by a wide margin. And, on top of their $240 million payroll, they would have a roster worth a total of about $470 million.

If Denver keeps Peyton Watson on a contract at $23M, as @BobbyMarks42 reported, Denver's total tax bill would be $231M and their payroll would be over $240M.

That's close to $500M total for the 2026-27 season for Watson at $23M/year.

Big money decisions looming in Denver. https://t.co/evvYMiImi3
— Brett Siegel (@BrettSiegelNBA) July 27, 2026

As it stands, the most expensive luxury tax bill was $176.9 million by the 2023-24 Golden State Warriors, and the second-most was $170.3 million by the 2021-22 Warriors, who won the NBA Finals. Obviously, if the Nuggets are paying nearly half a billion dollars for their roster, a championship would be the expectation.

Is it worth it?

Having the most expensive roster in NBA history is likely not the title the Nuggets want to have, because it would make a potential playoff loss sting that much more. However, if they feel this is their best way to compete for a title in 2027, and the ownership is willing to cough up some extra millions, then so be it.

Obviously, it is already a big enough financial commitment to hand Watson a huge contract, but the luxury tax implications and no escape from the second apron make Denver's decision much heavier.

Denver finances and roster

* Spencer Jones contract is a flat $6M in Y1 and declines to $5.75M in Y2.

* He cannot be traded without his consent and is not allowed to be moved to OKC for this season

* Tax penalty= $68M

* Second Apron team pic.twitter.com/W7DUqjwgPv
— Bobby Marks (@BobbyMarks42) July 27, 2026

Outside of this tough decision to make with Watson, the Nuggets have done a good job of finding inexpensive players to add to the roster. They signed Marvin Bagley III to a veteran minimum, while also adding rookie Trevon Brazile and EuroLeague standout Alpha Diallo to contracts worth even less than the veteran minimum.

They have made money-saving moves in some areas, but this pending Watson decision is very challenging, especially since they are also reportedly stern on keeping Cameron Johnson's expiring $23.1 million contract.

Denver has time to make changes

In the Nuggets' defense, even if they re-sign Watson to an expensive deal that skyrockets their luxury tax bill, they have time to lower it. The Nuggets have until the NBA trade deadline in February to finalize their financials, meaning they could still find a trade for Johnson in the regular season to help with their situation.

The obvious priority is to re-sign Watson, regardless of the cost, and then make any necessary changes later. Keeping the 23-year-old wing, coming off a breakout season, is exactly what the Nuggets need to do, but of course, nobody should expect the franchise to pay a luxury tax bill worth over $200 million.

Regardless, it is good to see the Nuggets willing to take financial risks to give themselves a good shot at competing for a title next season. Sure, many fans wanted the team to make bigger changes, but running it back with some minor depth tweaks could be their best shot.

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