Where Nuggets Stand With Peyton Watson in Restricted Free Agency

Most Denver Nuggets fans would be willing to admit that the franchise has had an underwhelming 2026 offseason, and their quiet moves can be attributed to one specific player: Peyton Watson. The 23-year-old wing is coming off a breakout season and is now sitting in restricted free agency waiting for a significant payday.

As the Nuggets continue to negotiate a new deal with Watson and figure out the best route to take with the versatile wing, where do the two sides currently stand?

The Athletic's Tony Jones reports that the Nuggets remain confident that they will be able to retain Watson and still want him back amid a dramatic free agency cycle.

"The Nuggets, according to those league sources, value Watson significantly. They feel they are in a good spot to retain his services and just need to let the restricted-free-agency process play out," Jones wrote.

Mar 27, 2026; Denver, Colorado, USA; Denver Nuggets guard Peyton Watson (8) after making a basket during the second half against the Utah Jazz at Ball Arena. | IMAGN IMAGES via Reuters Connect

Watson averaged 17.3 points, 5.3 rebounds, 2.2 assists, and 2.2 stocks per game through 30 starts last season, while shooting 49.9% from the field and 43.0% from three-point range. This offensive outburst came out of nowhere for Watson, as he emerged as a valuable, versatile two-way player for Denver last year.

What will it cost Denver?

Watson's price tag still remains uncertain, but we can be sure that it will cost the Nuggets a pretty penny to keep him. Not only will the Nuggets likely have to give Watson a deal worth around $25 million per year, but in doing so, they will soar above the second apron and owe a lucrative luxury tax bill.

"Denver’s conundrum is finding a potential contract resolution that’s good for Watson while also keeping the team in a good financial space," Jones wrote. "... An expensive contract with Watson would likely yield significant luxury tax penalties, something Denver has been loath to do in the past. The Nuggets are already over the luxury-tax threshold and could approach or exceed the $222 million second apron if they give Watson an eight-figure contract."

Peyton Watson self-creation leap pic.twitter.com/6oKZwf5eIr
— Brett Usher (@UsherNBA) January 23, 2026

Unless the Nuggets can still find a way to part with either Cam Johnson, Christian Braun, or Aaron Gordon while re-signing Watson, they will be stuck well above the second apron.

Sign-and-trade suitors

While the Nuggets are still expected to retain Watson, his free agency has boiled down to two scenarios: return to Denver or agree to a sign-and-trade. Since rival teams do not have the cap space to simply offer Watson a contract, the only way to pry him from the Nuggets is a sign-and-trade.

So far, three teams have shown interest in a sign-and-trade for Watson, per Jones: Milwaukee Bucks, L.A. Clippers, and Atlanta Hawks.

Bucks have emerged as a team potentially interested in sign-and-trade for Peyton Watson, per @tjonesonthenba.

Clippers, Hawks also interested.
— Underdog NBA (@UnderdogNBA) July 17, 2026

The good news for the Nuggets is that if these teams enter a bidding war for Watson, they could actually get something valuable in return for their breakout wing. Granted, it makes sense for the franchise to do what they can to keep their homegrown talent, especially now that he is showing flashes of star potential, but it could work out for the Nuggets regardless.

In fact, parting with Watson via sign-and-trade could be their easiest path to staying out of significant financial trouble. Still, though, we should expect to see Watson in a Nuggets uniform by training camp, regardless of how drawn-out his restricted free agency feels.

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