While front office employees dispersed from the Nuggets’ war room after a relatively uneventful draft on June 24, downstairs in Ball Arena, their co-general managers addressed the next order of business — a looming negotiation that would shape the team’s 2026 offseason, one way or another.
Ben Tenzer and Jon Wallace had taken a measured and conservative approach in the draft. Instead of selecting a player 26th overall, they had traded back nine spots to acquire two future second-round picks, prioritizing asset accumulation over an immediate gamble on late first-round talent. They were walking away with two new rookies, but the real prize was their mini-stash of draft capital. New trade pieces to be used later. Patience for the sake of future aggression.
Meanwhile, it was time to talk about Peyton Watson.
“We feel good about where that’s at,” Tenzer told reporters, reiterating a recent stance. “And we hope Peyton is here a long time.”
As it turned out, Denver’s draft strategy foreshadowed the eventual outcome for Watson, a restricted free agent whose seven-week stalemate with the Nuggets ended in a sign-and-trade to Cleveland on Aug. 19. Denver relinquished the rights to Watson in exchange for a 2031 unprotected first-round pick and a 2032 second-rounder. The Cavaliers signed a four-year, $88 million contract agreement with the 23-year-old wing, who was drafted 30th overall in 2022.
After four years of gradual development and one brilliant month of exploding star potential, Watson’s time in Denver was over. And the Nuggets hadn’t received a player back in the trade, controversially eroding their roster depth ahead of a pivotal 2026-27 season. After feeling out the market, they viewed Cleveland’s first-round pick as a more valuable asset than any player available to them, team sources told The Denver Post. It’s intended as a trade piece to be cashed in well before 2031. Patience for the sake of future aggression.
But what changed between January, when keeping Watson skyrocketed up the Nuggets’ priority list, and August, when their homegrown success story was cut short? Behind the scenes, several factors contributed to the most significant move of Denver’s 2026 offseason — painting a nuanced picture of why the team decided to move on from Watson after a negotiation that was nearly dead on arrival.
“Stan Kroenke is a shark in the water,” as one league source familiar with the sign-and-trade put it. “So is Rich Paul.”
A salary cap crunch
The Nuggets were always prepared for the likelihood that they would lose at least one starter-level player this summer, as The Post previously reported.
The first time they firmly chose a different player over Watson was Oct. 20, 2025. It was the day before a new season tipped off, and the deadline for teams to sign contract extensions with their 2022 draftees. Watson and Christian Braun were entering the final year of their respective rookie-scale contracts. The Nuggets had enough room for only one of them to be added to the 2026-27 payroll. They were anticipating a salary cap crunch, with four starters already under contract and one of them, Aaron Gordon, set for a $9 million raise.
Signing both Braun and Watson would push Denver’s payroll over the projected second apron ($222 million), triggering not only a historic luxury tax bill for owner Stan Kroenke but also a series of roster-building penalties that would render it immensely difficult to negotiate with other teams and make changes. The front office was already concerned by its shortage of trade-eligible draft capital; finishing 2026-27 in the second apron would cause Denver’s 2034 pick to be “frozen” by rule, temporarily forbidden from being traded.
And so it was Braun or Watson. Braun was far more established — a playoff rotation piece on the 2023 championship team, an NBA Most Improved Player candidate in 2025, a durable 15-point-per-game starter. Watson was a work in progress three years into his career, an upside bet whose role on offense remained ambiguous. Was he a secondary ball-handler? A corner spot-up shooter? A dunker spot heir to Gordon? A screener and roller? The Nuggets were hesitant to offer him an average annual value north of $10 million to $12 million at the time.
They focused instead on their negotiations with Braun. With a vote of approval from Nikola Jokic, they signed the guard to a five-year, $125 million deal, planning to take Watson to restricted free agency — a process that traditionally allows teams to squeeze their incumbent young players. The snub left a sour taste for Watson’s camp.
Watson, who had started his career as a client of the same agency as Jokic, geared up for the offseason by hiring new representation: Klutch Sports founder and super-agent Rich Paul, most famous for representing LeBron James. Then came injuries to Jokic, Braun, Gordon and Cam Johnson. Dismal luck for Denver. Opportunity for Watson. He seized it, amassing stats worthy of an All-Star for one tantalizing month: 22 points per game on 49% shooting.
An injury dispute
As Watson erupted, Denver’s offseason outlook shifted. A starter’s salary would need to be sacrificed if the Nuggets were going to re-sign their young wing and stay out of dreaded second-apron territory. Johnson was widely considered most likely to go at first, because of his relatively modest contract commitment: one more year at $23 million.
But the final memory of a crushing playoff defeat in April was that of Johnson amassing 27 points and eight rebounds in a road elimination game, desperate to save Denver’s season. Watson was watching from the bench, ruled out with a lingering right hamstring injury.
Whether Watson could have played is still disputed.
It first emerged in February, during a thriller at Madison Square Garden. Watson limped off the court and underwent an MRI later in the week, revealing a grade 2 strain, according to a league source. Denver announced he would be reevaluated in four weeks. He missed 19 games over a 45-day absence. In a recent appearance on ex-teammate Michael Porter Jr.’s podcast, Watson claimed that he returned too soon. “I feel like we kind of rushed it,” he said, “and didn’t take the right approach.” He reaggravated the hamstring after five games back in the lineup. April 1 in Utah was his last game as a Nugget.
The playoffs arrived, and then they ended, far sooner than Denver had ever expected. A 54-win team crash-landed in the first round against Minnesota. Over the six-game series, Denver never publicly ruled out the possibility that Watson might return.
Privately, Watson’s camp had decided he wouldn’t play. The exact state of his health might forever remain murky, as it depends on who you ask. The Nuggets felt strongly that Watson could’ve suited up by the end of the series but was slow-playing his return to protect his contract value, five league sources told The Denver Post both during the playoffs and afterward.
Another source close to Watson, however, said that he was in no position to return at any point during the series, and that Paul had intervened to tell Watson it would be unsafe to play on a bad hamstring with free agency on the horizon. Injury reports suggesting that he might be available throughout the series, the source contends, were merely an example of gamesmanship by Denver in a tightly contested series against a rival. Watson’s plan was to return during a potential second-round series if Denver had advanced, he said on Porter’s podcast.
“I just knew I hadn’t progressed far enough in my rehab,” he explained. “I knew that this is the most intense level of basketball.”
In either case, the upcoming contract negotiation was a major consideration, leaving people at every level of the Nuggets organization frustrated with how Watson handled the situation, sources told The Post. It stood in stark contrast to other recent examples of Denver’s players attempting to play through injuries in the playoffs: Braun in 2026, Porter in 2025, Gordon in both years. The source close to Watson said that Gordon was among the people advising him to be careful with his return.
“I was getting shot up with all types of stuff in my shoulder joint every game to try to hoop. … I didn’t really feel like we were deep enough as a team for me to sit out,” Porter said last month during his podcast conversation with Watson. “If that happened before I had gotten paid, I don’t think I would’ve put myself in that position.”
“When you’re dealing with those (soft tissue) injuries, you have to be very careful in your return,” Paul, Watson’s agent, said on recently. “Guys want to play. You have to protect them from themselves in that moment because you’re up for a contract.”
Claiming that organizational trust in Watson had taken a hit, the Nuggets drew a line in the sand at the beginning of free agency. They offered a four-year contract with an ascending salary in the range of $18 million per year, with a team option, multiple league sources said. Whatever reservations the team had, it still thought highly enough of Watson to pursue an extension with him — for the right price. But dependability and maturity were concerns on Denver’s end, while any such assertion was viewed by Watson’s side as a sign of disrespect, casting a shadow over the negotiation. The initial offer was turned down immediately. The Nuggets kept it on the table but never returned with a new one.
A sparse trade market
Even independent of injury squabbles, it’s fairly common for teams to hold a hard line in restricted free agency. They’re often comfortable letting these negotiations turn into staring contests, especially when no outside suitors extend an offer sheet (as Oklahoma City did for Denver’s Spencer Jones). But by the time this particular staring contest unfolded, the Nuggets had already gauged the trade market on other potential sacrifices they could’ve made to keep Watson.
Rival teams eyed Denver’s cap sheet and tried to take advantage of it. Hoping the Nuggets were desperate to avoid the second apron, those teams asked Denver to give up draft picks along with Johnson, multiple sources said. It wasn’t necessarily because Johnson’s contract genuinely has negative value. He ranked eighth in the NBA with a 43% 3-point clip last season. It was a matter of leverage and opportunism. The Nuggets rebuffed any such efforts.
They also received at least one legitimately good offer for the 30-year-old wing, according to a league source. They still turned it down, viewing Johnson as an impactful starter. He was Denver’s third-leading scorer in the Minnesota series, averaging 14.2 points on 50% shooting to finish strong after a checkered regular season.
Meanwhile, the Nuggets and Watson were nowhere close to a contract agreement. Watson’s side had asked for north of $25 million annually at the outset, believing him to be worth more than Braun, who was coming off his worst season. Both sides began to explore sign-and-trade options. Denver took calls from the Clippers, Bucks, Hawks and Trail Blazers.
Nothing gained much traction. Sixth Man of the Year runner-up Jaime Jaquez was floated in preliminary talks with Milwaukee, but those conversations were entirely conceptual — the Bucks never made an official sign-and-trade offer, league sources said. Denver would’ve been intrigued by the possibility of adding him if an offer had materialized.
Kris Dunn was another potential player brought up in conversations with the Clippers, but Denver wouldn’t have agreed to a deal involving the 32-year-old guard without also getting draft capital back from Los Angeles, a source said. Pulling that off would’ve been difficult because for the Nuggets, taking back any salary in a sign-and-trade would hard-cap them at the second apron by rule, meaning they would need to send out another player in addition to Watson. Zeke Nnaji’s $7.5 million salary would’ve made the most sense within the CBA framework, but he has been viewed as a negative-value contract around the league for years at this point; asking a team to give up draft picks, an attractive player and to take on Nnaji’s contract was always going to be an obstacle.
The conversations with Los Angeles and Milwaukee were also in awkward positions from the beginning because of league investigations into cap circumvention involving both teams. The uncertainty of their situations made it difficult for talks to advance past the conceptual stage.
If Watson were to be traded, it was becoming increasingly clear that an entirely pick-based return was both the most feasible path forward and the Nuggets’ preferred outcome, rather than a player who would likely slot into the back end of their rotation.
A change of scenery
Then along came the Cavs. They were the last team to get involved, a surprise late entry to the Watson sweepstakes. In the end, they were also the only team to offer Denver an unprotected first-round pick — a coveted asset with high-lottery potential, if Cleveland’s championship window is closed five years from now. No teams had offered an unprotected first-rounder for the older Johnson when he was available earlier in the summer, league sources said.
Watson’s camp grew increasingly frustrated by how Denver was navigating the summer, especially the team’s perspective on his injury. By the time Cleveland made the $88 million offer, the sense was that Watson’s side would’ve been unlikely to agree to that same offer if it had hypothetically come from the Nuggets, sources connected to both sides told The Post. A change of scenery was preferred at that point.
There was also a question of on-court role that Denver would’ve needed to address if it had increased its offer, two league sources said. Was Watson going to be a starter next season, or did the Nuggets still see him as a bench player behind the same five as last year?
He’s expected to start in Cleveland, where small forward was the last hole to plug in a lineup that reached the Eastern Conference Finals this year. It’s an impressive outcome for Watson, landing on another championship contender for a salary twice what he was worth last offseason. There were hard feelings on the way out of Denver — “anybody who knows Peyton Watson knows the last thing I am is a quitter,” he told Porter — but he also left town with a public message sending thanks to his teammates, the Kroenkes and other Nuggets brass.
“As a young player who was a bit naive and hadn’t seen much of the real world, you guys took care of me better than I could have ever imagined,” he said in an Instagram post Aug. 25. “Thanks for that. Playing this game every night on the national stage is difficult on both the body and the mind, but the love from the fans always makes it so worthwhile. I will miss seeing you at Ball Arena.”
The Nuggets walked away feeling elated by the draft pick they wrangled out of a tough situation. They know well what they gave up: youth, depth, two-way athleticism, scoring upside. Watson’s electrifying hops and friendly personality made him a fan favorite, and he may have been just scratching the surface in January. But one month was always a small sample size to bet $88 million on. After feeling out the market, the Nuggets decided they preferred Johnson’s expiring salary, Spencer Jones’ cheaper extension, and an unprotected first-rounder rather than what they would have had to sacrifice for a long-term relationship with Watson.
Signing DeMar DeRozan to a veteran minimum contract also helps alleviate the short-term sting of what’s been lost, at least offensively.
Anything can change in the NBA overnight, but as of now, Johnson is fully part of the team’s plan for the 2026-27 season, sources told The Post.
A final assessment of the trade for Denver can’t be completed until the next move. Until the Cavaliers’ pick has a new home, and another player has a new home in Denver.
The Nuggets are still thin on trade-eligible picks. They have only the one first-rounder. If they’re out of the second apron by next summer, they’ll add another to their stash. The next stage of the Jokic era depends on whether they can maximize their draft capital better than in past years.
While they wait for that next move, Watson will try to prove them wrong for this one.
