Insiders project Peyton Watson’s new contract

The Denver Nuggets’ most consequential offseason decision is starting to take shape on paper, and the price tag for restricted free agent Peyton Watson is coming into focus.

ESPN insider Bobby Marks pegged Watson’s next contract at four years and $90 million in his recently released top-20 free agent rankings for 2026 — a number far higher than the best team-control contract possible that came with him being the last first-round pick of the 2022 NBA Draft. Watson has earned about $11 million in four seasons as a pro. But the new number isn’t a surprise. A source told me a year ago that Calvin Booth was prepared to give Watson upward of $80 million last summer, had he not been fired.

“Watson should be a priority for Denver, even if that means going into the second apron,” Marks wrote. “A $22 million salary in the second year would allow the Nuggets to avoid the second apron once Cameron Johnson’s salary comes off the cap in the 2027-28 season.”

Marks listed Denver, Chicago, Brooklyn and the Los Angeles Lakers as Watson’s best fits — the same three suitors that have repeatedly surfaced as the cap-space teams capable of forcing the Nuggets’ hand with an offer sheet.

That projection aligns closely with the analysis from Matt Moore of The Denver Dig, who landed on an average annual value of $21.5 million for Watson after digging into the player comparisons.

“If you think he’s closer to Trey Murphy in potential, you aim for $22-$28 million,” Moore wrote. “If you think he’s closer to NAW (Nickeil Alexander-Walker), you aim for $15-$21 million. Me? I think I land smack dab in the middle at $21.5 million.”

Marks’ proposal of $90 million over four years works out to $22.5 million annually — only a slight bump above Moore’s number, and well within the projected range industry observers have circulated since his breakout became apparent this past season.

Watson, 23, posted career-highs across the board in 2025-26, averaging 14.6 points, 4.9 rebounds and 2.1 assists in 54 games while shooting 49.1% from the field and 41.1% from 3-point range. Before injuring his right hamstring Feb. 4, Marks noted, Watson’s 53% shooting on corner 3s ranked sixth in the NBA among players with at least 1,000 minutes.

Moore’s noted some of the things Nuggets fans have actually seen with Watson after four years.

“Watson was sloppy with the ball, but elite punishing teams off the Nuggets’ gravity with Nikola Jokic and Jamal Murray,” Moore wrote, noting Watson finished as the third-best catch-and-shoot player in eFG% this season among players with at least 150 attempts.

The flip side: Watson created at an 11th-percentile efficiency when tasked with on-ball creation and was in the 42nd percentile as a pick-and-roll ballhandler, per Moore’s breakdown. Paying a player who is so reliant on others to create could be troublesome but at the same time his off-ball skills make him too tempting to watch walk.

The structure Marks proposes is built specifically around Denver’s looming financial cliff The Nuggets are currently $18 million over the luxury tax and $2.2 million above the second apron, according to Marks, though they have the flexibility to reduce Jonas Valanciunas’ $10 million cap hit to $666,000 by waiving and stretching him.

Nuggets president Josh Kroenke acknowledged the tax bill the franchise may be staring down.

“If we deem running it back the most competitive thing we can do for the roster, that’s probably what we’re going to be doing,” Kroenke said at the season-ending news conference.

As previously reported by NBA Insider Jake Fischer and his colleague Marc Stein, the Lakers, Bulls and Nets have been identified as the three teams with the cap space — and the interest — to send an offer sheet that “causes angst in the Rocky Mountains.” Both the Lakers and Bulls registered trade interest in Watson leading up to the Feb. 5 trade deadline.

Brooklyn’s interest carries an added wrinkle. Former Nugget Michael Porter Jr., who was dealt to the Nets last summer in the Johnson trade, publicly recruited Watson on Instagram earlier this offseason with the comment, “See you in Brooklyn soon man.”

Moore’s analysis looked at two recent contracts that frame the conversation: Murphy’s four-year, $112 million extension with New Orleans in 2024, and Alexander-Walker’s four-year, $60 million deal with Atlanta in 2025.

“Watson is above where NAW was and behind where Murphy was, but his trajectory changes a lot,” Moore wrote. “If he dips? He’s worse than both next season. If he continues this trajectory? There’s a chance he’s better over the next three years than either one.”

Watson’s two-way upside could project toward stardom rather than role play. And that’s a huge part of this for the Nuggets. Both in the sense that they have limited assets to acquire a star moving into the future and the defense.

Watson may be the team’s best perimeter defender. He takes pressure off the struggling Christian Braun. He’s also a really solid small-ball power forward option, which takes pressure off the oft-injured Aaron Gordon. Watson might be the team’s strongest shot blocker, too, with electrifying defensive plays above the rim.

There’s also this point to consider: Watson has played only 303 minutes in the playoffs due to several mistimed injuries that have robbed him of impacting the team at the most important time. While there’s clear upside that could have Watson on a value deal, it’s not without risk.

Watson can start negotiating an offer sheet with another team beginning June 30, and Denver retains the right to match any contract. Whether the Nuggets actually let it get to that point — or sign him to an extension before then — remains a question.

If Marks’ projection holds, the Nuggets will pay Watson somewhere in the neighborhood of $22 million per year. That number alone wouldn’t break Denver’s books. But combined with Johnson’s $23 million, Gordon’s $32 million figure kicking in for 2026-27 and Braun’s $21.5 million, the math gets ugly fast. Something will have to give.

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