Peyton Watson’s restricted free agency has become attached to one of the NBA’s most complicated unresolved trades and the Denver Nuggets’ increasingly expensive payroll helps explain why.
Watson could be sent to the Los Angeles Clippers through an expanded version of the stalled Kawhi Leonard trade with the Toronto Raptors, NBA insider Jake Fischer reported during a Bleacher Report livestream.
“I’ve been told that is a possibility — that Los Angeles could turn the Kawhi trade into a bigger, multi-team deal where they rope that into a sign-and-trade, with Peyton Watson becoming a Los Angeles Clipper,” Fischer said. “Then zero salary would have to go back to Denver, and they could potentially reroute some draft capital from the Raptors to the Nuggets in that event.”
The construction would allow Denver to acquire draft assets without adding salary, an increasingly valuable option after the Nuggets crossed the NBA’s second luxury-tax apron.
Nuggets, Watson Remain Far Apart
GettyPeyton Watsonof the Denver Nuggets defends against Kawhi Leonard of the LA Clippers during the second quarter in Game Six of the Western Conference First Round NBA Playoffs at Intuit Dome on May 01, 2025 in Inglewood, California.
Denver’s current offer to Watson is four years and $70 million with a team option in the final season, The Athletic’s Sam Amick reported. The deal would carry a $17.5 million average annual value if completed in full.
Watson’s camp has sought more than $25 million annually, similar to the five-year, $125 million extension Christian Braun received from Denver in October 2025.
Watson has a credible argument after averaging career highs of 14.6 points, 4.9 rebounds and 2.1 assists while shooting 41.1% from 3-point range across 54 games last season. His scoring growth and defensive versatility have attracted sign-and-trade interest from several teams.
But Denver’s financial position leaves little room for another substantial contract.
The Nuggets matched the Oklahoma City Thunder’s fully guaranteed two-year, $12 million offer sheet to Spencer Jones in July. That decision increased Denver’s projected luxury-tax bill by $32 million, from $36 million to $68 million, and pushed the team above the second apron, according to ESPN.
Spotrac projects Denver’s allocations at approximately $223.7 million, about $2 million above the $221.7 million second-apron threshold.
Teams above that line cannot aggregate salaries in trades, take back more money than they send out, include cash in deals or use previously generated trade exceptions. Staying there also can freeze a future first-round pick and eventually move it to the end of the round.
That is why receiving zero salary for Watson would matter nearly as much as the draft return.
Kawhi Leonard Investigation Holds Up Solution
The Nuggets have sought approximately two first-round picks or one first-round selection and a promising player for Watson, according to Fischer. Expanding the Leonard trade could allow them to receive part of Toronto’s outgoing draft compensation without accepting a contract from Los Angeles.
The Raptors would not necessarily add to their offer. Existing assets could instead be redirected to Denver.
Toronto agreed to acquire Leonard for Brandon Ingram, Gradey Dick, two unprotected first-round picks, a first-round swap and two second-round selections. The Raptors paused the trade after learning they would assume the risk of any NBA discipline affecting Leonard.
The league is investigating allegations that the Clippers circumvented salary-cap rules through Leonard’s endorsement arrangement with the bankrupt sustainability company Aspiration. The Clippers have denied wrongdoing.
A fine or draft-pick penalty could require the trade package to be adjusted. A suspension affecting Leonard could force Toronto to reconsider. If Leonard’s approximately $50 million contract were voided, the entire transaction would collapse under its present financial construction.
Denver has reason to wait. An expanded trade could turn Watson into draft capital, reduce payroll and begin pulling the Nuggets out of the second apron without sacrificing another rotation player.
For a team facing a projected $68 million tax bill, that is more than a creative trade wrinkle. It may be Denver’s cleanest escape route.
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