ESPN salary cap analyst Bobby Marks projects the Denver Nuggets’ 2026-27 commitments could balloon to $246 million in payroll and $231 million in luxury tax penalties — a combined $477 million — if the franchise matches restricted free agent Spencer Jones’ offer sheet and signs Peyton Watson to a deal in the $23 million range.
The number lands with a particular thud when you set it against history. Since the 2002-03 season, Denver has paid a cumulative $53 million in luxury tax. One projected year would nearly quintuple that total.
Marks’ projection, shared via social media, arrives at a crossroads for the Nuggets’ front office. Restricted free agent forward Spencer Jones signed a two-year, $12 million offer sheet with the Oklahoma City Thunder, per Mike Scotto of HoopsHype. Denver has 72 hours to match. Jones, a Stanford product who started 37 games for the injury-ravaged Nuggets in 2025-26, averaged over 50% from the field and roughly 40% from three across 64 appearances, posting a 61.3 effective field goal percentage. He gave Denver 22 minutes a night of physical wing defense and spot-up shooting — the kind of glue guy who doesn’t show up in the box score but holds the rotation together when the starters are in street clothes.
The Nuggets are unlikely to match, according to Denver Stiffs, because of the cascading tax implications. And that’s where the math gets ugly.
Watson, Denver’s priority free agent, is reportedly seeking $20 million-plus annually through Klutch Sports. Spotrac lists his 2026-27 qualifying offer at $6.53 million, but his breakout 2025-26 campaign — 14.6 points, 4.9 rebounds, 1.1 blocks, and a .411 three-point clip across 54 games — has positioned him well above that figure. The 23-year-old wing missed 27 games to hamstring and abdominal injuries but was productive when available, starting 40 of his 54 appearances.
Even if Nuggets management negotiates a team-friendly deal, the franchise would still need to shed one of last year’s starters to avoid a punitive repeater tax, per Denver Stiffs. The organization has stated that getting under the tax line is not an offseason mandate. But the penalties for retaining Watson without corresponding salary dumps would be severe.
Denver’s offseason has already reshaped the margins. The Nuggets added Marvin Bagley III, Tyus Jones, and Alpha Diallo in free agency, plus second-round picks Trevon Brazile and Bryce Hopkins. Departures include Tim Hardaway Jr., Jonas Valančiūnas, Jalen Pickett, David Roddy, and likely Bruce Brown.
The core question is whether ownership will absorb a tax bill that dwarfs anything the franchise has ever paid — by a factor of four — to keep a supporting cast around Nikola Jokić. The repeater penalties compound with each consecutive year over the line, meaning a $231 million tax hit in 2026-27 could set the floor, not the ceiling, for future seasons.
Denver has historically operated as a tax-averse franchise. The $53 million paid over more than two decades reflects an organization that has trimmed payroll at the margins rather than absorb escalating penalties. The 2026-27 projection, if realized, would represent a philosophical shift — or a signal that the current core’s window has narrowed enough to justify spending through it.
The film doesn’t lie: the Nuggets can keep Jones and Watson, or they can keep the payroll manageable. Doing both costs $477 million.
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