After losing what was essentially a play-in game on the final night of the 2017-18 regular season, the Denver Nuggets missed out on the playoffs for the fifth straight year. Despite spending big last summer in free agency, Paul Millsap missed most of the season with a wrist injury that required mid-season surgery. When Millsap and Nikola Jokic were on the floor together, the Nuggets were dominant to the tune of a +11.1 net rating in more than 1,700 possessions. Building on the immediate core of Millsap, Jokic, and point guard Jamal Murray will be the key for 2018-19, but there are significant challenges ahead for the Nuggets to remain competitive for the playoffs without blowing out their ownership’s checkbook with luxury tax penalties.
Denver’s summer will be defined by a single series of transactions involving Jokic: the Nuggets will opt out of the final year of his contract to make him a free agent, tender a qualifying offer to ensure he’s restricted, then agree to a five-year max contract with their young star center. That will raise his 2018-19 cap hit from $1.6 million to more than $25 million and will create a sizable luxury tax bill for the Kroenke family to foot. Indications out of Denver are that the Kroenkes understand that paying the tax for a year or two will be necessary to transform the team into a serious contender in the Western Conference, but it still will be a significant check to write if they get to June 2019 without having found a trade partner for one of their negative contracts.
Outside of Jokic, the Nuggets will have to navigate the free agency of Will Barton, who is coming off career-best efficiency and a second consecutive season with an above average three-point shot, something that held him back early in his career. Now six seasons into his career without a major payday, Barton will look to convert the three-year, $10.6 million contract he signed with Denver in 2015 into a new deal worth at least that much annually. Expectations around the league are that Barton would be worth somewhere in the $10-12 million range in a normal market, but the numbers game might leave Barton short of his 8-figure goals. There just isn’t a ton of cap space out there this summer, leaving a lot of teams to contend for free agents offering identical salaries using their mid-level exception. That said, wings are always at a premium these days and Barton can fill a low-end starter/high-end backup wing role on any team who needs his offensive production. He doesn’t bring as much to the table defensively (though he did inexplicably earn a second-team All-Defense vote this year), but his versatility on that end brings him closer to average than some of this offensively-focused perimeter counterparts.
The Kroenkes may understand that paying the tax is necessary, but certainly bringing back Jokic at the max and Barton at a reasonable salary would create a luxury tax bill that would even make Dan Gilbert blush. Assuming Wilson Chandler and Darrell Arthur opt in to more than $20 million in combined salary for next season, re-upping with Jokic and Barton would skyrocket the Nuggets to $143.5 million in salary and nearly $47 million in luxury tax payments, a number that could even eclipse what the Cavaliers would pay if they are able to hold onto LeBron James this summer.
Retaining both players would almost certainly hinge on their ability to trade one of Chandler, Kenneth Faried, or Mason Plumlee. Rumors have been percolating recently that the 14th pick is on the table for a team with cap space who wants to take on Faried’s $13.8 million for next season. A low lottery pick is a high price to pay to dump that little money, but when you take the luxury tax savings into consideration, dumping Faried and the 14th pick (slated to make $2.9 million in 18-19) would save the Nuggets $57.6 million in combined salary and tax. All of a sudden, paying the 14th pick doesn’t look so bad for savings like that.
Playing into the decision to dangle their first-rounder this year in a potential trade is their depth further down the roster. Denver have the enviable problem of almost being too deep—there are players at the bottom of the roster who are intriguing prospects but just can’t get on the floor for the Nuggets. Last year’s 22nd pick Tyler Lydon played a grand total of two minutes for the big club before undergoing knee surgery in late January and Malik Beasley is still searching for a consistent role two years after being drafted. Juancho Hernangomez lost most of his sophomore season to a particularly bad bout with mononucleosis but remains yet another promising player in the organization who needs regular minutes to grow. While first-round picks should never be given away without a good reason, the situation is perfect for Denver to move their 14th pick this season—they could save upwards of $60 million and adding another young guy to their stable of minutes-starved players could be counterproductive.
Trey Lyles will be going in to the fourth year of his rookie-scale contract, which means the Nuggets can open extension negotiations with him this summer. Despite the fact that he’ll will always be associated with what could have been for Denver (he was traded on draft night from Utah for Donovan Mitchell), Lyles did put together a very solid year off the bench for the Nuggets. He recaptured the three-point shot from his rookie season and blew his old career-high in two-point efficiency out of the water with 56.3 percent shooting from inside the arc. While the usage wasn’t anything special and he played mostly against bench units, his .590 true shooting percentage borders on elite levels and makes him a potent offensive force. Unfortunately, he gives most of it back on the other end of the floor, but defense isn’t as important in the role he plays for the Nuggets. Still, it would surprise me if something came together on an extension for Lyles; Denver would be better served waiting to see if his 2017-18 season is the new norm and making him a restricted free agent at the end of the year.
The Nuggets likely won’t be overhauling the roster this summer, but another year of development for their young guys and a (hopefully) healthy season for Millsap should put them firmly in the playoff conversation. Jokic will re-up for as much money as they can legally give him, Murray is still on his rookie-scale deal, Gary Harris is under contract until 2022, and their host of young guys are ready to step into the veterans’ roles as soon as those contracts expire, this year or next. Despite a disappointing 2017-18 campaign, it will likely be the last one without a playoff run for at least the next five years as Denver is poised to be a consistent threat in the Western Conference for the foreseeable future.
30 Teams in 30 Days takes you through every team’s thinking heading into the offseason, from evaluating their own personnel to dealing with their cap situation. This is the third installment, covering the Denver Nuggets. You can find Denver’s full cap sheet here.