The Denver Nuggets plan to match any offer sheet for restricted free agent Peyton Watson once the NBA's moratorium ends Monday, but they are open to sign-and-trade scenarios if a deal cannot be reached.

Talks between Denver and Watson's representation, Rich Paul of Klutch Sports Group, have stalled on a new contract.

The recent Walker Kessler saga with the Utah Jazz offers a useful parallel. Utah repeatedly stated its intent to match offers and avoid a sign-and-trade, only to ultimately send Kessler to the Los Angeles Lakers for two unprotected first-round picks and two first-round swaps. Kessler signed a four-year, $130 million deal with the Lakers.

Denver's preference, sources said, is to keep Watson, a fourth-year player selected 30th overall in the 2022 draft.

Only the Brooklyn Nets and LA Clippers currently hold the cap space needed to sign Watson to an offer sheet. The Clippers have shown real interest but are simultaneously handling their own restricted free agency matter involving Bennedict Mathurin. Multiple other teams have registered interest in a potential sign-and-trade.

Speculation has circulated that Denver would look to shed salary and dodge the second tax apron. However, Nuggets ownership has not instructed the front office, run by Ben Tenzer and Jon Wallace, to cut costs. That stance carries added weight given Denver's reported pursuit of unrestricted free agent LeBron James, who is also represented by Paul.

Watson emerged as one of Denver's most productive players last season, averaging 14.6 points, 4.9 rebounds and 1.1 blocks over 54 games. Following Nikola Jokic's knee injury in late December, Watson posted a career-best 17-game stretch before suffering a hamstring strain in February that limited him for the remainder of the season and playoffs.

The Nuggets signed Christian Braun to a five-year, $125 million extension before the start of the season, but Watson emerged as the more essential member of the team from their 2022 draft class.