The Denver Nuggets and Minnesota Timberwolves are heading in opposite directions.

On Wednesday, the Nuggets traded Peyton Watson to the Cleveland Cavaliers for a 2031 unprotected first-round pick and a second-round pick, with Watson signing a four-year $88 million contract with the Cavaliers.

For the Nuggets, the deal was heavily motivated by their salary cap sheet. After bringing back Spencer Jones on a two-year $11.75 million deal, Denver sat as the lone team with a salary total above the NBA's dreaded second apron.

With Watson a restricted free agent this summer, the Nuggets could have matched any offer he received from another team. Instead, they chose to remove his salary from their books in exchange for draft capital, a decision made both to avoid the second apron and to greatly lower the team's luxury tax bill.

Considering this being another recent talent loss for Denver, while Minnesota continues to take big swings and add difference-makers, it's hard to ignore the diverging paths these teams are on.

Timberwolves could create huge gap between them and Nuggets after Peyton Watson trade

Since winning the championship three years ago, the Nuggets have been slowly losing talent. In the offseason of 2023, Bruce Brown and Jeff Green left in free agency. The next summer, Denver decided not to bring back Kentavious Caldwell-Pope, who signed with the Orlando Magic.

Last offseason, the Nuggets traded away Michael Porter Jr. and the team's 2032 first-round pick for Cam Johnson's smaller salary, a move that downgraded the overall talent level of the Nuggets' starting lineup in favor of financial flexibility that allowed them to acquire Tim Hardaway Jr. and Jonas Valanciunas.

All of the moves by themselves make sense, but all together represent a slow trickle of lost talent. Brown, Green, and Caldwell-Pope were key contributors, but all became either overpaid with their new team or aged out of being a high-level playoff contributor. Johnson makes much more sense for the Nuggets given salary than Porter Jr, but also has a much lower ceiling as a player.

Now, the Nuggets are set to run back a worse version of their team from a season ago that got embarrassed in the playoffs by an injured Timberwolves team. They no longer have Watson, Hardaway Jr., or Valančiūnas, with only Marvin Bagley and potentially DeMar DeRozan to replace them.

Two years ago, the Wolves were staring down similar financial realities as the Nuggets. They were above the second apron with a team that came up short in the Western Conference Finals and had no easy way to cut salary.

Instead of running back with the team from the previous year and risking strangulation from the NBA's new collective bargaining agreement and second apron penalties, Timberwolves President of Basketball Operations Tim Connelly opted to make bold moves over stagnation.

Connelly traded franchise cornerstone Karl-Anthony Towns and his $60 million-a-year contract for Julius Randle, Donte DiVincenzo, and a first-round pick that later became Joan Beringer. This offseason, after a pair of somewhat successful playoff runs, Connelly made his biggest pivot yet, trading Randle, Naz Reid, and a first-round pick for LaMelo Ball.

All of those moves from Connelly allowed the Wolves to dip back under the second apron, keep the luxury tax payments at a manageable level, and add a former All-Star to the roster at minimal cost when the previous season's team proved they weren't good enough.

Meanwhile, the Nuggets seem stuck. We will see if Denver can use their newly acquired draft assets to upgrade their team, but that will likely not solve the fundamental issue Jaden McDaniels exposed when he said "they're all bad defenders" about this Nuggets team.

Everything will come to a head next summer when Nikola Jokić can decline his player option on the final year of his deal and become a free agent. The expectation is that Jokić will immediately sign a new max contract with Denver, but that will not stop people from speculating all of this next season that Jokić will want a new team. The trade of Watson will only make that noise louder.

While a similar sentiment has already begun about Edwards, despite having multiple years left on his contract, that noise has begun to quiet with the acquisition of Ball and as nearly the entire team gets together with Rudy Gobert in France.

How these two organizations have handled the new CBA environment could not be more different. The Timberwolves have made proactive moves to keep their options open and as much talent in the organization. The Nuggets, on the other hand, have been reactive, leading to trades that have made their roster worse instead of better.

The main similarity between the Nuggets and Timberwolves is that they each have a generational talent, Denver even more so than Minnesota. While the Timberwolves have continued to put an increasingly talented and cohesive roster around their superstar, the Nuggets appear to be failing theirs.

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