The Nuggets’ Nikola Jokic, right, battles for possession with Pacers guard Victor Oladipo, center, as Nuggets forward Will Barton looks on during the fourth quarter April 3 at the Pepsi Center in Denver. (John Leyba / The Denver Post)

DENVER — Nikola Jokic’s contract has been one of the biggest bargains of the NBA. Soon, it will become one of the most lucrative.

The Nuggets have officially declined Jokic’s $1.6 million team option for next season in order to sign him to the richest contract in franchise history — a plan heavily implied by president of basketball operations Tim Connelly all offseason and confirmed to The Denver Post by a league source Tuesday. That move signals that management is willing to suffer a short-term financial hit to lock up their franchise star long-term. But it also limits how much the Nuggets can immediately open their checkbooks during free agency, which begins Sunday.

Jokic’s expected five-year, $146.5 million deal, as first reported by Yahoo! Sports’ Shams Charania, cannot officially be signed until July 6. That adds to a payroll that, barring offseason trades, puts Denver well over the projected $123 million luxury tax threshold.

Forget unveiling a splashy signing like last summer, when four-time all-star Paul Millsap joined Denver. The current roster construction makes it challenging for the Nuggets to re-sign versatile swingman Will Barton, who is coming off a career season while playing multiple roles.

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Earlier this month, both Wilson Chandler ($12.8 million) and Darrell Arthur ($7.5 million) exercised their player options for the 2018-19 season. Starting shooting guard Gary Harris’ hefty extension kicks in this season and will pay him $16.5 million in 2018-19. Millsap ($29.2 million), Kenneth Faried ($13.8 million) and Mason Plumlee ($12.9 million) also command high salaries for the

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