The Denver Nuggets filed paperwork to decline the team option on star forward Nikola Jokic's contract on Monday night, clearing the way to sign him to what likely will be a five-year, approximately $147 million maximum contract in July, league sources told ESPN.

Declining the $1.5 million team option for the 2018-19 season makes Jokic, 23, a restricted free agent and allows the Nuggets and Jokic to execute the long-term deal.

The Nuggets will decline the $1.5 million team option on Nikola Jokic so they can sign him to a long-term deal. Matthew Stockman/Getty Images

Had Denver not declined the option, Jokic could have been an unrestricted free agent in 2019.

Both sides are intent on working together toward the new deal, which should be completed as soon as July 1, league sources said.

Jokic has developed into Denver's franchise star, averaging 18.5 points, 10.7 rebounds and 6.1 assists last season. Denver won 46 regular-season games, missing the playoffs on the final game of the regular season. Denver is hoping to re-sign guard Will Barton, who will be an unrestricted free agent.

Jokic was the 41st pick of the 2014 NBA draft and signed a typical deal for a second-round pick that includes unrestricted free agency after the fourth year.