Warriors third-year point guard C.J. Watson is close to signing an offer sheet with the Orlando Magic, according to a source close to negotiations.

Representatives for Watson — who already has turned down a one-year, $2.3 million offer from the Philadelphia 76ers — spent Monday trying to hammer out a deal with the Magic. Watson is hoping for a three-year deal.

Because he is a restricted free agent, the Warriors have the right to match any offer Watson signs though they are over the salary cap limit. Doing so, however, would put the Warriors in an odd situation.

Warriors general manager Larry Riley has said all along he's a fan of Watson, who went from NBA Development League call-up to reliable backup in less than two full seasons. Before the draft, Riley said whichever point guard Golden State brought in would have to beat out Watson.

Of course, that was before guard Stephen Curry fell to the Warriors and became coach Don Nelson's favorite rookie (and, at worst, the backup of starting point guard Monta Ellis). Before the Warriors acquired point guards Acie Law and Speedy Claxton from Atlanta. Now, Watson is expected to be in a battle with Law for the No. 3 point guard slot.

Carrying four point guards is probably excessive for the Warriors, who, according to a team source, are looking to cut expenses by carrying 14 players instead of the maximum 15. Law is already set to make just over $2 million. If Watson gets a deal in that ballpark, the Warriors would be paying more than $4 million for a third-string player.

Watson's chances of reaching an agreement may be hindered by a possible deal between the Magic and Matt Barnes, reported Monday night by ESPN.