The day after
It's taken 24 hours to collect my thoughts on the subject, but there is a very good reason why it's so damaging for the Jazz to be luxury-tax payers.
For every fan who says it's the Millers' money and who cares if they have to write a $12 million check in penalties next season, I think it has long-term implications for the very notion of what it means to be a small-market team in the NBA.
The idea behind the NBA's luxury tax system is to help level the playing field between small- and large-market teams. Were it not for the luxury tax, the Lakers and a handful of others could spend the rest of the league into oblivion.
When the Jazz push their payroll past $70 million - - and maybe even $80 million - - it becomes much more difficult for Greg Miller to someday sit at a league meeting and advocate for more protections for small-market teams.
Why would the owner of a big-market team make concessions in terms of revenue sharing and luxury tax when his team is being outspent by the Jazz in the first place? That might not be an issue for the Jazz this season, but it could be in future years.
If the Jazz spend another $8 million to re-sign Paul Millsap when they're already over the tax in the first place, I think it gives ammunition to the large-market teams who ask why there even needs to be a tax when a team like the Jazz blows through it.
Which is why I think Larry Miller was so opposed to the Jazz ever becoming luxury tax payers. Obviously, he recognized that it didn't make sense for the organization's bottom line, but it also didn't make sense philosophically for the Jazz's viability in Utah.
* * *
The Jazz didn't just become tax payers overnight. We've been building toward this for at least the two-plus seasons I've been on the beat. Here are five decisions the Jazz made that they might want back looking at things in hindsight:
1. Not trading Andrei Kirilenko for Shawn Marion, September 2007
Miller appreciated Kirilenko as much as any player he had during his years as Jazz owner other than John Stockton and Karl Malone. He also regarded the four years remaining on Kirilenko's contract as a plus, compared to only having Marion for two years. But Kirilenko's production never will match the $34 million he's due the next two seasons, making his contract a killer for the Jazz. Had they traded for Marion, the Jazz would be clear of his salary obligation.
2. Trading Gordan Giricek for Kyle Korver, December 2007
The acquisition of Korver has been a plus in every respect, except when it comes to contracts. Giricek had a $4 million expiring contract, while the Jazz took on more than $10 million in salary commitments to Korver between last season and this season. That money would have made re-signing C.J. Miles less painful in hindsight. Korver still was a good addition, especially after Giricek and Jerry Sloan clashed once and for all.
3. Matching Oklahoma City's offer sheet to C.J. Miles, July 2008
Once he got out of the hospital last summer, Miller suggested the Thunder's offer to Miles was probably a little higher than he would have gone himself in matching. The Jazz did so anyway, trying to protect the investment they'd already made in Miles. But with Kirilenko on the roster and playing the majority of the available minutes, Miles' opportunities have been decidedly limited.
4. Exercising the third-year option in Kyrylo Fesenko's contract, June 2009
OK, the $870,000 Fesenko is making is small potatoes in the big picture of the NBA. But it becomes $1.7 million when you have to pay the dollar-for-dollar tax penalties. The Jazz obviously felt Fesenko was good insurance in case Mehmet Okur opted out of his contract, but then they went ahead and drafted Michigan State center Goran Suton in the second round. Suton provides a cheaper alternative than Fesenko, for whom the jury is still out on his future as an NBA player.
5. Not selling their No. 20 pick in the NBA Draft, June 2009
It will take years to see just what kind of player Eric Maynor proves to be. But the Jazz could have made $3 million by selling the pick and saved the $1.3 million they're going to have to pay Maynor this season. With the tax penalties, that's a more than $5 million difference. If Maynor wins the job as Deron Williams' backup this season, it likely will be worth it. If not, the Jazz likely could have found a much cheaper alternative.
* * *
You have to wonder what's going through the mind of Oklahoma City general manager Sam Presti right now. He very well could stick it to the Jazz with a contract to Paul Millsap that will haunt the Thunder's Northwest Division rival for years to come.
Forget signing Millsap himself, the smartest move for Presti might be making the highest possible offer he knows the Jazz will match, then hoping that Millsap never develops beyond being a hustle-playing fourth option for the team.
As much as Matt Harpring's $6.5 million salary hurts right now, the Jazz could wind up paying Millsap $8 million or $9 million a year through the 2013-14 season. Now imagine if Millsap was back to coming off the bench in those later years.
The Thunder would have to tie up their free-agent money for seven days in an offer sheet, but it might be worth it to cripple a division rival. They could turn around and go bargain hunting after the Jazz matched their offer, still saving cap space for next summer.
* * *
Jazz president Randy Rigby appeared on David Locke's radio show Tuesday after Carlos Boozer and Mehmet Okur both opted in for the final year of their contracts.
"We feel very good about what's in front of us," Rigby said. "When you deal with this league, you'd like all the money to always line up and be able to always be underneath that luxury tax. But you know that sometimes you're going to maybe have to go over that.
"We're over it a lot more than what we were planning on, but when you look at the numbers and the potential - - and that's why we've always been excited about having the quality of this team together.
"And last year was really an anomaly with the injuries that we were dealing with, and the impact as to what those injuries then had on our team, the morale, I think the overall chemistry.
"But we think that this team has a lot to prove. And now with three players that have no opting in their future, they've basically got more to prove for themselves and really for their future.
"So we think there's some high motivation from the players. We think there's a great talent level that when they can be all healthy and get on the floor, we think we've got a team....
"And of course with Kevin working, things are never done. But we have great assets in place to either play together or use those to bring other key assets to making us a very competitive team this year and for the future going forward for Jazz fans."
I will admit to being skeptical. The payoff for the Jazz was supposed to be last season, but the way things unraveled the final month - - when the team was at full strength and should have been surging - - left me questioning whether it wasn't time to make changes.
Now the Jazz will bring back largely the same team, a group that looked ready to be put out of its misery when the Lakers series was over. I think that malaise is going to be very tough to shake. Not impossible, but anything but easy.
--Ross Siler
For every fan who says it's the Millers' money and who cares if they have to write a $12 million check in penalties next season, I think it has long-term implications for the very notion of what it means to be a small-market team in the NBA.
The idea behind the NBA's luxury tax system is to help level the playing field between small- and large-market teams. Were it not for the luxury tax, the Lakers and a handful of others could spend the rest of the league into oblivion.
When the Jazz push their payroll past $70 million - - and maybe even $80 million - - it becomes much more difficult for Greg Miller to someday sit at a league meeting and advocate for more protections for small-market teams.
Why would the owner of a big-market team make concessions in terms of revenue sharing and luxury tax when his team is being outspent by the Jazz in the first place? That might not be an issue for the Jazz this season, but it could be in future years.
If the Jazz spend another $8 million to re-sign Paul Millsap when they're already over the tax in the first place, I think it gives ammunition to the large-market teams who ask why there even needs to be a tax when a team like the Jazz blows through it.
Which is why I think Larry Miller was so opposed to the Jazz ever becoming luxury tax payers. Obviously, he recognized that it didn't make sense for the organization's bottom line, but it also didn't make sense philosophically for the Jazz's viability in Utah.
* * *
The Jazz didn't just become tax payers overnight. We've been building toward this for at least the two-plus seasons I've been on the beat. Here are five decisions the Jazz made that they might want back looking at things in hindsight:
1. Not trading Andrei Kirilenko for Shawn Marion, September 2007
Miller appreciated Kirilenko as much as any player he had during his years as Jazz owner other than John Stockton and Karl Malone. He also regarded the four years remaining on Kirilenko's contract as a plus, compared to only having Marion for two years. But Kirilenko's production never will match the $34 million he's due the next two seasons, making his contract a killer for the Jazz. Had they traded for Marion, the Jazz would be clear of his salary obligation.
2. Trading Gordan Giricek for Kyle Korver, December 2007
The acquisition of Korver has been a plus in every respect, except when it comes to contracts. Giricek had a $4 million expiring contract, while the Jazz took on more than $10 million in salary commitments to Korver between last season and this season. That money would have made re-signing C.J. Miles less painful in hindsight. Korver still was a good addition, especially after Giricek and Jerry Sloan clashed once and for all.
3. Matching Oklahoma City's offer sheet to C.J. Miles, July 2008
Once he got out of the hospital last summer, Miller suggested the Thunder's offer to Miles was probably a little higher than he would have gone himself in matching. The Jazz did so anyway, trying to protect the investment they'd already made in Miles. But with Kirilenko on the roster and playing the majority of the available minutes, Miles' opportunities have been decidedly limited.
4. Exercising the third-year option in Kyrylo Fesenko's contract, June 2009
OK, the $870,000 Fesenko is making is small potatoes in the big picture of the NBA. But it becomes $1.7 million when you have to pay the dollar-for-dollar tax penalties. The Jazz obviously felt Fesenko was good insurance in case Mehmet Okur opted out of his contract, but then they went ahead and drafted Michigan State center Goran Suton in the second round. Suton provides a cheaper alternative than Fesenko, for whom the jury is still out on his future as an NBA player.
5. Not selling their No. 20 pick in the NBA Draft, June 2009
It will take years to see just what kind of player Eric Maynor proves to be. But the Jazz could have made $3 million by selling the pick and saved the $1.3 million they're going to have to pay Maynor this season. With the tax penalties, that's a more than $5 million difference. If Maynor wins the job as Deron Williams' backup this season, it likely will be worth it. If not, the Jazz likely could have found a much cheaper alternative.
* * *
You have to wonder what's going through the mind of Oklahoma City general manager Sam Presti right now. He very well could stick it to the Jazz with a contract to Paul Millsap that will haunt the Thunder's Northwest Division rival for years to come.
Forget signing Millsap himself, the smartest move for Presti might be making the highest possible offer he knows the Jazz will match, then hoping that Millsap never develops beyond being a hustle-playing fourth option for the team.
As much as Matt Harpring's $6.5 million salary hurts right now, the Jazz could wind up paying Millsap $8 million or $9 million a year through the 2013-14 season. Now imagine if Millsap was back to coming off the bench in those later years.
The Thunder would have to tie up their free-agent money for seven days in an offer sheet, but it might be worth it to cripple a division rival. They could turn around and go bargain hunting after the Jazz matched their offer, still saving cap space for next summer.
* * *
Jazz president Randy Rigby appeared on David Locke's radio show Tuesday after Carlos Boozer and Mehmet Okur both opted in for the final year of their contracts.
"We feel very good about what's in front of us," Rigby said. "When you deal with this league, you'd like all the money to always line up and be able to always be underneath that luxury tax. But you know that sometimes you're going to maybe have to go over that.
"We're over it a lot more than what we were planning on, but when you look at the numbers and the potential - - and that's why we've always been excited about having the quality of this team together.
"And last year was really an anomaly with the injuries that we were dealing with, and the impact as to what those injuries then had on our team, the morale, I think the overall chemistry.
"But we think that this team has a lot to prove. And now with three players that have no opting in their future, they've basically got more to prove for themselves and really for their future.
"So we think there's some high motivation from the players. We think there's a great talent level that when they can be all healthy and get on the floor, we think we've got a team....
"And of course with Kevin working, things are never done. But we have great assets in place to either play together or use those to bring other key assets to making us a very competitive team this year and for the future going forward for Jazz fans."
I will admit to being skeptical. The payoff for the Jazz was supposed to be last season, but the way things unraveled the final month - - when the team was at full strength and should have been surging - - left me questioning whether it wasn't time to make changes.
Now the Jazz will bring back largely the same team, a group that looked ready to be put out of its misery when the Lakers series was over. I think that malaise is going to be very tough to shake. Not impossible, but anything but easy.
--Ross Siler
10:37 PM
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7 Comments:
If it were not for AK's contract, the Jazz would not have luxury cap issues. If this were the NFL, AK would have been cut a year or two ago. He'd either be gonzo or have a more reasonable contract with the Jazz.
Problem #1 with the Jazz may be the undersized front line. With Boozer opting in, he's got to be great trade bait. If Utah could trade Boozer for a long, defensive oriented center, and move Okur to the 4, the front line is no longer undersized. Is there a team out ther with a 10 mil defensive oriented center who would want Boozer?
You're right to point out that this was situation was unavoidable if the team wanted to hold onto AK. I like AK as much as anyone, but his production doesn't justify his contract, and it certainly doesn't justify being a luxury tax player. Increased minutes for Brewer and Korver would make up for at least 80% of what AK contributes. The Jazz have had multiple opportunities to move him, whether for Marion or Morris Peterson's expiring contract when he was with Toronto, or the trade exception Golden State got from the J-Rich deal. I think not moving him was very short sighted.
One thing nobody is mentioning right now is that if Fisher didn't ask to be released to care for his daughter we would also have his contract (about 6.5 mil?) on the books for next season, and would have to push the payroll to 90 million to keep Millsap. I think that having Fisher (or rather, the Lakers not having him) would have made the Jazz a legit title contender the past two years, but the Jazz have to feel lucky to be out from under that contract.
Ross, you're wrong about why the luxury tax exists. The salary cap itself exists to level the playing field so that teams with deep pockets can't just field a dream team. That was never the intent of the tax. The escrow system and luxury tax were created as insurance so that the players' salaries didn't eat up too much of the league revenue. In other words, it doesn't protect the small market owners from the big, bad large market owners -- it protects ALL the owners from the players eating up more than their "fair" share of the money that's out there.
The escrow was specifically created to keep salaries below 57-58% of basketball related income, and the tax is designed to keep it below 61% or have the teams responsible for the overage cover the bill.
What's more, neither the tax nor the cap have much of anything to do with the revenue sharing that Larry Miller and other small market owners have been seeking. Revenue sharing is about sharing a percentage of gate receipts and television contracts across all 30 teams. It has nothing to do with player salaries. Obviously the Lakers' TV contracts and luxury suites and bringing in a lot more than the Grizzlies', and that makes it hard for the Grizzlies to make money -- regardless of salaries or of the competitive product.
So if the Jazz wind up with $80 million in team salary, and the Knicks wind up with $80 million in team salary, both will get the $10 million tax bill... but the Knicks will be able to absorb that far better because they have the league's richest cable deal and $400,000 luxury suites. For that matter, if if the Jazz's payroll was $20 million, they still could never turn the same profit as the Knicks because of those factors. That's what revenue sharing is about... NOT salaries.
Stupidest thing I've read all day. The only way this has any impact at all is if the Jazz are tax payers for years to come. One year of luxury tax paying because your no-good, pig-stealing, power-forward predictably contradicts himself and doesn't opt out of his deal does not an argument win. Sorry.
After listening to something that Kevin O'connor said recently about trade exceptions, and then watching the Jazz go over the luxary tax, I got to thinking about a way that the Jazz could cut some salary.
Dwayne Wade can become a free agent after this upcoming season, so Miami is going to want to do something to try to encourage him to stick around. Carlos Boozer has a home there (I am sure you can see where I am going with this). Trade Carlos Boozer to Miami. I think I am right in saying that Miami has two trade exceptions worth a combined total of around 5 million dollars. Combine those trade exceptions with Michael Beasley and Chris Quinn or someone on the Heat roster with a similar salary. The deal helps the Jazz out financially and also gives them a talented prospect. The difference in salaries is about 7 million dollars, which translates into about 14 million in savings when you consider the luxury tax.
Miami would never trade Beasley so keep dreaming. They want to build with him. And i don't think he's that great either. Can't shoot the 3 consistently and he's not quick enough to play the 3 and he's too undersized to play the 4.
Go JAZZ!!!
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