The Utah Jazz May Never Pay The Luxury Tax Again

by Basketball John on Nov 28, 2011 11:16 AM MST in Utah Jazz - News & Interviews

The Utah Jazz lost a lot of money over the past two seasons and the biggest reason for that was that they paid the luxury tax for the first time in team history for the 2009-10 season and then again in 2010-11. Miller called paying the tax "deliberate" and "by design." The reasoning for the 2010 season was that all of the big free agents opted back in to their contracts given the down year on the FA market. The Millers may have hoped that one of the three -- Carlos Boozer, Mehmet Okur, and Kyle Korver -- would opt out. That didn't happen and that was one of the possible risks that the Millers took. Because of this, the Jazz dumped Matt Harpring to the Thunder and paid a steep price when they had to include Eric Maynor. The cap hit would have been much larger had they not done that.

The reason for going over the cap in 2011 was to trade for Al Jefferson and keep Deron Williams happy. When it looked like Deron wasn't going to re-sign with the team, they traded him for the best package they could get.

Will the Jazz be willing to pay the luxury tax in the future? Don't count on it. With the changes in the luxury tax system in the next CBA, the Jazz would have paid about $2.5 million more than they did this past season. Instead of paying a dollar for dollar tax, the rates would be as follows:

Amount Over Luxury Cap	Tax Rate
$0M - 5M	$1.50-for-$1
$5M - 10M	$1.75-for-$1
$10M - 15M	$2.50-for-$1
$15M - 20M	$3.25-for-$1

Below is a chart that shows how much the Jazz paid in salaries last year and then looks at how much they would have paid under the new rules.

	Old CBA	New CBA
Player Salaries 2010-2011	$75,292,849	$75,292,849
Luxury tax level	$70,307,000	$70,307,000
Tax Penalty	$4,985,849	$7,478,774
Total Salary + Tax	$80,278,698	$82,771,623
Missed luxury tax distribution*	$2,400,000	$2,400,000

Savings staying under lux tax	$12,371,698	$14,864,623

*Thanks to Tim Donahue for this info

As you can see, by paying the luxury tax this past season, the Jazz paid or missed out on over $12 million and that's not counting the missed revenue from missing the playoffs. Under the new rules, that amount would have gone up to almost $15 million and possible more if the luxury tax distribution amount increases.

I suppose that in several years that if the Jazz are contenders once again and need an extra piece or pieces to push them over the top that the Millers would consider it. But with the more punitive tax, don't count on it.

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Comments

Parity in the NBA is pure myth

I think basketball fans need to get used to the idea that there will always be a small handful of elite teams and then a league full of teams good enough to be considered competition, but not true contenders. That is a pessimistic view, I know, but I just don’t see any small market teams consistently winning unless they get a superstar (like OKC has with Durant) We’ll see

by Stockton2Malone on Nov 28, 2011 11:26 AM MST reply actions 1 recs

That's been the truth for 50 years

One player has such a big impact, that only those 4-5 teams with a great leading player, great sidekick, and great supporting cast are genuine contenders.

Can this be a small market team? Of course.

Under the new CBA does a superstar have incentive to resign with the team that drafted him? Yes.
Under the new CBa does a team still have payroll room to keep the sidekick? Yes.
Under the new CBA does a small-market team still have the ability to piece together the right supporting cast? Yes. In fact, piecing it together is slightly easier if the team stays far enough under the luxury tax line by NOT filling the roster with overpaid dudes.

I don’t love the new CBA, but I think it still allows a small market team the chance to compete for a championship.

Nothing will ever change that only 3-5 teams have a genuine shot at a title every year. And nothing will ever change that the same teams are the contenders for a multi-year period. That’s due to the nature of the sport itself—nothing to do with the structure of a CBA.

I got the crap beat out of me in Provo one time

by Yucca Man on Nov 28, 2011 12:15 PM MST up reply actions

Correct on all points

In a football a team can have a great QB or RB or DE but still be pretty bad. Same is true for most sports. But basketball is so unique in that a single player influences the game drastically.
Can a small market team find a superstar and win with him? The SPurs did and the thunder likely will. Could the Jazz? Sure. For all we know, Favors is the next Kevin Garnett. But teams like the Celtics, Lakers and Bulls will always have Midas’ touch. Don’t be shocked if Chris Paul and Dwight Howard both are playing for the Lakers next season (or even this season) Don’t be shocked for a minute.
I love the game too much to ever be driven away, despite my grumpy threats. But we as fans need to realize that 26/30 teams will only win a title if they capture lightning in a bottle. It’s not the CBAs fault. Blame it on the sun for giving LA and Miami great weather. Blame it on New York for being the home of Times Square and all that comes with the Big Apple. Blame it on the nature of a game where soloists thrive. Blame it wherever you like, but just realize that parity will never be achieved in the NBA to the same degree it has in other leagues.

by Stockton2Malone on Nov 28, 2011 12:30 PM MST up reply actions

very interesting breakdown

another reason i come to SLC Dunk first for my NBA news.

Love the Jazz, Utes, and BoSox.

@AskTheSportsGuy
bigbenstechnicalfoul.blogspot.com

by BigBenSportsGuy on Nov 28, 2011 11:35 AM MST reply actions

Yeah i doubt we go over the cap again

to many other benefits of staying under the cap

by Evans Almighty on Nov 28, 2011 11:42 AM MST reply actions

Question

Can NBA contracts be incentive based like the NFL does it? If player x plays a certain amount of games, or reaches a certain amount of yards/TD’s they get however much money in their contract. Do they do this in the NBA?

"I hate it! It looks like a stickup at 7-Eleven. Five guys standing there with their hands in the air."

Norm Sloan

"We have a great bunch of outside shooters. Unfortunately, all our games are played indoors."

Weldon Drew

by EcERyda69 on Nov 28, 2011 12:46 PM MST reply actions

Disregard my question

Found the answer I was looking for.

Thought this was interesting about Boozers contract in the 09-10 season: if Carlos Boozer plays in 65 games, averages more than 32 minutes, and finishes in the league’s top 12 in rebounds, he nets an extra $333,333.

Now I know why Boozer always shouted for the ball on rebounds, and why he said he was the “starter. Period” after coming back from his injury.

"I hate it! It looks like a stickup at 7-Eleven. Five guys standing there with their hands in the air."

Norm Sloan

"We have a great bunch of outside shooters. Unfortunately, all our games are played indoors."

Weldon Drew

by EcERyda69 on Nov 28, 2011 1:09 PM MST up reply actions