The Utah Jazz May Never Pay The Luxury Tax Again

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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