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Jazz show how small markets can stay afloat, but winning costs

Oct 25, 2011, 2:20 PM EDT

Jeremy-Evans Getty Images

The Salt Lake Tribune did a fantastic story over the weekend looking at the finances of the Utah Jazz and how that ties to the fortunes of late owner Larry Miller. It’s a great bit of reporting.

Some interesting tidbits out of that is how the Jazz have a passionate fan base — they averaged 19,511 people per game (seventh in the NBA) and had the second best television ratings and third best local sponsorship deals. This is a small market team that has kept fans happy and is rewarded with a loyal following and good revenue streams.

And yet they lost money. Why? Because you have to spend with the big boys to compete for rings and the Jazz were trying to do that, which left them with big contracts on the books. The blog SLC Dunk breaks it down well.

That of course is because the team was a luxury-tax payer for the first time ever starting with the 2010 season. They committed to that once Carlos Boozer, Kyle Korver, and Mehmet Okur all picked up their player options in a down off-season. They also had Andrei Kirilenko‘s contract still on the books. In addition, Deron Williams‘ max contract extension kicked in. So while they may not have been planning on going into the luxury tax that season, they knew it was a possibility. As a result, the team lost their first-round pick in Eric Maynor as he was traded to Oklahoma City in order for the Thunder to take Matt Harpring’s contract. That move saved them $12 million ($6 million for Hapring plus matching tax).

Last season also saw the Jazz go into luxury tax territory as they used a traded player exception received from Carlos Boozer going to Chicago in order to sign Al Jefferson. Again, AK’s deal was still on the books, Okur had a $10 million deal, and Williams was making the max. After a promising start to the season, the Jazz faltered and never materialized into a contender. The choice to go into the luxury tax last season was a little more of a conscious decision in an effort to remain a contender and to help appease Williams.

The owners will use this as an example of why the system needs to change, they will mask it as “competitive balance” but make no mistake it is all about the money. They spent it to keep Deron Williams, then unsure that was going to happen they shipped him out early to get a new building block in Derrick Favors.

The spending pattern in the NBA is not big markets spend and small ones don’t, it’s contenders spend and rebuilding teams don’t. The Lakers and the Mavericks are spending right now not just because they can but also because they are title contenders. The Thunder have not spent big yet but that is about to change as they have to really pay Kevin Durant and Russell Westbrook, not to mention good role players to go around them. They want to contend, they have to spend.

That doesn’t make the system flawed. Whatever system the owners put in that pattern will continue — teams will spend when they think they can win, will strip down costs during rebuilding.

The Jazz will spend less in the coming years as they rebuild with youth (after seeing him this summer, watch for Jeremy Evans), but when they get good again they will spend a lot for a chance to win. Frankly, it’s the way it should be.

  1. savocabol1 - Oct 25, 2011 at 2:55 PM

    What exactly has Utah won? When did they raise a championship banner?

    Sure small markets can win some games but what about the rings?

  2. leearmon - Oct 25, 2011 at 3:27 PM

    San Antonio has a few. Portland would have had a bunch too if they knew how to draft, ya know passing up on Jordan and all…

  3. redbear18 - Oct 25, 2011 at 6:06 PM

    Every time the jazz have had a good team and look to play for the championship, they get beat down on the way by a slightly bigger team. It was the spurs and lakers recently in the west, two teams that were stacked with veteran talent. Then, when they had the best point guard ever in John Stockton (Don’t even try to argue, Magic fans. All-time leader in assists and steals. ’nuff said.) And an amazing power forward in Karl Malone who ended his career second all-time in scoring, they had to go up against the greatest player ever (Jordan, duh.) in his prime when they were good enough to win a ring. The Jazz have had perhaps the most disappointment of any franchise, always being so close to greatness, then getting beat by someone barely better. Despite that, they have one of the most loyal fanbases and best homecourt advantages in the league. That’s saying something about their fans, who definitely aren’t bandwagoners, considering the jazz have never had a bandwagon to jump on.

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