During one interview in particular, Larry Miler expressed his concern for the future financial state of the Jazz. Miller said "[the Utah Jazz] do not intend to be a luxury tax payer". While Miller's "intentions" are clear, reality may take the Jazz into unchartered territory.
Before jumping to any conclusions, it should be clarified what makes a team a luxury tax payer. There are two basic levels of salary cap in the NBA.
Soft Cap = $56.68M in 2008 = the so-called tax limit which restricts a the amount of money available for a team to pay free agents from other teams. (interestingly to note, there was not a single team in the NBA last season that was under the soft cap)
Hard Cap = approximately 125% of the Soft Cap = $71.15M in 2008 = the maximum allowable payroll limit for a team without paying a "tax" to the league. For every dollar that a team pays in salary beyond this hard cap, that same franchise must pay the same amount in "taxes" to the league. Thus, creating a dollar for dollar tax which one will often hear references of. (interesting to note, in 2007, only 6 teams were below this limit including the Jazz).
Is it necessary for a team to exceed the hard cap to stay competitive in the NBA similar to the MLB (Red Sox, Yankees, etc)?
The simple answer is No. If you break the NBA down into three tiers of payroll, here are the results.
Highest Payrolls = .471 win percentage
Middle Payrolls = .577 win percentage
Lowest Payrolls = .452 win percentage
Using the same tiered system to analyze teams only in the WESTERN CONFERENCE, you get the following numbers:
Highest Payrolls = .529 win percentage
Middle Payrolls = .627 win percentage
Lowest Payrolls = .424 win percentage
Looking solely at statistics, one could create a reasonable argument to state that teams should not be extreme penny-pinchers, although they shouldn't reach the other extreme by opening their pockets for anyone who has ever had a good season.
Among the highest and lowest paying teams in the NBA, you'll find:
Miami = $150M in 2007-08 including luxury taxes paid
New York = $135M in 2007-08 including luxury taxes paid
Denver = $130M in 2007-08 including luxury taxes paid
LA Clippers = $57M in 2007-08
Milwaukee = $59M in 2007-08
Memphis = $48M in 2007-08
Philadelphia = $45M in 2007-08
While teams want to avoid either extreme, there is no exact recipe for success. Many people ask "can a team in a small market like Utah afford to pay high taxes in the NBA and stay afloat"? Given the right scenario, the answer is YES.
The San Antonio Spurs ranked 6th in the NBA last season in payroll which reached approximately $110M including luxury taxes. San Antonio is really a smaller market that Utah, but the Spurs have gained a national following by staying competitive for multiple seasons and winning multiple NBA championships.
Our blogger team has put together a spreadsheet that shows the Utah Jazz salaries for the coming years.
The yellow cells mark the quality players eligible for signing an extension after next season with their expected salaries. Don't forget, a team can't operate with only 6 players however, and a portion of salaries must be kept aside for bench players to fill out a roster. In addition to those listed, the Jazz have zero first round draft picks in 2009, two first round draft picks in 2010 (including one from the NY Knicks), and 1 first round draft pick in subsequent years following.
A common idea among Jazz fans is that the Jazz should trade Andrei Kirilenko to free themselves of his contract. The following chart shows the effect that change would have on the overall team salary. These changes are under the assumption that Kirilenko would be traded for either a high draft pick, or an expiring contract in return.
Feel free to take a look at numbers, and make your own determination of which players you would opt not to resign (in the yellow). If you want any specific numbers, send us an email at "thesaltpalace@gmail.com" or post a comment and we'll make those calculations and post them in response.
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2 comments:
I would like to know where you got your numbers for the salaries from. I got mine from Hoopshype.com and they are a little different than yours. And that could make a big difference. I also couldn't find anything about the future salary cap after the up coming season, where did you get that.
The numbers are based on those provided by espn for current year. All future years are taken from reports given with contract details over the years.
The salary cap numbers are a simple calculation of inflation combined with economical conditions of the time. Generally the cap increases 2-5% per year. I used 3% though it can vary with the economy.
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