Utah Jazz: Playoff payoff? Each home game has big impact on Jazz bottom line
Scott G. Winterton, Deseret News
Getting into the playoffs again this year wasn't just good for the morale and competitive nature of the Utah Jazz and their fans.
It'll also help the NBA franchise's bank account not lose quite as much money this year.
"There are roughly half the teams that are making money," Jazz president Randy Rigby said,"and half that are losing money."
Playoff revenue will help some, including the Jazz, but not all of the league's 30 teams. While visiting Salt Lake City in March, NBA commissioner David Stern said he'd prefer if his league members could sustain themselves financially whether they make the playoffs or not. Earning a postseason spot, he said, shouldn't be "vital" for their budgets. It should be a financial bonus.
"I think our teams should budget to break even (in the regular season)," he said, "and if they make the playoffs they make money."
There was a time in the NBA when many teams would break even or better during the regular season and then "make a little money" in the postseason, Rigby said. But now the "icing on the cake," as he called going into the black, often gets licked off by skyrocketing player salaries and other franchise costs (front-office payroll, production costs, rent payments, etc.).
"Now we (the Utah Jazz) will not make money in the regular season," Rigby said. "That's just the dynamic. I'm not apologizing. We're not feeling sorry for ourselves."
In fact, the Jazz even bank on having a bank deficit. Though Forbes Magazine ranked Utah as the 16th most-valuable NBA franchise listing its value at $342 million as of December 2007 Larry H. Miller's team currently plans on not recouping all of its costs on an annual basis.
Rigby wouldn't divulge how much money the Jazz are set to lose this season, but it's no secret that the longer Carlos Boozer, Deron Williams and company stay alive, the better it is for the club's coffers both for the present and future.
The Jazz's biggest expenditure, Rigby said, is the players' paychecks, which cost Miller $60 million-plus this year. That eclipses the league's $56 million salary cap. The killer is that teams have to pay for exceeding the cap, so a playoff run could help recoup some of that.
"It's critical. It's very important," Rigby said when asked how important making the playoffs is for NBA franchises' finances. "The reason is not only what it establishes for you financially for the remainder of the season but also what it does to establish credibility for the future year."
The Jazz benefited from their run to the Western Conference Finals last season. Fans flocked to snatch up season tickets in record numbers after the 2007 playoffs, helping to put a dent in what they claim will be an inevitable deficit.
That's one of the main reasons the Jazz upped their value according to Forbes by 15 percent about $45 million, as was reported in the Deseret News in December from the previous season. Only Cleveland (20 percent), Toronto (18 percent) and Golden State (16 percent) had better valuation increases.
The magazine claimed that the Jazz's first NBA playoff stint since 2003 helped them earn $114 million in revenue for the 2006-07 season and $5.7 million in operating income (earnings before interest, taxes, depreciation and amortization).
According to Forbes,"the playoff run helped the Jazz add close to 6,000 new season ticket holders this year, one of the biggest sales gains in NBA history ... Miller can use the added revenue to help pay the $250 million worth of long-term contracts he doled out in 2004."
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