More owners are wanting to lock in on a hard cap, and then they can prosper instead of just surviving. The Jazz can prosper under a new agreement.
SALT LAKE CITY — The NBA looks to be headed to the courtroom after players rejected the owners' latest offer, disbanded their union and took legal action with two antitrust lawsuits.
Whenever each side's lawyers finish their showdowns, owners and players will eventually need to resume negotiations for a new collective bargaining agreement.
Which raises the question: What scenario is best for the Utah Jazz?
Jazz CEO Greg Miller turned down an interview request because NBA team management and employees have been forbidden to talk about lockout-related issues by commissioner David Stern.
But one former team executive shared his three best-case post-lockout scenarios for the Jazz.
A hard salary cap
This, according to ex-Jazz vice president of marketing Eric Schulz, "will force the 'haves' to compete on a level playing field with the have-nots."
The financial advantage of being in a big market allows those privileged teams to not bat an eyelash at paying luxury tax fees.
Real Salt Lake owner Dave Checketts, the ex-Knicks president, agrees.
"More owners are wanting to lock in on a hard cap, and then they can prosper instead of just surviving. The Jazz can prosper under a new agreement," Checketts said. "I believe if they push that percentage to 50 or below (for BRI), it will really help teams like the Jazz and allow them to prosper."
Ultimately, Checketts added, "I think the target the NBA wants is 47 percent (for players). I think that's where the NBA would like to be."
Checketts, who's currently a consultant for the Detroit Pistons, doesn't see a doomsday scenario for the Jazz if at least a 50-50 BRI split is achieved, but he said other teams are in peril. He believes owners who've lost 60-70 percent of their wealth are determined to "stand and fight until they fix the whole model."
Added Checketts: "I've been in four or five of these things with the players association and I've never seen the owners take such a strident position. A really, really strident position. I don't think it's David's natural style, so he's getting pressured by the owners who want this repaired. They recognize they'll never be able to get their investments back if it doesn't get repaired."
Late Jazz owner Larry H. Miller vowed to never pay luxury taxes, but the Jazz finally surpassed the threshold in 2009-10, doling out $3.1 million while missing out on a $3.7 million check for non-taxpayers. The fee was a couple million dollars higher for 2010-11.
The Lakers, meanwhile, paid $110.4 million last season, including $20 million for luxury fees.
"If you look at the teams with the highest payrolls," Schulz said, "they consistently are the teams in the Conference Finals, NBA Finals."
The last five NBA champions, in fact, paid luxury taxes.
The Jazz were a painful exception last year. They had the fifth-highest payroll and paid taxes but didn't make the playoffs.
Increased revenue sharing
The NBA, Schulz explained, has two revenue sharing mechanisms: 1) luxury tax monies equally redistributed to non-taxed teams; and 2) a pool of money small-market teams can earn based on a complicated formula using "performance and effort" criteria from sales and marketing.
"If the team is deemed to have done all they can do in these areas, they receive a portion of the pool," Schulz said. "But it's a relatively small amount, 1 (million) to 2 million dollars on average."
Small-market teams want to mimic the NFL's revenue-sharing model, Schulz said. This would allow teams to keep revenue from premium seating (e.g. luxury boxes and "Hollywood courtside seats") and local sponsorships, but the rest of ticket sales earnings would be shared equally as a league.
Another desire of small-market teams is to benefit from TV and radio rights the bigger-market teams cash in on. The Lakers' reported $3 billion TV deal compared to the Jazz's $240 million contract is a prime example of the divide.
Franchise player designations
The trend of star players forming super teams (see: L.A., Boston and Miami) is "a slippery slope" for the NBA, Schulz believes. That's why some owners want to be able to attach a franchise player tag on a player similar to the NFL, forcing high-profile guys like LeBron James or Deron Williams to remain with their current teams.
"Under the current system, the good ol' days of Karl (Malone) and John (Stockton) playing for a Utah team their entire career is never going to happen again," Schulz said. "Small-market teams will constantly be in rebuilding mode, unable to compete."
Schulz cited what happened with Deron Williams and the Jazz as Exhibit No. 1.
Utah re-signed Williams to a max contract after his rookie deal, but the team then felt forced to trade him due to the risk that he might walk away when his contract allowed.
And the worst-case scenario for the Jazz?16 comments on this story
Schulz's two-fold answer: Keeping a variation of the luxury tax and not increasing the owners' share of BRI to at least 50 percent. (Players earned up to 57 percent of BRI in the previous CBA.)
"As long as the big-market teams can buy their advantage, the Utahs of the world will never be able to compete," Schulz said. "Sure, they may have a one-year blip, but nothing sustainable. Money always wins in the NBA."