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Could bad deal mean end to Jazz in Utah?

Small-market NBA teams facing tough times

Published: Sunday, Nov. 20 2011 11:05 p.m. MST

With his peers, Larry H. Miller pleaded for increased wealth distribution, especially with local TV revenue, between the league's 30 franchises.

One snippet from the letter read: "We are asking you to embrace this issue because the hard truth is that our current economic system works only for larger-market teams and a few teams that have extraordinary success on the court and for the latter group of teams, only when they experience extraordinary success.

"The rest of us are looking at significant and unacceptable annual financial losses."

Five years later, the message still resonates.

ESPN.com NBA writer Brian Windhorst recently described the contents of that old letter as being "the root of the current lockout" and the reason behind the impasse on negotiations, which have lasted for two years.

A comparison of the Los Angeles and Utah markets offers a stark example of the uneven financial playing field in the NBA.

Earlier this year, the Lakers signed a 20-year deal with Time Warner Cable for a whopping $3 billion, according to the Los Angeles Times.

Utah's current TV contract?

The Jazz signed a 12-year pact in 2009 with ROOT Sports, formerly Fox Sports Network, worth $240 million.

"There is such a wide disparity among the values of those in cities like L.A. vs. Salt Lake City," former Jazz marketing vice president Eric Schulz said. "The big-market teams have such a huge advantage financially, it's akin to Zions Bank trying to compete with Citibank."

Financial losses the last couple of years were partially self-imposed by the Jazz. They carried a high payroll, hoping it would pay off in the form of an elusive championship, only to see those chances leave with Carlos Boozer, then Jerry Sloan, then Deron Williams.

But the team, the source said, has lost money almost every year since moving to Utah from New Orleans in 1979. Last year, Greg Miller admitted to ESPN that, "some years we make money, and some years we lose money."

The 1997 and '98 NBA Finals teams were profitable, the source said. Larry H. Miller pointed out in his posthumously released biography, "Driven," that the team made a small sum in the first few years he owned it outright (about $100,000 a year). Yet even under Miller's watch, the source claimed the Jazz lost millions most seasons.

That, despite the Jazz being one of the most successful NBA teams with one of the most loyal fan bases.

With last season's franchise-high payroll of $75.3 million, the Jazz were cast further in the red than ever before. Carrying massive contracts like Andrei Kirilenko's ($17.5M), Al Jefferson's ($13M) and Mehmet Okur's ($10M) put the Jazz on the world's biggest-spenders list.

The Jazz payroll ranked 11th in the world in average salaries at $5,829,643 a player, according to sportingintelligence.com.

That heavy payout by the Jazz came on the heels of a $9 million loss in 2009, the source pointed out.

To make matters worse for Jazz ownership, the Miller Motorsports Park has been a consistent money loser since opening in 2006. One of Larry H. Miller's pet projects, he admitted in his book — co-authored by Deseret News columnist Doug Robinson — that the world-class complex was losing $2 million a year. He even called the racetrack "an ugly stepchild" for the Miller Group because it was ahead of its time in Utah (in other words, unappreciated and underused).

The company's TV and radio stations (KJZZ and KFAN) have also taken significant losses, cutting into profits made by the Millers' movie theaters and Fanzz stores, according to the source.

The Miller's biggest moneymaker and original raison d'etre — the car dealerships — continue to bring in big bucks. However, according to the source, the 40-plus new and used auto lots saw their profits fall more than 50 percent in a recent three-year period.

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