Ever since Kevin O’Connor traded away the Jazz’s franchise cornerstone Deron Williams to the Nets back in 2011, they have been in rebuild mode, even though O’Connor never wanted to say that phrase.
O’Connor tried to rebuild while staying mediocre for a few years; this defined the Al Jefferson and Paul Millsap era. When Dennis Lindsey took over as general manager a year and a half later, he embraced the rebuild and bottomed out in 2013-14. That offseason, the Jazz received the fifth pick in the draft and selected Dante Exum, hoping he could become a franchise cornerstone.
Even before this, the Jazz were collecting young talent and doing an excellent job of developing it. O’Connor drafted Gordon Hayward and Alec Burks, traded for a young Derrick Favors and a draft pick who turned into Enes (Kanter) Gulen, who Lindsey traded for another future draft pick.
After Lindsey took the reins in 2012, he has drafted talent like Rudy Gobert, Rodney Hood, Exum and Trey Lyles. He also hired Quin Snyder as coach, who excels in player development, to help his young talent grow and reach their potential.
As the young players improve their talent levels, they also want their paychecks (and rightfully so) to improve. The Jazz have a very talented young roster that will all want to get paid their fair market value and maybe more. The question is, can the Jazz afford all their young talent? Let’s take a hypothetical look to see how this could be possible.
The NBA’s salary cap is defined as the total amount of money a team is allowed to pay its players. This past offseason the NBA salary cap took a record jump from $70 million per team to $94 million. Next offseason, it will continue its steep climb to a projected to $102 million. For the purpose of this exercise, let’s use a $100 million salary cap to make it easy.
Unlike the NFL, who has a hard cap (meaning under no circumstance can teams exceed the cap), the NBA has a soft cap (meaning teams can spend over the cap but only for certain exceptions and they will have to pay a luxury tax bill to do it).
When defining the NBA soft cap, Aboutsports.com says, “The National Basketball Association caps player salaries at a certain level, which is based on a percentage of projected league revenue (BRI). But it is a 'soft' cap — there are a wide variety of mechanisms that teams can use to go over, most notably the Larry Bird exception, which allows teams to exceed the cap when re-signing their own free agents. Teams can spend above the cap without penalty — up to a certain point. But once a team's payroll hits the luxury tax threshold, the franchise faces additional charges.”
A key point in this is understanding the luxury tax threshold. John Hamm of The Oklahoman explained the threshold as “basically a line in the financial sand (that) is drawn roughly $12 million to $13 million above the salary cap. Teams are subject to a luxury tax if their payroll exceeds it.” The league gives a little leeway to help teams keep their own players.
If Lindsey and company are trying to keep all their key players with a salary cap of $100 million and the luxury tax threshold at $15 million, the Jazz could have up to (depending on exceptions) $115 million to spend before they are penalized.
NBA rosters are required to have a minimum of 13 players and a maximum of 15. Assume that the last four roster spots (12-15) are league minimum players. These players, depending on time in the league, will make between $500,000-$1.5 million per season. For these players, we’ll use $5 million out of the $115 million cap to sign them. Examples of these kind of players on the Jazz’s roster are Raul Neto, Chris Johnson and Jeff Withey.
Right now if Hayward, Favors and Gobert were to hit the open market, all could receive a maximum contract (and justifiably so). A max contract is the most a team can offer a player. The max for Hayward and Favors would be worth $30 million a season or 30 percent of the cap. Gobert could sign for $25 million a year or 25 percent of the cap. The max offers get higher the longer a player has been in the league. Players who have been in for 10+ years can receive 35 percent of the cap.
If the Jazz were to offer their “big three” max deals, it would total $85 million per season. Then add on the $5 million for the end of the roster players; now they only have $25 million left to spend on the other eight roster spots. These guys consist of Hood and Exum, who fill out the starting lineup, plus Lyles and Burks. When the Heat signed LeBron James, Dwyane Wade and Chris Bosh, the players surrounding them were either rookies on cheap deals (Mario Chalmers) or longtime veterans taking less money to chase a ring (Shane Battier).
Hood’s market value will probably be around $15-$20 million, and if Exum grows into a solid point guard but not an All-Star, he’d be worth around $15 million (this is probably George Hill’s value next summer). In this scenario, the Jazz are more than capped out at $115 million on just nine players, including the backend of the roster. They would be forced to pay the tax on players like Lyles, Burks and the other four remaining the roster spot. What if Exum and Hood become borderline All-Stars? Paying all these guys becomes impossible.
Another option is to try to convince the Jazz’s “big three” to take a little less than their max offer. No player is going to take less money unless it leads to a lot of winning attached to deep playoff runs. Let’s say Hayward, Favors and Gobert all sign for $70 million instead of their max at $85 million. That gives the Jazz’s front office an extra $15 million a year. Now the Jazz have a better chance to keep Exum and Hood around their market value and pay either Lyles or Burks $10-$15 million a year while losing one of them. Even in this scenario, the Jazz are still going over the tax and losing a quality player. Lyles’ agent is Rich Paul, and if history has anything to say about Paul, he has never given a team a discount on any of his players (just ask the Cavs).
There is a chance that the Jazz’s top seven players (Hayward, Favors, Gobert, Hood, Exum, Burks and Lyles) all become worthy of contracts that exceed $15 million per season over the next few seasons. The Jazz could always just pay the tax and keep all their key players but unless they are a serious title contender, it doesn’t make sense. Also to consider when paying the luxury tax is that the penalties get harsher every consecutive year a team exceeds the cap.
Whether the Jazz can pay all their players depends on the development of Exum, which is why his injury was so costly; Lyles, the new age playmaking four; Burks, but if he can stay healthy and learn to make his teammates better; and Hood, depending on how good can he become. All of these players have serious potential and are in a culture that should help them achieve it.
The Jazz have a good but challenging problem. They have a ton of young talent that is developing well but will cost too much to keep all of them in the fold. In the end, Lindsey will have to make a difficult decision, like choosing to pay either Favors or Gobert their max and be forced to trade the other to help the Jazz keep the likes of Hood, Exum and Lyles in the Rocky Mountains or choosing to keep just one player of the latter three. The foundation of the Jazz is there, so now it’s time to make this team a real contender within the rules of the NBA salary cap.
Follow Kincade on Twitter @kincade12 or email him at kupstill12@gmail.com