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The Structure of Jazz
By Joseph Nation Posted in NBA on September 5, 2017 0 Comments
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A glance at a surprisingly shrewd offseason

It’s extremely hard to catch how smart of an off-season the Utah Jazz had. Their biggest moves were trading up in the draft using Trey Lyles to move from pick 24 to pick 13 to select Donovan Mitchell. The Jazz then traded up again from 30 to 28 to take Tony Bradley. Those two moves aren’t really possible to evaluate yet. We haven’t really seen either player in action, though I do like both of them a lot as prospects. If we were just looking at those moves, it would be undetermined how good their offseason was.

What actually makes their offseason so special is the sheer level of flexibility they’ve set up in how they structured the contracts signed. There are a few moves that were just generally good for flexibility. The Jazz acquired Ricky Rubio, a solid quality starter on a cheap contract in exchange for a pick that looks likely to be in the twenties. They also re-signed Joe Ingles on a deal that maximized future flexibility by causing the amount to decline over the lifetime of the contract. But what really makes this special is, in conjunction with the contracts already on their roster, a series of three similarly structured deals given out to marginal role players: Thabo Sefolosha, Jonas Jerebko, and Ekpe Udoh.

First, in order to understand how this offseason set up, you have to look at the circumstances that created it. Going into the 2016-2017 season, the Jazz knew they had effectively set up a core with the potential to fall apart after that season. After smartly indirectly fleecing Indiana for George Hill, they had a starting lineup that could compete with anyone, cap space to add solid bench veterans, and one of the best scheming head coaches in the league, complete with a murderous stare. But Hill and Hayward, two of their four best players, both had the ability to walk at the end of the year, breaking up that core.

The Jazz, however, knew about this concern going into the year and started hedging their bets. With Rodney Hood, Dante Exum, Raul Neto, and Derrick Favors already set to expire, they started lining up other players that came off the books in 2018. They gave Joe Johnson a two-year deal and acquired Boris Diaw via trade with the Spurs, who expired in 2018 as well. They also signed second round pick Joel Bolomboy to a deal with no guaranteed money in 2018-19.

As a result, they gave themselves the ability to go into the 2018-19 season with no one other than Rudy Gobert, Alec Burks, Trey Lyles — who traded during the draft to clear even more space — and their three first round picks over the course of two years. They did trade for Ricky Rubio’s and re-sign Joe Ingles, both players with guaranteed money past 2018-19, but even with those two players on the books, they have very few obligations for the 2018 offseason.

But this isn’t something we’ve never seen before. Plenty of teams have set up consecutive years in which most of their team has expiring contracts, parlaying that cap space into specific free agents. The Jazz, while they had the option to simply decline to use their space, instead went into free agency looking for a specific contract. Utah wanted quality veterans willing to take a contract with one year guaranteed and one year unguaranteed. The Jazz signed three of those, totaling to $12.81 million in unguaranteed salary for the 2018-19 season.

These deals allow Utah to keep what’s left of that core and compete with it. Despite Hayward’s departure, this team still has several strong pieces and should be able to repeat the third ranked defense from last year that made them a quality playoff team in the first place. They’ll need better injury luck, though, if they want to maintain that level of defensive quality and consistency. Having Rodney Hood, Alec Burks, or Derrick Favors healthy and playing at their full abilities should go a long way for Utah. Even if the injury bug rears its ugly head again for the Jazz, they have the ability to evaluate any potential player/asset in an appropriate environment — playing on a good team in meaningful games and situations — while having the flexibility to mitigate future financial concerns.

There are other contract structures that give the Jazz the ability to also reset in 2018. Utah could have offered flat one-year deals or a two-year deal with a team option for the second year. Going the non-guaranteed route leaves them with a series of options for next offseason. That’s where the brilliance lies. Taking large amounts of non-guaranteed salary into 2018 gives them the ability to take advantage of the general lack of salary cap space around the league.

They’ll begin the offseason with about $18 million in practical cap space. If Utah wants to, they can renounce Derrick Favors’ cap hold, offer someone like Julius Randle an $11 million per year contract, and also retain Rodney Hood via restricted free agency. Or they can decline to extend Hood a qualifying offer and extend, say, $18 million to someone like Aaron Gordon, Robert Covington, or Jabari Parker, depending on where those three have their markets fall, of course.

Another important aspect of the non-guaranteed contract structure involves trades. The Jazz can trade those players before the trigger date of when the contracts become guaranteed. The team receiving those players with the non-guaranteed contracts can immediately waive them to free up cap space or pay a smaller luxury tax penalty. If those contracts had an option (player or team), however, the process becomes more complicated. Having an option prevents a team from trading the player between the end of the regular season and the deadline for when the option needs to be picked up. This means that the salary would have to be guaranteed before they could trade the player/contract, decreasing the player’s value significantly.

How does this benefit Utah? A team looking to cut salary can dump it to the Jazz without taking anything back because the other team can waive the non-guaranteed contract player immediately after the trade. For example, if the Jazz struggle this year and the Lakers need a place to dump Deng’s contract, the Jazz can immediately take on the last two years of that and get paid handsomely in picks. If the Jazz are successful and the Magic decide that they don’t want to retain the core of Evan Fournier, Aaron Gordon, and Nikola Vucevic, Fournier might be a reasonable target that they can find for cheap. Or if the Pistons struggle this season again, Tobias Harris and his strength from midrange, something that’s historically been extremely valuable from power forwards in Quin Snyder’s offense, could easily be on the table as the Pistons look to blow up their current core, cut costs, and acquire future assets.

Basically, the Jazz have the ability to pick the trade package best suited for whatever situation they may be in because of these contracts. If no good offer materializes, they can simply waive the players, giving them an additional $12 million in cap space. That would bring their potential total cap space over $30 million next off-season, a total that only five other teams can hit. That potential $30 million is enough to make them major players in an already thin market.

Now, the Jazz are threatening to throw a wrench in their own plans by opening up extension negotiations with Rodney Hood early. That would put additional salary on their books, which isn’t ideal and goes against Utah’s plan of cap flexibility. The Rodney Hood deal would have to be very team friendly for the Jazz to make it tolerable. Regardless, in an offseason where a certain team hard-capped themselves by paying a third string player, the Jazz showed fantastic understanding of how to manipulate contracts and the Collective Bargaining Agreement in order to execute a cogent long term plan, and this shouldn’t go unnoticed in the public eye.

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