A Jazz Era Ends as Smith Acquires Franchise From the Millers

October 28th, 2020 | by Dan Clayton

Ryan Smith, pictured at center in this 5 For the Fight video, has acquired the Utah Jazz franchise and Vivint SmartHome Arena.

In a heated 1985 meeting, playwright and investor Sydney Schlenker saw an opportunity to pounce. He had already offered then Utah Jazz owner Sam Battistone two payments of $9 million to take over the club over a two-year period and move it to Miami, which still didn’t have an NBA team. As the meeting grew more intense, Schlenker raised his offer: $20 million and he would take over the franchise immediately. That’s when a short, balding, modestly (at that point) successful businessman from Utah spoke up.

Larry Miller, attending the meeting as neither a buyer nor seller, gestured a giant “T” with his hands to signal timeout. The others didn’t notice this plea amid the chaos, so he yelled: “Timeout!” and asked if he could speak with Battistone in the hallway.

Battistone had already offered to sell Miller a 50% stake for $8 million, Miller recalled in his 2010 autobiography, Driven. The Jazz were deeply in debt — to the tune of more then $6 million — and needed an injection in cash just to keep operating. Miller, whose net worth at the time was a modest $4 million and mostly tied up in his own business investments, had balked at paying the $8 million. But with the Jazz just seconds away from being whisked away to South Florida, Miller changed course. In the hall, he asked Battistone if he’d still take the offer of $8 million for half the team, which would mean accepting less money and a lower valuation. Battistone agreed. If Miller could come up with $8 million in a few days, he could save the Utah Jazz. But that would require getting a loan for more than twice his net worth to buy a team that had been operating in the red for its entire 11-year existence.

“Plus, I had no cash to put down and no business plan to show how I would make this financially strapped team profitable,” Miller wrote. “All I had to offer was my word and my reputation.”

Turns out that was enough. For the last 35 years, the Miller family has presided over professional basketball in Utah. Larry oversaw 19 consecutive winning seasons, hung two conference championship banners, built the team a new arena, and made Utah Jazz basketball a fixture of both the state’s identity and the NBA power structure. After his passing in 2009, his wife Gail reaffirmed the family’s commitment to the Jazz, and the team has returned to NBA prominence after a period of rebuilding. Since that meeting in April 1985, the Millers have been the stewards of professional hoops in Utah.

Until today.

Gail Miller announced on Wednesday morning that the family had an agreement in place to sell the controlling stake — 80%, per some reports — of the Jazz to Qualtrics founder and Utah native Ryan Smith.

Smith has long been a visible figure around the Jazz. He’s been a conspicuous front row fan even before the sale of Qualtrics to Germany’s SAP made him a billionaire. His company became the Jazz’s jersey patch sponsor, but then instead of slapping a logo on every player’s uniform, he and the Jazz leveraged the space to invite fans to join in the fight against cancer with $5 donations.

But perhaps the most comforting thing on Smith’s résumé for Jazz fans wondering what this move means for the long term future of their club: he’s a Utahn. Smith grew up cheering for the Jazz and playing in their youth basketball program, the Junior Jazz. Incidentally, he hails from the same Provo neighborhood as this site’s founder, Spencer Ryan Hall, who has been giddy about this announcement all day.

It doesn’t seem likely that he would purchase his hometown team just to move it, so Smith’s local ties and apparent love of the Jazz seem to bode well for the club staying put. The $1.66 billion sale also includes Vivint SmartHome Arena. In other words, this sale doesn’t feel at all like the 2006 sale of the Seattle SuperSonics, when an Oklahoma-based businessman bought a team that needed a new arena and would eventually use the lack of arena plans as the pretext to bring the team to his Sooner State. 

(Side note: VSHA is now the NBA’s third oldest arena, but with recent renovations, it will likely continue to house the Jazz for another long while.)

For all we don’t know about how Smith will run the Jazz, here’s what we know: he has been a wildly successful tech entrepreneur. He and a small group of friends and family founded Qualtrics in 2012 after getting funded by top venture capital firms, and in just a half dozen years, it grew into a powerhouse with Smith at the helm. Now one of the top experience management platforms in the industry, Qualtrics provides surveys and sentiment analysis to several of the world’s most recognized brands. When SAP acquired the company in late 2018, Smith became one of Utah’s wealthiest individuals overnight.

Now the unknowns: there’s no telling how Smith’s style running the Jazz might differ from Larry’s, Gail’s, their son Greg who had a stint atop the Jazz org chart, or even current CEO Steven Starks. The ownership group’s modus operandi in recent years has been to back off and let basketball people run the basketball side of the business. That said, you don’t grow a startup into an $8 billion company in six years by being hands-off, so we’ll see what Smith has in mind in terms of his level of involvement basketball operations, transaction decisions, and the like.

We also don’t know exactly what this will mean for the front office’s pursestrings. There’s a popular assumption out there that an organization run by a deep-pocketed fan will result in the Jazz blowing right past the luxury tax threshold. But the tax is limiting in ways that go beyond just its effect as a spending deterrent. Tax teams have fewer spending tools at their disposal, and rates for repeat taxpayers reach unsustainable levels pretty fast. Even if a particular owner is *willing* to spend into the tax, sometimes the right strategic move is to wait. The argument could be made that the Jazz would be better served to keep their payroll bill under control while Donovan Mitchell is still on his rookie deal and Rudy Gobert is relatively cheap, so that if they need to spend later, they can do so without fear of repeater penalties.

It’s also not necessarily a sound assumption that just because he’s wealthy and a fan of the Jazz that he’ll be willing to spend like crazy. Like any business owner, he will likely try to run the Jazz in a way that is profitable.

So it’s way to early to guess exactly what impact Smith will have on the Jazz’s roster-shaping mindset and consequently their on-court play. But for now, the incoming Jazz owner sounds a lot like his predecessors in one important way: both Smith and Millers talk as though they view the Jazz as part of the community.

When Larry Miller was weighing that initial 50% for $8 million offer, one day as he drove down I-15, he blurted out to Gail, “The Jazz can’t leave. We have to do everything we can to keep them here.”

Thirty-five years later, Smith echoed the thought at today’s press conference, “The Jazz are a gift to this whole community, and that’s how we view it.”

There you have it.

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