To be sure, the Utah Jazz were the bright starlet in the Larry H. Miller Group of Companies' portfolio.
That, along with Vivint Arena, was the glamorous, most prominent business that headlined the rest of the company’s assets. That fact was one big reason Wednesday’s announced sale of the team to Qualtrics CEO Ryan Smith was so surprising to most.
But to understand that sale — and why it came now — one has to understand that the Jazz and the arena were actually a small part of LHM’s world. Yes, the team earned millions of dollars of revenue from the team in good years, and gets further money from their movie theater and real estate holdings too.
The big fish, though? That’s car sales. The businesses that provided the start of the Miller empire are still responsible for the majority of LHM’s revenue now. The company owns over 60 dealerships in the Western United States.
And while there was a near-complete loss of sports and movie theater revenue as a result of the COVID-19 pandemic, the car business has been a good one to be in.
That’s because sales locally and nationally have surprisingly grown over the course of the pandemic overall. Salt Lake County’s Office of Data and Innovation provides details on taxable sales in each industry, comparing 2020′s results to 2019′s. And while auto sales declined by $75 million in March of 2020 compared to March 2019, they rebounded to be worth $148 million more in May, June, and July of 2020 compared to their previous year’s counterpart months.
Yes, obviously, the Miller sports and entertainment industries were strongly impacted by the pandemic, to the tune of millions of dollars. But that car revenue represents the majority of the Larry H. Miller business, and sources confirm that LHM’s dealerships are no exception to local and national trends. LHM’s other sectors performed well, too.
So if the finances were fine for now, why did the team sell? LHM CEO Steve Starks told The Salt Lake Tribune that it’s not about the short term, but the long term.
“By selling the team and entrusting stewardship to someone with the same commitment to Utah, the organization could further expand in our current industries and invest in new ones while honoring the Miller family’s legacy,” Starks said. "In addition, Gail and the Miller family are able to continue their significant philanthropic commitment to the community.”
While COVID-19 showed how fragile some businesses could be, the windfall from the sale would be enough to insulate them from volatility by providing cash for their existing businesses and diversifying into other sectors. The plan is to purchase numerous businesses in the coming months and years to all come into Miller control, giving the family a chance to expand their empire in a resilient way. One hope is that if catastrophe were to befall the automotive business, the overall whole would still be healthy.
They certainly got a good deal on their investment: “at least” 1.6 billion dollars in exchange for 80% of the Utah Jazz, Vivint Arena, and associated assets like the Salt Lake City Stars. Forbes estimated that 100% of the team was worth 1.55 billion dollars last year, so to get more than that from Smith, in an uncertain economic time for the league, reflects a growth in the valuation of the team. In comparison, Larry Miller bought the team for a combined $22 million in 1985 and 1986.
That big-money payout is enough to ensure generational wealth for the entire Miller family and their offspring forevermore. There’s millionaire rich, and there’s billionaire rich — and while the Millers owned billion-dollar assets, they’ve never had a billion dollars, for investment, philanthropy, or whatever the succession of Millers choose.
For Smith, owning his hometown team — the team that plays his favorite sport, the team he wore a Jr. Jazz jersey for as a child, the team he’s rooted for for his whole life — is a dream come true. Smith has always made his interest known in owning the Jazz, as he admitted in Wednesday’s press conference, but never really thought he’d get the chance.
That passion for the franchise also made Gail Miller and the family much more comfortable with the sale. In 2017, she placed the team into a legacy trust, in order to ensure long-term family ownership of the team for generations. One person in the family wouldn’t have total control, and thus couldn’t sell the team. The goal was to keep the Jazz in Utah forevermore, just as was Larry Miller’s intent when he bought the franchise in 1985.
“I am fully persuaded that with this sale, the objectives of the trust will be honored, and the new owners have made the same commitment to keep the team in Utah,” Gail Miller said in the press release announcing the deal. Smith provided that, along with a proven ability in running his businesses' operations day-to-day.
He plans to be more of a hands on than the the younger Millers have been in recent years. Greg and Steve Miller stepped down from roles in the LHM organization in 2015 to “pursue personal interests,” according to the press release at the time — both are on the company’s board of directors now in oversight and strategic roles.
Smith, though, plans to provide hands-on care for the Jazz. The 42-year-old Qualtrics CEO’s ability to provide bona fide experience in building and running his own company, a demonstrated commitment to Utah, and the overall economic environment of 2020 made the family consider the possibility of selling the team in a way they hadn’t with previous offers. In many ways, Smith displayed the same characteristics as Larry Miller had three decades earlier.
After Smith presented an informal offer to Starks in July, the family got together over the course of the next few months and voted that they’d support selling the team via the trust, culminating in the announcement this week.
There’s optimism in the Jazz’s offices about the new leadership, in part because Smith doesn’t plan to come in and make a ton of changes right away. In recent days, he’s been on the phones with Salt Lake City and Utah politicians, as well as Jazz executives, introducing himself to some and expressing excitement to others about his new acquisition.
While the Millers will retain 20% ownership of the team, they don’t expect to be too involved in decision making beyond Starks' role as an advisor to Smith, as noted in the press release announcing the sale. Some NBA teams have minority owners in the draft room, for example — that won’t be the case in Utah. This will be Smith’s organization, assuming approval by the NBA’s Board of Governors in the coming weeks.
So yes, the deal came as a surprise to most. But for the Millers, it all added up.
“It was just the right time," Starks said. "We are confident this will be a win, win, win.”