This is purely speculation (I wasn't in the room when they were negotiating), but I think the Buss family resented Phil's popularity, influence, and potential power within the organization. Magic Johnson openly campaigned for his return. Kobe Bryant was euphoric about the possibility of running the triangle again. The LA crowd chanted his name in unison. All of these things played a part in their rationale.
I think Jim Buss was having what Bill Simmons refers to as a Commodus moment. In the movie Gladiator Commodus was jealous of the love and admiration the people had for Maximus. This situation is no different. Jim Buss wants to be recognized as the guy who is responsible for the Lakers success. It's hard to play second fiddle to the coach when you own the team. Just ask Jerry Jones, Jerry Reinsdorf (Phil Jackson's former boss) or the late great George Steinbrenner.
In addition, Phil Jackson sees himself as a demi god like King Xerxes in 300. It wasn't enough the Lakers organization came to him for help, he wanted them on bended knee. Instead of kneel before Zod it was kneel before Phil. Kiss the ring (any of the 12 you wish), admit you were wrong, and give me a say in player personnel decisions because you've proven to be incompetent in the past. Jim Buss wasn't willing to do all that.
The price of a championship is often larger than monetary salary compensation. There's opening your checkbook then there's swallowing your pride. Owners will typically do one or the other, but not both. We all know Mike D'Antoni is not a better coach than Phil Jackson. He is however a viable alternative since Kobe Bryant and Steve Nash endorse him plus they don't have to say uncle. The decision to pass on the winningest coach in the history of professional sports was personal. It had nothing to do with who gives the team the best chance to win a championship. If you can have the best why settle for almost as good? Feelings. Nothing more than feelings.
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