FWIW, listening to it live and I think he just handled the question poorly. He started the question off by talking about guarding the perimeter, but seemed to be hesitant to call anybody out specifically. Then his mind kind of shifted to "well, everybody even our best defensive player needs to play better". Since Kessler is obviously our best defensive player it made sense (in his mind) to call him out. I'm sure he wasn't even thinking about contract negotiation stuff.
Manufacturing losses was the goal last year. (They took what could have been a 35-win team down to 17 wins.) It may be again this year. Having a lousy defense is part of the plan. Last year, the Jazz talked about improving defensively then proceeded to be bottom of the league again. Defense is just going to be a sore topic for a while, I’d expect.