Would You Fire Shaq? You Would If You Were Missing Revenue...

Businesses make hard calls all the time.  Is what we are paying worth it?  Is it time to let a former star, who's become an average performer, go?

Business and sports mirror each other in this regard.  It's just that when you make a business decision, you don't have 10,000 news sources analyzing your move and intellect...

The Miami Heat recently traded Shaquille O'Neal to the Phoenix Suns for former All-Star Shawn Marion and reserve Marcus Banks.  If you follow sports, you've seen the blockbuster deal in the headlines.  While the deal is all about sports, it's also all about talent. 

More to the point, it's about what you are willing to pay for talent - based on your operating results and P&L.

Take the case of the Phoenix Suns.  Shawn Marion's been an All-Star, and Phoenix has the best record in pro basketball.  Unfortunately, Marion is at the end of his contract, and the Suns were going to have to cough up more than they were willing to pay, to lock him up for the future after this season.  The Suns weren't willing to erode their profitability to give a big, long-term contract to Marion.  Rather than be left with nothing in return, they made the move to deal for Shaq.

Now take the case of the Miami Heat.  Shaq had 2 years left on his deal, and his play had been severely diminished as of late.  In return for the hefty contract of Shaq and running mate Dwayne Wade, the Heat have the league's worst record.   It's clearly time for them to rebuild, so moving Shaq and getting younger with Marion makes sense.  So, they made the deal for Marion.  If Marion still declares for free agency with the Heat at the end of the season, they've removed a huge salary off their payroll (Shaq) and can use the resulting funds in the rebuilding process.

Here's how the deal mirrors paying for talent in corporate America:

--Situation #1 - You have a high performing employee who's a little disgruntled that he's not earning more.  Unfortunately, you have better talent locked up in the positions above the employee (just like the Suns do above Marion with Steve Nash and Amare Stoudamire).  What happens?  You do the best you can to keep the talent motivated, but understand at some point he may leave and you'll have to backfill the position.  That's the Suns with Marion before this deal...

--Situation #2 - You have an employee who's been a high performer in the past and has helped you be successful.  Over time, your business results erode, as does the performance of the star.  It becomes obvious that the organization can't support the cost structure demanded by talent that doesn't deliver results anymore.  That's the Heat, and that's why they moved out the icon that is Shaq.

I'm betting that the trade causes a brief 1-2 year resurgence in Shaq's career.  Who hasn't seen the example in corporate America when new surroundings invigorate an individual's career?

Playing with Steve Nash doesn't hurt either....

Comments

[Frank Giancola]

KD

I have read in some papers that the deal is based on more than contractural differences for the Suns, such as this one:

The Suns have had the most entertaining team in basketball since Steve Nash arrived three-plus seasons ago to orchestrate coach Mike D'Antoni's ultra-fast style. But they have never made it to the finals, and the trade confirmed the belief that this version of the Suns, despite its record, wasn't going to be able to do it, either.

The presence of a 7-foot-1, 325-pound man in the middle should go a long way toward erasing Phoenix's image as a "soft" team. His four championship rings give him extra credibility, and his personality should, as he put it, "amp up" what has been a joyless Suns team this season.

The Pistons coach said that championship teams have to be able to play two syles of basketball---run and gun and slow down. Shaq gives Phoenix the ability to do the latter.

So the deal is more than contactural differences, according to some, it is a matter of chemistry and versatility that Shaq brings.

Frank

[Wally Bock]

Let's not forget that Phoenix has Steve Nash at point guard, a good thing for any big guy inside. It has nothing to do with salary, but I bet it makes Shaq smile.

[David Zinger]

These trades and firings are always a little more complex than first meets the eye. Of course very few people can look Shaq in the eye. Hopefully this benefits Phoenix in the short term (this year) and Miami in the long term.