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Case Study Analysis Part a: “Power Play for Howard”

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Case Study Analysis Part A
Team C
August 14, 2012
MGT/445
Steve Knabe

Case Study Analysis Part A Benefits Costs Risks
Party Tangible Intangible Tangible Intangible Tangible Intangible
Juwan Howard Heat:
$95.2 mil contract including $6 mil in bonuses, hotel suites, limo services, $5000 toward charitable cause

Bullets: 1st offer - $84 mil contract
2nd offer - $100.8 mil contract plus $4.2 mil to cover tax expenses Heat:
Possibility of winning a $100+ mil contract, living in a lavish home with elevators, and receiving “special treatment”

Possibility of expanding his fan base

Possibility of expanding his brand

Bullets: Ability to remain in Washington, which is his home

If Howard accepts the initial offerings from Unseld, his salary would be significantly lower than if he were to accept the Heat’s proposal

Howard would forfeit the special treatment privileges by accepting the Bullets’ offer Accepting the Heat’s proposal would result in Howard leaving the place he calls home

Howard would leave his fan base in Washington $50 mil pay cut if he chose to remain with the Heat during arbitration

Accepting the initial proposal from Unseld would have resulted in a below-average salary

Leaving the Bullets could result in a smaller fan base, which would affect revenues and marketing

Possibility of no contract with the Bullets or the Heat. No contract, no income Leaving Washington may negatively affect his fan base

Howard may regret moving to Florida if he dislikes the coach, team, or state

Media/Fan backlash Benefits Costs Risks
Party Tangible Intangible Tangible Intangible Tangible Intangible
Wes Unseld Howard will increase the likelihood of wins, which increases the team’s budget

Howard will bring revenues to the Bullets through advertising and marketing

Bullets will profit from licensing of Howard’s name and number on gear and memorabilia

Bullets have not won in nine years, Howard could help the Bullets win within his 7-year contract

Washington coach can strengthen the team by keeping Howard on the team

Howard can help strengthen other team members who have potential

Satisfying fans

Howard may attract potential recruits to the team

The Bullets promised the fans that the team would do whatever it took to sign Howard. The final contract will cost the team $100.8 million dollars.

Final 100.8 mil contract and $4.2 mil to cover tax expenses

Loss of profits from Howard’s fans

Loss of profits from fans who disagree Disgruntled team members viewing Howard’s contract as unfair

Fan/Media backlash

Possibility of team members quitting the Bullets because of the controversy surrounding Howard’s contract

Being labeled as a liar for not fulfilling the promise of doing “whatever it takes” to retain Howard

Over-paying Howard and the team does not improve

Washington coach may be unable to pay Howard what he is truly worth

Losing revenues from licensing and promotions through Howard

Losing Howard’s fan base, which contributes to revenues through tickets and merchandise

Fan/Media backlash

Losing Howard to a competing team

Howard can get and bench for a season

Losing Howard’s fan base

Being labeled as a liar for not fulfilling his promise to retain Howard

Disgruntled fans

Benefits Costs Risks
Party Tangible Intangible Tangible Intangible Tangible Intangible
Pat Riley With a winning player, it I likely the team will have more wins. This would result in higher budgets

Acquiring a larger fan base, which contributes to the team’s revenues

Licensing Howard’s name for gear and memorabilia will generate profits

Higher probability of winning

A stronger team

Larger fan base

$95.2 mil contract, $6 mil in bonuses, cost of hotel suites and limo services, game tickets, and $5000 to Howard’s charity work

Cutting salaries of other players to avoid exceeding the salary cap

Attorney fees

Fines and jail time for exceeding salary cap Views of the Heat team as participators in unethical negotiations

Tarnished brand and reputation

Perceptions of favoritism

Fan/Media Backlash

Loss of fan base

Investing a significant amount of money into a player who does not perform

Appearance of valuing Howard more than current team members because of exclusive hotel suites and limo services

Fan/Media Outrage

Fines

Jail time

Loss of Howard to a competing team

Unlikely to regain Howard during arbitration

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