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Sunday, October 18, 2015

Tristan Thompson Should Have Hired a Real Agent

Many media members laud LeBron James for being a shrewd businessman but it is fair to wonder how much of James' business success is the result of shrewdness and how much is just the result of possessing overwhelming leverage as the best player in the NBA. James got his way with just about everything during his first tour of duty in Cleveland not because he is so smart but because the Cavaliers were terrified that he might leave town when he became a free agent. Of course, even though the Cavaliers built a roster around him that was good enough to post the best record in the NBA in 2009 and 2010, James left anyway--and did so in a way that damaged his reputation as a player and his brand, though both his reputation and his brand largely recovered after James led the Miami Heat to championships in 2012 and 2013.

Billy Martin once said that George Steinbrenner was born on third base and thought that he had hit a triple. James was not born on third base; he came from a tough background and worked very hard to develop his basketball skills. However, James has been nationally famous since he was a teenager and he signed endorsement deals worth millions of dollars before he played one minute of NBA basketball. If he had been a total bust as a player he still would have been set for life (provided he used that money wisely) not as a result of great business acumen but simply because he cashed in on the leverage he possessed as a prized commodity.

James has used his money and influence to set up great business opportunities for his childhood friends. This shows commendable loyalty but is not necessarily a sign that James or his friends are great businessmen. One member of James' entourage, Rich Paul, is now an agent. Paul represents James' teammate Tristan Thompson, who is currently a restricted free agent. Not long ago, Paul was being praised for shrewdly advising Thompson to decline to sign a contract extension so that Thompson could cash in during free agency. Thompson played well during the 2015 NBA playoffs and increased his market value, though it must be noted that a major part of Thompson's market value is that he is represented by one of James' friends; the assumption is that the Cavaliers want to do everything possible to please James, who has made it clear that he will only commit to staying in Cleveland on a year to year basis (which maximizes James' personal leverage but is of questionable value in terms of attracting players to Cleveland long term to play with James, who may not be in Cleveland long term). The Cavaliers offered Thompson a five year, $80 million deal--an incredible contract for a bench player who has had one good (partial) season. At that point, a shrewd businessman would realize that he had maximized what he could realistically get and sign the contract. Instead, Thompson not only did not sign the deal but he threatened to sign a much smaller one year contract and test free agency next summer. The Cavaliers essentially responded, "Good luck to you" and withdrew the $80 million offer, whereupon Thompson and Paul made the apparently shocking (to them) discovery that there is not a huge market outside of Cleveland for an overpriced, offensively limited power forward who will bring with him the baggage of being de facto represented by James without the benefit of playing alongside James.

Thompson, presumably based on advice from Paul/James, has overplayed his hand and now has no leverage. Maybe everything will still work out for Thompson. Kevin Love could get hurt or James could (privately, so as not to damage his newly rebuilt brand) threaten to leave Cleveland if Thompson is not signed to a huge contract. Right now, though, it looks like being represented by Paul (James) is going to cost Thompson millions of dollars.

Supposedly, James, Chris Paul and a new wave of players will go on the warpath versus the NBA owners regarding the next Collective Bargaining Agreement. I suspect that if this happens it will turn out the way it did the last time, with the players being locked out and losing money they'll never get back until they agree to the NBA's terms. As I wrote in one of my lockout-themed articles in 2011 after Dwyane Wade supposedly bolstered his "street cred" by yelling at then-NBA Commissioner David Stern during a meeting, "On the court, I'll take Wade over Stern every day of the week but in a boardroom the matchup is just as lopsided in the other direction, something that Wade will have plenty of time to ponder as Stern and the owners refrain from paying Wade and the other players for an extended period of time."

James is more polished than Wade and has much more leverage than Wade but he will find that even his power has limits; Pat Riley and the Heat did not bow to James' every wish when James played for Miami and, at least on paper, the Heat have put together a pretty good team just one year after his departure. If James and the NBA Players Association overplay their hands versus Commissioner Adam Silver and the NBA owners, James and the NBAPA may be praised by some media members but they will cost themselves and their constituents a lot of money.

James is such a global icon now that he will likely always have at least some leverage in any business deal involving him but it will be interesting to see if 20 years from now he will have parlayed that recognizability into as broad and diverse a portfolio as Magic Johnson, let alone enjoy the post-basketball business success of someone like Junior Bridgeman, who has been extraordinarily successful without having a fraction of the worldwide fame that James enjoys.

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posted by David Friedman @ 12:26 PM

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At Sunday, October 18, 2015 6:09:00 PM, Anonymous Anonymous said...

Many a free agency blunder has been done under the frequently disingenuous sentiment of "I have to do what's best for me and my family" which is usually code for "The black hole that is my and/or my agent's ego has not been adequately satiated and we will feel disrespected unless the other side grovels at our feet". This works if you're LeBron James or Chris Paul but not for the Tristan Thompsons of the world, even if LeBron is the one trying to negotiate you a better deal. I'm sure it was this same type of insular, delusional thinking that led James to believe that "The Decision" was an even remotely good idea.

 

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