Case Study Analysis Part A: Case 3, "Power Play for Howard"
MGT 445
4/25/12

Power Play for Howard
In this assignment Team C will briefly summarize the case of Juwan Howard. Next, Team C will evaluate the benefits (tangible and intangible), risks, and costs associated with negotiating Juwan Howard’s free agent contract. Afterwards, we will provide a brief conclusion.
The Overview
As kids we have dreams and aspirations of growing up making it big in our profession of choice while making lots of money. According to most children, their dreams range from a number of professions including; Doctors, Lawyers, Teachers, Police, Firefighters or even becoming a professional athlete such as Michael Jordan and Juwan Howard. In the 1990’s, most kids wanted to be like “Mike”. Michael Jordan’s name was a household name, and a major brand for marketing worldwide for Nike. Most NBA players’ career salaries would not even come close to Michael Jordan’s endorsement income from the late 80’s through the 90’s. In our opinion, Michael Jordan was clearly underpaid when he played basketball. It wasn’t until later in his career that he signed the biggest NBA contract of all time paying $30 million a year. Jordan set the bar for young superstar NBA players such as Juwan Howard to sign multi-million dollar contracts in the late 90’s.
Juwan Howard’s story was a little different from Michael’s. He signed two contracts over the course of his career totaling $205 million. This type of money is unlikely for a second year pro center in the NBA unless you are Wilt Chamberlin, who scores a hundred points a game on a consistent bases. Juwan’s situation was between two ball clubs which were The Washington Bullets and Miami Heat which were both in heated negotiations to get him on their team. His loyalty was with The Washington Bullets. However, in the beginning the money was with the Miami Heat and Juwan was bound for Miami, until things started to unravel.
The Risks
There have been devastating problems and disagreements in recent years developing and negotiating contracts with NBA’s players and owners. With the collective bargaining salary system in place, there were incentives for cars, fancy hotel rooms for away games, and even court side seats for friends and family members of the players. Juwan Howard was offered and promised it all.
Howard risked not having a tangible NBA team to play with once he became a free agent throughout his negotiation process and Wes Unseld, as the general manager of the Washington Bullets, stood to lose a player dedicated to his team. Juwan Howard became a free agent with an expensive price tag. His expensive price tag would cost anyone vying for his skills and abilities to pay out more money in order to have him. Howard believed that he was worth far more than what the Washington Bullets agreed to offer him. During the negotiation process that lasted over four weeks with all of the issues that persisted with it, Howard’s agents continued to ask for more even though more was on the table with the other team. When unable to get more from the Bullets and an ultimatum in a sense, he agreed to sign what he believed to be a tangible deal with the Miami Heat organization for 100.8 million in cash plus perks. Howard later found out that Alonzo Mourning had agreed and signed a deal worth over $100 million as well. The Miami Heat organization had not notified the NBA as required. The agreement with Alonzo Mourning dramatically shrunk room for Miami under the salary cap to tangibly sign Juwan Howard. The negotiation process can be very stressful and complex. Juwan later found that if the organization lost the arbitration, Juwan would tangibly stand to risk tens of millions. Not only this but the general manager of the Heat would lose Juwan but also still have to pay Mourning because Mourning now knows what they were willing to pay Juwan. Because Juwan was a free agent, the Washington Bullets could resign Howard only if the league would agree to restore the teams “Larry Bird rights”. This would allow teams to exceed the salary cap in order to re-sign their own players. However, if the rights were restored, the Washington Bullets would have no limits on the sum of money they could pay Howard. With that said the tangible and intangible risks that were conducted by Howard’s legal team paid off. On Monday August 5, 1997 the league agreed after voiding the first contract, Juwan Howard would sign a second contract which would be valid, making arbitration moot. Howard signed a $105 million contract with the Washington Bullets. He stated “this was a blessing from God.” He also compared his feelings from the signing of this contract to his college graduation.
The Costs The CBA is the governing body that prohibits the NBA from making arrangements with players that would exceed the salary cap. These contract negotiations placed the parties involved at risk for losing a lot, including reputations because of the allegations that the general managers and agents were trying to improperly make contract deals with players that circumvented the salary cap rules. Pat Riley was accused of making an undisclosed agreement with Alonzo Mourning to make him the highest paid player on the team. This would prove very costly in the end. When word of this got out, it sparked a whirlwind of legalities that the teams and players lawyers had to sort out. The Heat imposed injunctions to keep Howard from signing another contract if theirs was recognized as valid. As everyone was trying to sort out all of this mess, the Bullets renounced their rights to Howard pending his signed and valid contract with the Heat. This contract that the Miami Heat was offering Howard would cost them $100.8 million dollars. The ultimate cost here was to the Miami Heat. They lost the player that they had most wanted to make their ball club spectacular. It was because of their shady dealings as mentioned above that they had to make a decision on whether or not to continue to try to prohibit Juwan Howard from signing another contract with the Washington Bullets until theirs had been deemed valid or invalid. Pat Riley felt very strongly that the unlikely bonuses that he had offered in other deals to players would not place him so close to the salary cap that he would not be able to sign Howard.
The Conclusion In conclusion, the negotiation process worked out in Juwan Howard’s favor. Although he was not able to receive the luxury suites and limosine rides to and from the games, he in the end was able to stay with the Washington Bullets, where his loyalty was in the first place. Most players in the NBA wouldn’t believe that loyalty and hard work pays off while playing for a team because at that level, there are no friends in business. In addition, because of Juwan Howard’s persistence and determination he turned out to be one of the highest paid basketball players of his time.

References
Bill Brubaker. (2007). "power Play for Howard" [Multimedia]. Retrieved from Bill Brubaker, MGT/445 Organizational Negotiations website.