Power Play for Howard Part A

Case Study Analysis Part A: "Power Play for Howard"

Maria del C. Perez

MGT/445

February 20, 2012

Dr. Anne Hallcom

Case Study Analysis Part A: "Power Play for Howard"

In the case study of "Power Play for Howard," Juwan Howard, a free agent basketball player is looking to begin negotiations to obtain at least a $100 million dollar contract for his services. As a Washington Bullets team current player, his manager extends an invitation to this team first. He receives an offer from their organization; it is far below what he is looking to obtain. He decides to look elsewhere. Miami Heat offers him a deal that was too good to be true. They offered $100.8 million, seven-year contract with nice incentives; Juwan Howard agrees to their terms and signs their contract. Prematurely, there is excitement by the new agreement that he thinks is binding (Asher & Brubaker, 2007).

The Bullets' General Manager, Wes Unseld would soon hear back that the contract was invalidated by the basketball league in which they were governed by. The forward, Howard would continue with the Washington Bullets although arbitration takes place. In the end, the decision is made in favor of the Washington Bullets. In this paper, Learning Team B will take the reader through the tangible and intangible benefits, costs, and risks that took place for Juwan Howard, the Miami Heat, and the Washington Bullets- who would later to be known as the Washington Wizards (Asher & Brubaker, 2007).

Benefits: Tangibles and Intangibles

Evaluating the Power Play for Howard case study from the perspective of stakeholder benefits enables one to understand easily why the stakes were so high in the negotiation process. For Juwan Howard, a $105 million contract with the Washington Bullets would not only mean he gets to continue to stay in Washington where he loves "playing and living" (Lewicki, Barry, & Saunders, 2006, p. 616), Juwan will also finally realize his dream of living in a home with "elevators inside" (p. 617).

According to Lewicki et al. (2006), "the management of tangibles...," while resolving the "intangibles" are important characteristics of the negotiation process. In this context, the tangibles in Howard's case are the specifics of the contract terms. For example, the initial $78.4 million dollar contracts offered by Wes Unseld, General Manager of the Washington Bullets, the $100.8 million dollar contract offered by the Miami Heat's Pat Riley, and the final $105 million contract with the Washington Bullets, are both tangibles of the negotiation process. Additional tangibles include the bonuses, hotel suites, and limousine services offered to Howard by Unseld and Riley as perquisites to entice him to sign with either team.

Intangible benefits, according to Lewicki et al. (2006), are the "underlying psychological motivations that...influence the parties" (p. 8). For example, Howard's desire to "win" a $100 million contract so he can remain with the Bullets is a direct intangible attribute that influences the outcome of his negotiation process (Lewicki et al., 2006, p. 8). Moreover, the prospect of a 23-year-old living in a luxurious mansion with elevators who walked away from a $78.4 million dollar contract because it is below his market value demonstrates that money is certainly a key intangible motivator for Howard.

For Wes Unseld of the Washington Bullets and Patrick Riley of the Miami Heat, the stakes were high as well. Winning the contract negotiation for Wes would mean his team had a chance at making it to the playoffs. This intangible benefit would bring prestige to Wes if his team were to win the National Basketball Association (NBA) championship; a windfall for any coach. The benefit for Riley would mean another well-executed strategy in terms of the formulation of a winning team.

Costs: Juwan Howard and General Managers

Negotiation strategy planning must define the cost and resistance point for parties involved. "The resistance point is established by the value expected from a particular outcome, which in turn is the product of the worth and costs of an outcome" (Lewicki et al., 2006, p. 39). Understanding the interests, costs, and resistance point of the parties involved will provide insight into possible solutions and assist in creating a successful negotiation plan.

The book The Business of Sports provides insight into the perspective of team general managers in negotiating contracts for players' salary. Rosner and Shropshire (2010) state in the book The Business of Sports that team general managers can estimate the resistance point the team would pay a player. The salary estimation is calculated by evaluating the amount of potential revenue the player would generate for the team. The result of the salary estimation is the players' marginal revenue product.

The decisions by the teams' general managers