Jeff Schmitt: From the Bottom Up

Rehashing Dan Gilbert's Parting Shot at LeBron James


It seemed too good to be true. For years, the Cleveland Cavaliers were an NBA laughingstock, saddled with hefty contracts, selfish players, and a half-empty arena. Then they drafted a high school prodigy from nearby Akron, who led them to six consecutive winning seasons and their first trip to the NBA Finals. This franchise savior, LeBron James, was also a sponsorship dynamo and media darling with a spotless public image. Just one problem: His contract was up.

Despite LeBron's status as hometown hero on a winning team, it was no slam dunk that he would re-sign with Cleveland. Like an investment banker, James listened to pitches from other teams, measuring his chances to win a championship with each. Eventually, he made a decision, spurning his longtime employer to join the Miami Heat and play alongside fellow All Stars Dwyane Wade and Chris Bosh.

As expected, the Cleveland fans jeered their star and burned his jerseys. But hell hath no fury like an owner scorned. In an "Open Letter to Fans," Cavaliers majority owner Dan Gilbert publicly unloaded on his former employee. Swept up in the moment, Gilbert painted James' decision as a "cowardly betrayal," "shocking act of disloyalty," and "shameful display of selfishness." He dismissed James' years of service, referring to him as a "former hero." Worse yet, Gilbert claimed in an interview that James had "quit" on the team during the playoffs, even cryptically insinuating that people had "covered up" for the player "for way too long."

It was easy to understand Gilbert's outbursts. He had built a team that complemented James' strengths. For that, James publicly rejected him on ESPN, without bothering to break the news to him personally. But Gilbert's rhetoric masks certain hypocrisies and other truths that lie beneath the manager-employee dynamic. They include:

1) Employees have dreams too. Emotions aside, LeBron James was actually engaged in the most American of pursuits: self-determination. Twenty-five years earlier, Dan Gilbert had founded Quicken Loans with two friends. Now James was playing the entrepreneur, banding together with two fellow players to launch a new venture in Miami (without all those pesky startup costs and headaches).

Experts contend James didn't believe he could win a championship in Cleveland or recruit players there. More likely, he envisioned something larger for himself, no different from the future that Gilbert imagined in law school. Right or wrong, James chose to take the risk and start fresh, knowing he could never go home again. As a result, he earned the enmity of a boss who'd shown that same spirit at James' age.

2) The team should be bigger than the player. In the business world, successful organizations create their brands via a combination of unique experiences, images, promises, or history, packaging a long-term vision to the public.

In the NBA, this management and branding model is inverted. Transcendent talent like LeBron James is rare, so when it comes along, the organization tends to build its brand around it. As a result, teams commit $50 million to $100 million in guaranteed salaries to single stars. These stars serve as the faces of their respective franchises, with teams often marketed as star vehicles—no different from how the movies do it. But because these stars often (wisely) establish personal brands and income streams outside their teams, they have emerged as near equals to their bosses and often possess the stature to follow their own rules.

But this model has a major downside. With James' departure, the Cavaliers now offer little that differentiates their brand from other entertainment options, both inside and outside Cleveland. The revenue streams will invariably dry up, as will the media spotlight. In short, the Cavaliers lost more than a player. They lost their identity—and the franchise value, revenue, and goodwill that came with James' affiliation. To the Cavaliers, James' departure was the equivalent of the gulf oil spill wiping away years of BP's share growth and corporate social responsibility initiatives.

3) Loyalty cuts both ways. When discussing a trade, sports fans usually examine its impact on the field. They forget the men involved just had a life-altering change foisted on them, usually without their foreknowledge or consent. They must pack up their families and adapt to a new team and community and different expectations. And chances are, many of them were once praised for their loyalty and told how indispensable they were.

Managers are taught they must show loyalty if they expect it back. After last season, Dan Gilbert replaced his general manager and head coach, despite their.663 winning percentage over five seasons. LeBron James certainly took notice. In fact, he probably asked himself, "If I tore up my knee, would Dan hesitate to ship me out of my hometown?" Fact is, Cavalier greats Austin Carr and Mark Price ended their careers with other teams. And every player knows appeals for loyalty from ownership are usually self-serving. Both Gilbert and James wanted the same end for themselves. As so with any business, change is inevitable.

4) You must understand the impact of your actions. With his letter, Gilbert got the last word and cleansed his hands. But he also created a perception that will reverberate in his future dealings. In many companies, employees carry an unspoken fear: Our superiors don't really care about us, and we're easily disposable when we get too old or earn too much. So the employees keep their heads down and lips pursed.

In truth, in his reaction, Gilbert revealed more about himself than about LeBron James. Fair or not, he basically confirmed all employees' worst fears: Their reputations will be sullied and contributions quickly forgotten once they're gone. Employees remember how their peers are treated on their way out. Regardless of how they feel, leaders must think before they speak and always take the high road. Chances are, the next LeBron will be reflecting on these events five years from now … and wondering if he'll be treated the same way when his Cavaliers contract is up.

Jeff_schmitt
Jeff Schmitt is an online columnist for Bloomberg Businessweek. He has spent 17 years in sales, marketing, project management, training, legal compliance, and recruiting. You can reach him via e-mail or follow him on Twitter.

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