A Power Play for Howard
SubjectCase Study: A Power Play for Howard
As a sophomore during the 1995-96 NBA season, Juwan Howard posted superstar-like numbers for the Washington Bullets. The fifth pick in the 1994 NBA Rookie Draft was immediately courted by many teams as he was about to be a free agent in the 1996-1997 season.
Although publicly stating he wanted to stay with the Bullets, Howard and his agent, David Falk, were not attracted to the team’s seven years $78 million offer. Howard felt that his market value was far more than that. Then Miami Heat offered a 7-year/$98M contract. The Bullets pushed their offer to $89M, but stopped short of matching the Heat’s offer. On July 15, 1996, Howard signed a $101 million contract with the Miami Heat. However, this contract was voided by the NBA citing that the Heat exceeded its salary cap. On August 5, 1996 Howard returned to the folds of the Bullets after signing a seven-year contract worth $105 million. The Heat went to court to challenge the NBA’s ruling. Assumptions
The NBA indicated that the Heat violated its salary cap and only used this as basis to void its contract with Howard. However, salary cap violations come with strict penalties - $5 million penalty to the team and a season long suspension for Heat Coach Pat Riley. The NBA maintained that the Heat already had an agreement with center Alonzo Mourning before signing Howard and, that the bonuses of two other players were not counted against the cap when they should have been.
1. Impose the $5 million penalty against the Heat and season suspension for Coach Riley. 2. Give concessions to Miami for it to stay competitive in the league during the season. 3. Allow the courts to settle the matter.
A Power Play for Howard 1Diagnosis
Impose Sanctions against the Heat
For the NBA to pursue its allegations of salary cap violations against the Bullets it would have to seek imposition of the $5 million penalty against the Team and a season long suspension of Coach Pat Riley.
The league maintained it had evidence that the Heat had an agreement with its center Alonzo Mourning prior to signing Howard – a violation of salary cap rules. The league also maintained that the bonuses in the contracts of Tim Hardaway and P. J. Brown were not counted against the cap by Miami, and that those bonuses should have been included. These allegations, as expected, were denied by the Heat camp.
Voiding Howard’s contract with the Heat and imposing severe penalties on the team may have been the right thing to do, but many things would have to be given consideration – the Heat can contest the matter in court and the league could face a backlash from Miami fans and other fans of the league who might view this action as too much on the part of the NBA. Remember, the Heat took pains to prepare for drawing Howard to Miami unloading several of its high value players to make room for Howard. Now left with a shallow roster of talents, Miami will be facing an uphill challenge to stay competitive and maintain its base of loyal fans in market rich Miami.
If the Heat decides to slug it out in court, as would be expected if the matter reaches arbitration, the players union and the team owners would be coming into the picture as the union was supporting Howard and the Heat was getting sympathy from some team owners. In that situation, a lock-out scenario could be inevitable and it’s one scenario that the NBA – from Howard Stern down to the last man in a team’s staff - dreads. Give Concessions to Miami
A Power Play for Howard 2The NBA can opt not to pursue sanctions against the Heat as a concession. At the same time the league should recognize the Heat’s disadvantages – if losing Howard is not enough, losing key players just to make salary room for Howard has given a serious dearth in team competitiveness. The league should stay away from giving impressions that it favors certain teams.