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Can LeBron James Learn From Karl Malone?—A Commentary by Ian Ayres ’86

The following commentary was posted on nytimes.com on June 17, 2010.

Can LeBron James Learn From Karl Malone?
By Ian Ayres ’86

LeBron James told Larry King that his “ultimate goal is winning championships” and that he wants to go to a team where he “has the best chance for me to win a championship not one year, but multiple years.”

But it’s also been reported in the past that he has the goal of being the first billionaire athlete.

These goals might conflict. I suspect that his objective of winning multiple championships is subject to a constraint of being paid close to max money. The general manager for the Phoenix Suns, Steve Kerr, thinks the same thing. Kerr was fined $10,000 for joking that LeBron might consider playing for a mid-level salary (the highest that many cap-constrained teams can offer) of $5.5 million per year. Kerr’s comment was a joke because most people think there is no way that James would agree to pay for that little money.

But if LeBron’s ultimate objective was really to win championships, he should be willing to take a lower salary if it would increase his chance of winning. He also might be willing to sacrifice some of the security of a multi-year contract.

For example, LeBron might agree to play for the Lakers at the mid-level salary for a year or two (or for a longer contract where LeBron would have the right to opt out if the team’s prospects of a championship were in decline). I pick the Lakers as my example because, with Kobe Bryant and Pau Gasol, the Lakers have a strong nucleus that could contend for a championship (and Los Angeles offers ample opportunities for making money outside of an NBA contract).

This sounds like a crazy idea. No player cares enough about winning a championship to sacrifice millions of dollars in salary.

But in 2003, Karl Malone did just this. Malone sacrificed millions of dollars to play for the Lakers so that he could increase his chance of winning a championship. Malone went from playing in Utah for $19 million a year to playing for the Lakers for the veteran minimum of just $1.5 million. Malone was at the end of his career and his skills were in decline, but this future hall-of-famer could easily have commanded a much higher salary if he had stayed at Utah or gone to the highest bidder.

Malone was so intent on winning a championship that he even agreed to let Gary Payton take the higher mid-level exception: “Karl let Gary know he wasn’t going to fight over the mid-level exception,” Manley told The New York Times. “He took the lower slot. He put his money where his mouth is.”

Because of Malone’s sacrifice, the Lakers went into the 2003-04 season absolutely loaded. The team had already won 3 championships with Shaquille O’Neal and Bryant. With the added skills of the Glove and the Mailman, they should have been unbeatable.

But they were beaten. The Lakers made it the finals, but were so handily beaten by Detroit that the series “came to be known as a ‘five-game sweep.’” Malone hurt his knee and ended the series watching from the bench. Part of what LeBron can learn from Karl is that the best laid plans of mice and men often go awry. A monetary sacrifice is a certainty, but an increased probability of a championship is, at best, just that – a chance.

I have complicated emotional reactions to Malone’s financial sacrifice. As a general matter, I think society should valorize individuals who sacrifice (either financial or non-financial sacrifices) to enhance social welfare. People who turn down big bucks to help others are heroes in my book.

Part of me is attracted to the idea that Malone was willing to buck the trend and take less money to pursue his goal of a championship. But it’s not clear that Malone was making a sacrifice. He was just choosing one attribute (better conditions of employment) over another attribute (a higher salary).

More importantly, it’s not clear Malone was promoting welfare. In fact, his strategy was undermining the league’s salary cap, and the ideal of team parity. If enough other athletes followed Malone and Payton’s lead, the Lakers might have become, notwithstanding the cap, perennial champions — luring superstars to play at a fraction of their market value.

One could imagine an alternative cap system that limited Malone’s attempt to load the Lakers with more talent than allowed by the cap. This alternative system would attribute to a team’s salary cap the market value of the player — measured by the highest bona fide offer a player receives — and not just the salary at which the player agreed to play. Under this “mark to market” system, Malone would not have been able to join the Lakers because he would have almost certainly received a bona fide offer that would have put the Lakers over their cap limit.

Then again, as a fan, I probably prefer a league where the idea of parity is not scrupulously enforced. I want to have some teams with a higher chance of returning to the finals. The high television ratings of the current Celtics/Lakers series suggest that I’m not alone.

We will soon learn whether LeBron really wants to maximize his chance of winning a championship. I’m betting that he will not follow Malone’s example. The Lakers have no shot and not just because of the salary cap. I think they’re at a disadvantage because they are already too loaded with talent. If LeBron won a championship in 2011 as a Laker, it wouldn’t be clear that he was the but-for cause. I predict that he goes to neither end of the quality distribution, but adopts a Goldilocks strategy of opting for a team that is not too strong and not too weak — so that he can rightly claim to be the prime mover behind any championship. I think that, instead of either money or championships, LeBron will attempt to maximize that more ephemeral quantity, glory.