Mark Cuban, Business and Basketball

Photo credit CBS SportslineWhen Mark Cuban purchased the Dallas Mavericks on January 14, 2000, most NBA fans assumed that, since Cuban was a billionaire, he would use his business savvy to turn the franchise around.

It started to look that way at first, but now, 8.5 years later, with some highly questionable personnel decisions and some record setting failures under their belts, people are starting to look at how Mark Cuban has run the Mavericks and are wondering where all that business savvy is.

Speaking of Mark Cuban’s business savvy, did you know that, contrary to popular belief, Mark Cuban did not start broadcast.com, the company whose sale made him a billionaire? Did you know that he only worked there about a year and a half prior to its sale to Yahoo.com? And did you know that the man who hired him to work at broadcast.com, Todd Wagner, was his college roommate?

I am not saying Mark Cuban has no business savvy, but it could well be that his impressive wealth has caused many to overrate his business acumen. At the very least, Mark Cuban is one of the luckiest guys you’ve ever heard of.

According to PBS, “The basis of Cuban’s considerable fortune was his 1999 sale of Broadcast.com for $5.7 billion in Yahoo stock that Cuban and his partner Todd Wagner rapidly converted to cash and moved on with their lives before the dot-com meltdown of 2000.” (Robert Cringley, PBS.org).

Mark Cuban became an overnight billionaire in April of 1999. On March 8, 1999, Dallas Mavericks General Manager, Don Nelson, traded away Bubba Wells and Martin Muursepp to bring Steve Nash and Dirk Nowitzki to the Dallas Mavericks.

Think of it: just months before Mark Cuban bought the Mavericks, Don Nelson traded away two players who never played in the NBA again after their stint with the Mavericks, for two players who went on to win 3 NBA MVP awards between them.

And you thought the Lakers got Pau Gasol for next to nothing!

Speaking of next to nothing, if you want to see what Yahoo! got for their $5.7 billion, just enter “broadcast.com” into the address bar of your web browser. You get nothing. Your browser gets redirected to Yahoo.com. Broadcast.com promised to deliver video over the Internet, but 1999 technology couldn’t make good on the promise and in the end, Yahoo paid $5.7 billion for nothing.

PBS.org also says, “Yahoo, which probably shouldn’t have bought the company at all, overpaid for Broadcast.com in such an epic manner that the deal quickly became a Silicon Valley joke” (ibid).

What is worse, it looks like Yahoo! will pay TWICE for that mistake. Ever since Yahoo’s overpayment for broadcast.com made them the laughing stock of the business world, Yahoo has been compensating by over-analyzing business opportunities… to the point that they haven’t made decisions quickly enough to compete with agile competition such as Google. Now Yahoo is about to be acquired by Microsoft, and isn’t too happy about it. Yahoo REALLY paid for their faith in Mark Cuban’s business acumen.

Six years prior to Mark Cuban coming on board, Broadcast.com was known as “Cameron Broadcast Systems” and it had nothing to do with the Internet. Chris Jaeb started it in 1992 to broadcast college sports via shortwave radio. Later they decided to broadcast audio of sporting events (and presidential conventions) over the Internet. In January 1998, the company went public, renaming themselves broadcast.com. That is when their attorney, Todd Wagner, hired his old college roommate to help out.

The day broadcast.com went public, Wagner, Cuban, and 98 other broadcast.com employees with stock options became paper millionaires. In April of 1999, Yahoo! announced their purchase of broadcast.com, and Wagner and Cuban quickly cashed out their Yahoo! stock making them both billionaires just before Yahoo stock plunged.

To give you an idea of how unbelievably lucky Mark Cuban is, on January 4, 2000, Yahoo stock was trading for $500.13 a share. On September 27, 2001, Yahoo stock dropped to $4.01 a share (when you adjust for a 2-for-1 split).

To put that in basketball terms, that is like going from 67 wins one season, to 0.5 the next.

And yes, I chose 67 wins on purpose.

Months after becoming an overnight billionaire, Mark Cuban had the fortunate timing of buying the Dallas Mavericks with newly acquired Steve Nash and Dirk Nowitzki, and Cuban was credited for taking a 40 win team who didn’t make the playoffs, and making it into a 67 win team … who lost in the first round to a team that barely made the playoffs!

If we credit Mark Cuban for things that actually happened on his watch, then his Dallas Mavericks resume looks something like this:

<> Cuban broke up his power tandem and let Steve Nash go to the Phoenix Suns, only to later trade away promising and productive players to get the closest thing he could get to Nash: an aging Jason Kidd.

<> One reason Cuban felt he couldn’t afford Nash was because he overpaid so much for Erick Dampier.

<> Cuban also let future all star Antawn Jamison (who now averages 21.4 points, 10.2 rebounds) slip through his fingers.

<> Cuban also kissed goodbye to Michael Finley, a former all star and now a solid role player for the (still in the playoffs) San Antonio Spurs.

<> Cuban let go of Raja Bell, a defensive stalwart and now a starter for the Phoenix Suns.

<> Cuban let go of Antoine Walker, a flakey player for sure, but he was an all star and helped the Miami Heat beat the Dallas Mavericks in the NBA Finals.

<> Cuban also took from Avery’s arsenal, Devin Harris, a young point guard who was more than promising, he was delivering.

<> There were many other personnel decisions such as Kevin Willis and Doug Christie that didn’t pan out for the Mavs.

<> Unbelievably, Mark Cuban actually hired a statistician to track how NBA officiating treated his Mavericks compared to other teams.

<> Speaking of officials and mistreatment, total up the fines the NBA has levied on Mark Cuban as of June 20, 2006, and imagine an astute businessman pissing away $1,665,000 in tantrums. THAT is good business acumen?! Yes, Cuban matches every dollar of fines with a charitable donation, but that hardly makes him a good guy. That is like calling former New York Governor Eliot Spitzer a good guy if he were to claim that every dollar he gave to a prostitute he matched with a donation to the girl scouts. Mark, if you want to be thought of as a humanitarian, double your charitable donations and quit paying fines to the NBA… they’ve got enough money as it is anyway!

Now Mark Cuban is being criticized for firing Avery Johnson because Avery wasn’t able to win with the roster Cuban ruined.

I understand their arguments, but perhaps they overlook yet another of Mark Cuban’s poor business decisions concerning the Dallas Mavericks. If Cuban knew Don Nelson was going to step down as head coach, which he apparently did since they were “grooming” Avery Johnson for the job, Cuban could have hired Byron Scott instead. Scott was fired by the New Jersey Nets in the season prior to Don Nelson stepping down. Yes, this is the same Byron Scott of the (still in the playoffs) New Orleans Hornets who just won coach of the year for the NBA.

With broadcast.com, Mark Cuban was at the right place at the right time and shrewdly took advantage of his good luck and found himself a billionaire.

With the Dallas Mavericks, Mark Cuban was once again at the right place at the right time, but instead of shrewdly taking advantage of his luck and turning the organization over to experts, Mark Cuban took credit which rightly belonged to Don Nelson for turning around the Dallas Mavericks, then ran Nelson out of town, and meddled with the Mavericks to the point that is is plain to every NBA observer that the Dallas Mavericks are heading the wrong direction.

If Mark Cuban wants to salvage his reputation as a businessman, where the Dallas Mavericks are concerned at least, he’ll hire an experienced coach, let his coach and managers run the team, and go do some good with that fortune he has been blessed with.

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