In defence of “The Decision”

Yupin Yang shows professional athletes must be mindful of their star status.

With the dust still settling on NBA team Miami Heat’s championship victory over the San Antonio Spurs, a win that clinched their second consecutive NBA title, even basketball fans in Cleveland may now struggle to disagree with Lebron James’ controversial decision to move to a higher-profile team in search of championship silverware.

However research from the Beedie School of Business shows that James’ decision was not only the right one in a sporting sense, but also demonstrates sound marketing and career-management acumen.

The research focuses on the evolution and importance of star status for today’s professional athletes, and reveals that in order to maximize their earnings and endorsements, today’s celebrity athletes — from James to Cristiano Ronaldo to Peyton Manning — need to be mindful of the evolution of their star status.

So what makes a star shine even brighter in the world of pro sports? It’s a combination of not only personal performances and team records, but also includes the markets that athletes play in and the star calibre of the athletes they compete with.

The study, “Investigating the evolution of star status in professional team sports,” describes the rise and fall of celebrated athletes using data from the National Basketball Association (NBA) from 1987 to 2008. Published in the International Journal of Research in Marketing, it was authored by Beedie School of Business professor Yupin Yang and Mengze Shi from the Rotman School of Management at the University of Toronto.

To measure star status, the pair measured the number and share of votes received by pro basketball players for the annual NBA all-star game. It turns out that the careers of star athletes have a natural life cycle. In the early years, individual performance is more important – but as time passes, winning a team championship becomes more imperative than personal statistics or accolades.

The results of the research, which arguably vindicate Lebron James for managing his career so deliberately, show that stars should seek opportunities to play for a winning team – which not only helps an athlete rise up to being a star, but also extends a star athlete’s playing career.

Also in James’ favour, profs. Yang and Shi maintain that star teammates can help each other. An athlete’s popularity is strongly associated with the popularity of teammates, and explains some blockbuster deals in recent years that have brought stars together to form star teams.

There is risk associated with this kind of career movement, as the researchers point out: Stars who move to star-laden teams could be eclipsed by more popular star teammates and eventually lose star status. James’ teammate Chris Bosh, who was already a star in his own right when he left the Toronto Raptors to join the star-studded Miami Heat, was in danger of falling into this trap. The two championship medals he has won with the Heat in the years since suggest he has negotiated these potential pitfalls, but the critics point out that declining production is proof that his star has indeed faded.

The researchers’ results can be useful to managers of professional sports teams in managing their star athletes. According to the researchers, “if a team intends to develop a new star, the team should build up the player’s individual performance statistics by providing him with more support and playing time.”

From the perspective of sports franchise managers, teams may leverage their assets such as a large fan base, current star players and a winning record in attracting or retaining a star player.

Their results also have implications for companies such as Adidas and Nike, who employ star athletes as endorsers of their brands. “By knowing the evolution patterns of athletes and the impacts of surrounding factors, corporate brands can make better informed decisions regarding which athlete to sign and what endorsement contracts to offer,” say the researchers.

Surprisingly, despite the prevalence of star athletes and the enormous economic value of these celebrity brands in the marketplace, such marketing-focused empirical research on star athletes to date has been scarce.

A related research paper from profs. Yang and Shi, with Rotman School of Management professor Avi Goldfarb, lends further credence to the argument that James was justified in moving to the Miami Heat.

The article, “Estimating the Value of Brand Alliances in Professional Team Sports,” examines the alliances between professional athletes and sports teams in the NBA, concluding that a player falling into the “superstar” category would gain most matching with a high brand-equity team, while a good player who is not a superstar could be better off matching with a medium brand-equity team.

With James falling firmly into the category of “superstar”, the research concludes that his decision to join the star-studded, high-brand equity Miami Heat was a mutually beneficial one, and can be explained by the maximum individual salary policy in the NBA meaning high-brand equity teams such as the Miami Heat are able to provide more value to such players’ own brand equity.

The research warns, however, that in the long run, brand alliances such as James and the Miami Heat may damage the league’s competitive balance.