Last night the NBA finals began with the Dallas Mavericks beating the Miami Heat. (I am not sure yet how I feel about the Heat’s defeat because I am a Lakers fan, and find it frustrating to watch Shaquille O’Neal go for a championship with another team.) However, I do enjoy watching the Dallas Mavericks not only because this is there first NBA final, but also because of their owner Mark Cuban who turned around one of the worst NBA teams in the league by making seemingly risky trades and coaching decisions, and generally employing an all-out marketing and promotion strategy for his team. Cuban’s ability to turn the franchise around appears to be matched by his feats in other arenas. As the Washington Post notes, Cuban is a self–made billionaire who sold Broadcast.com to Yahoo for $5.7 billion and even helped produce the documentary “Enron: The Smartest Guys in the Room.”
But because I see corporate law everywhere, reading about Cuban’s successes in the Washington Post caused me to think about business executives more generally. Indeed, Cuban’s success suggests that some people have management styles that can be successful in any industry. I wonder if his successes can be attributed to the fact that he take risks or if his successes stem from the obvious enthusiasm he has about his product? But aside from this, Cuban’s success actually reconfirmed for me why the business judgment rule is important. Indeed, although as the Washington Post points out, Cuban probably thinks of himself as a “maverick,” it seems to me that corporate governance rules are designed precisely to protect and encourage executives such as him. Cuban is a risk taker, and needing corporate risk takers is an oft-cited justification for ensuring that our policies and practices encourage executives to take chances while discouraging them from being overly cautious. Cuban also has a style distinct from most everyone else in the industry. This fits with the notion that corporations cannot have a “one size fits all” style of management, but instead must allow directors and officers the freedom to find their own path of success. With all of the focus on corporate misconduct, we lose sight of the fact that the discretion inherent in our business rules sometimes protects executives who make good—if daring--decisions.
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8345157d569e200d834932ba153ef
Links to weblogs that reference NBA Finals and the Business Judgment Rule:
1. Posted by Equity Private on June 9, 2006 @ 7:47 | Permalink
Ugh. You are killing me with this Cuban worship.
2. Posted by Michael Guttentag on June 9, 2006 @ 10:18 | Permalink
I have to agree with Private Equity. Mark Cuban is not someone I would applaud. I would guess you didn’t see that many episodes of “The Benefactor,” and I wonder, when was the last time you used Broadcast.com? There are certainly better examples of management excellence.
3. Posted by Randy on June 9, 2006 @ 11:40 | Permalink
I'm inclined to agree with the above. I'm open to correction, but what happened to Broadcast.com? Did its pieces get filtered into Yahoo? Is it a poster story for over-priced acquisitions?
And why does internet video start playing before it has completely buffered producing that annoying start/stop/start/stop phenomena? Can I blame that on Cuban?
4. Posted by Auto on June 10, 2006 @ 11:40 | Permalink
Cuban's a meathead. He got hit by lightening which allowed the Dallas sports media to turn him into a business genius.
Let's keep in mind that the Mavs are said to be the second least profitable team in the NBA. Only the team owned by Paul Allen (who got rich by managing to go into business with HS chum Bill Gates) does worse.
5. Posted by Preston on June 15, 2006 @ 16:04 | Permalink
C'mon, don't be a Cuban hater because you're not bright enough to understand the broadcast.com valuation. Cuban is getting out there, in an educated way, and creating personal wealth in the void (radio-on-the-net, hdnet, hd movies, direct to market movies, etc.). He shakes up industries. Auto - I'm calling you out: Cuban and the Mavs are adamant that they don't share their financials. How on earth would you know?
Lisa, I like the point you're making. With business executives scrambling to polish, or learn, accounting, there is hardly enough time to get crazy and create wealth. As time is eaten by efforts with compliance, the business judgment rule is almost the last bastion of old fashioned risky business. Cuban's probably one of the last cowboys that would take the business bank and roll the dice at Vegas Fedex style (not that that was covered by the BJR). Those were the days...
| Sun | Mon | Tue | Wed | Thu | Fri | Sat |
|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | |||
| 5 | 6 | 7 | 8 | 9 | 10 | 11 |
| 12 | 13 | 14 | 15 | 16 | 17 | 18 |
| 19 | 20 | 21 | 22 | 23 | 24 | 25 |
| 26 | 27 | 28 | 29 |
