LeBron James-Miami Heat: M&A Darling or Disaster?

NEW YORK ( TheStreet) -- The societal connection between sports and business isn't just about paychecks even fatter than those given to Goldman Sachs CEOs -- one of which will be doled out by the Miami Heat to LeBron James.

It's not just about Superbowl ads or corporate sponsorships doled out by Nike and Gatorade, either.

Anyone familiar with corporate America knows that the trading floor of the New York Stock Exchange comes to a halt when Tiger Woods steps up to a Masters green. Athletic perfection is one of the business world's favorite metaphors for the rhetorical "American excellence" strived for by the CEO class.

LeBron James' excellence is not in question, but his signing by the Miami Heat does offer yet another way to evaluate sports as a metaphor for the business world. Will the LeBron James signing by the Miami Heat go down in history as one of the greatest mergers of all-time or will it end up as one of the worst?

Would you compare it to the much-lauded Exxon Mobil ( XOM) or Disney ( DIS)-Pixar deals?

Will it reflect sheer necessity of an industry, like Sirius XM Radio ( SIRI)?

Or will it be the equivalent of a colossal M&A bust like America Online- Time Warner ( TWX) or PepsiCo's ( PEP) subsidiary Quaker Oats acquisition of Snapple, now part of the Dr Pepper Snapple Group ( DPS)?

You don't have to be Cleveland Cavaliers owner Dan Gilbert, a Cavs, Knicks or Nets fan to place a critical market eye on the LeBron James signing with the Miami Heat.

At the more emotional end of the spectrum, Cavs fans were out in the streets burning LeBron jerseys on Thursday night, Knicks fans were (as usual) despondent, and Cleveland Cavs president Gilbert quickly took his place among the all-time sports owners ridiculous comments with his open letter to Cleveland Cavs fans. Gilbert wrote of the LeBron James signing saga as "a several day, narcissistic, self-promotional build-up culminating with a national TV special of his "decision" unlike anything ever "witnessed" in the history of sports and probably the history of entertainment."

That type of rhetoric - not Gilbert's, but the TV special rhetoric itself - wouldn't be out of place in headlines issued upon major corporate mergers and acquisitions.

Gilbert condemned LeBron's decision as a "cowardly betrayal" and made the bold guarantee that "THE CLEVELAND CAVALIERS WILL WIN AN NBA CHAMPIONSHIP BEFORE THE SELF-TITLED FORMER 'KING' WINS ONE...You can take it to the bank." Gilbert's comments are a little too off the deep end to be compared to a CEO defending an core asset divestiture in front of skeptical shareholders, or a CEO telling shareholders they can "take to the bank" earnings accretion from a proposed merger or acquisition. However, since investors speculate on the outcome of mergers and acquisitions as part of stock analysis, why not use our Street smarts to digest the Miami Heat signing of LeBron James?

Of course, the decision over whether to grow organically or grow by acquisition is one of the biggest to be made by the CEO class. For every successful merger there is a big M&A bust, and the concept of growing through a mega-deal has a spotty won-loss record. CEOs too often seek to prove themselves through engineering a huge M&A transaction, only later to discover that the devil in the deal's details can change the headlines about the deal from being laudatory to being derisive.

It's the same story in sports. The age of free agency created the equivalent dilemma: does a franchise grow from its roots, or buy high and try to bring together an ever-changing cast of characters year after year until it finds the winning formula?

There's no answer to the question, and the fact that a wise veteran like 36-year old Derek Fisher of the Los Angeles Lakers can be the difference in an NBA Finals reminds the sports fan, yet again, that team chemistry and the winning formula is not always as simple as signing the biggest free agent in the off-season.

With this in mind, take your pick from among the best and worst in corporate M&A history in finding what you believe is the best equivalent for the Miami Heat signing of LeBron James.

Disney-Pixar: a blockbuster deal, bringing together two brands with much to gain from an on-court marriage. Pixar, like LeBron James, is the feature attraction that a titan in the director's chair like Pat Riley had to capture. No doubt about it: the Miami Heat signing of LeBron is a great action. The two will collaborate free and easy, just like Pixar and Disney. Cut. Print championship banner.

Sirius XM Radio: The deal to combine the two satellite radio brands was seen as a union brought on by sheer necessity. Neither may have survived without the other, runs one argument. Additionally, with satellite radio stars Howard Stern, Oprah and Martha Stewart being brought together, the Sirius XM deal had properties as marquee in value as Dwayne Wade, Chris Bosh and LeBron James. For these reasons the satellite radio deal often ranks among the best M&A transactions in corporate history, even if Sirius is still a $1 stock, and history will still afford plenty of time to judge the deal. Do the Miami Heat and LeBron James need each other just as much to win a championship?

AOL-Time Warner: the disaster of all corporate M&A disasters, and a breakup as ugly as the marriage. Is the Miami Heat signing of LeBron James headed for AOL-Time Warner tie-up territory? It's often the case that the greatest teams on paper are not the greatest teams on the court. Just look at some of the Olympic dream teams stock full of NBA all-stars that failed to deliver versus the likes of Lithuania. The heat is on for the Heat, and Wade said as much on Thursday night, commenting that the all-star triumvirate is now wearing a target on its collective back. Can they dodge the bullets on their way to a championship, or will the burden weigh down their AOL-Time Warner-esque aspirations?

Quaker Oats-Snapper: it was the classic "buying at a peak" deal, reminding the business world that post-purchase remorse is not limited to car dealerships and plasma television showrooms. Quaker Oats paid $1.7 billion for Snapple, and just a little over two years later, sold Snapple for $300 million - a $1.6 million loss for each day it owned the beverage company. Will the Miami Heat quench its championship thirst with LeBron James, or will the Lebron James price tag prove to be a peak purchase error?

Which among the best and worst M&A deals in corporate history do you think the Miami Heat signing of LeBron James will ultimately match? Take our poll, and see what TheStreet thinks. And feel free to write in your own M&A deal in the comments section.

What corporate merger will the LeBron James-Dwayne Wade-Chris Bosh Miami Heat most resemble?

Disney-Pixar -- a blockbuster deal
Sirius XM Radio -- a deal long in gestation and borne of necessity
AOL-Time Warner -- the disaster of all corporate merger disasters
Quaker Oats-Snapple -- a prelude to buyer's remorse

-- Written by Eric Rosenbaum from New York.


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