LeBron-Heat Deal Will Be M&A Bust: Poll

NEW YORK ( TheStreet) -- The NBA slapped the Cleveland Cavaliers owner Dan Gilbert with a $100,000 fine for his epistolary evisceration of LeBron James after the former Cleveland Cavaliers star announced his decision to sign with the Miami Heat on national television.

Gilbert pulled no punches, and went too far by most judges in the court of public opinion who don't reside in Cleveland. Yet in holding what should have been a private conversation between himself and LeBron James in a public forum and amid a media circus, in effect, Gilbert treated James in a manner similar to which James treated the Cavaliers, in not extending to them the courtesy of being informed of his decision before the rest of the world.

Can we imagine a high-profile CEO of a major U.S. corporation, say Steve Jobs of Apple ( AAPL) or Warren Buffett of Berkshire Hathaway ( BRK>B), informing the U.S. public that they may leave for another company, and will make an announcement about their intentions on live TV, but that the board of directors and shareholders will just have to tune in like everyone else?

Would BP hold a national press conference on CNBC to let the world know whether they have chosen to be taken over by Exxon-Mobil ( XOM), Chevron ( CVX) or PetroChina ( PTR)?

Of course, one sad truth of these rhetorical questions is that LeBron did what he did because the U.S. public eats up every minute of it. Just consider that even business journalists end up writing articles about it.

These are ridiculous comparisons to make, too. Yet it's not ridiculous to link sports business within the larger business context of corporate America. Let's face it, for all the ruthlessness of the business world, it's still a white-gloves, white-lunch-napkin kind of place. Just think of all the fired CEOs who always resign, invariably, "to spend more time with their family."

It's probably safe to say that it was ill-advised of LeBron James to break with long-standing sports tradition of keeping deals between players and management in the private realm before announcing them to the world. In that regard, James' national media spectacle did not display the professional decorum typically expected of business deal makers.

Yet that's all water, or in the case of Cleveland, mud flats under the bridge now.

The real question is whether or not LeBron James and the Miami Heat made the right decision to merge, and this question has its own business world metaphorical implications.

It's a merger of the best independent property in the NBA with a conglomerate that believes that the synergies created by signing LeBron will result in its inevitable rise above peers. It's your classic M&A deal, but which kind of M&A deal will the LeBron James-Miami Heat merger represent when history replaces the judgment of Dan Gilbert?

We asked readers of TheStreet last week to weigh in on the issue. Before getting to the results, let's recap the best and worst in corporate M&A history from which TheStreet idly speculated on the LeBron deal.

Disney (DIS)-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. In this scenario, 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 (SIRI): 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 (AOL)-Time Warner (TWX): 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, stocked with 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-Snapple: This 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?

It turns out that the Lebron James merger with the Miami Heat, or Heat acquisition of James -- whichever way you prefer to think of it -- resembles three out of four of the above-mentioned deals, according to TheStreet readers.

In fact, only one deal received less than 30% of votes, with 8% of survey takers saying that the LeBron James-Miami Heat deal would go down in history as the sports world version of Sirius-XM Radio. A marriage of equals it isn't to be, even if the Heat now claim to have the NBA's most premier triumvirate of players.

Beyond that, it was really a toss-up, or in this case, a jump ball when it came to comparing LeBron's decision to corporate deal-making.

Approximately 32% of survey respondents indicated that the Miami Heat signing of LeBron James will ultimately be the Quaker Oats-Snapple deal of the NBA, with Miami's owner and fans coming to regret the high-profile purchase. This negative view of the The Decision barely won out over the other two famous corporate M&A comparisons.

With equal 30% portions of the remaining votes, TheStreet readers demonstrated the big divide over LeBron James decision that only time, or an NBA championship, can resolve. Some 30% think that the deal is a blockbuster like Disney-Pixar, but an equal 30% think the LeBron James-Miami Heat union will end in disaster akin to the Time Warner-America Online.

Taken together, readers who think the LeBron-Heat tie-up will devolve into corporate deal-making disaster like Time Warner-America Online or Quaker Oat-Snapple represent 62% of the votes cast.

That should make Dan Gilbert happy, but is there a message for investors? Start building your Miami Heat short positions before the opening tip of the next NBA season.

-- Written by Eric Rosenbaum from New York.

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