Why Shaq moved to the Celtics: the economics of sports

How much is a basketball star really worth?, and other questions addressed by Lakers' General Manager Mitch Kupchak.

Greg M. Cooper / AP / File
Shaquille O'Neal talked with the media at a news conference on Aug. 10, in Waltham, Mass, shortly after signing with the Boston Celtics. Superstar players demand high salaries, but not all teams think they're worth it.

The Lakers' General Manager Mitch Kupchak is a graduate of the Anderson School. Today, he was back on campus to talk to the Anderson Alumni. I snuck in and listed to 1/2 of his talk. He revealed that very few people actually work for the Lakers. It is a family firm. He told another Anderson graduate to discourage his son from becoming an agent. Not everyone ends up like the guy from Entourage or like Tom Cruise in that "show me the $" movie. He talked a little bit about the bad blood between Kobe and Shaq just before Shaq was traded to the Miami Heat. He also revealed that he thinks like an economist. He argued that you win titles with older players but with success that players want a big payout. He hinted that at the margin Shaq was asking for too much $ and he had to go. People in the audience wanted to attribute the Lakers' success to Dr. Jerry Buss. I wonder if the great quality of life in LA is such that flamboyant players such as Ron Artest and Lamaar Odom are willing to sacrifice $ to work in LA. The only weakness in this argument is how to explain the last ten years of the New York Knicks playing so bad. Maybe management matters?

After Mitch Kupchak's talk, the next speaker was even more impressive. Who was he? He is one of my heroes; Professor Ed Leamer. Ed is funnier than I am and he has published many more pieces in Econometrica than I have. Ed told me the bad news that his leading indicator index predicts bad news for the macro economy and the California economy. I asked him whether he had any good news to report and he said "no".

Reading the news today that Dr. Bernanke is looking for more magic bullets to "save" our economy did scare me. Sell your homes and stocks people. My mother is stocking up on thousands of pairs of women's shoes and she prepares for the coming barter economy. Maybe the United States will become China's Charter City!



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