Wednesday, October 31, 2007

How A-ROD differs from Tiger



Yankees third baseman Alex Rodriguez opted out of the final three years on his 10-year, $252 million contract.

The announcement was made during the final game of the World Series, leading many to criticize A-ROD and his agent, Scott Boras for stealing the show from the Boston Red Sox. Boras apparently wants to score a $300 million contract for his super star client. The Wall Street Journal got into the act and suggested that A-ROD accept a form of deferred compensation convertible into a minority ownership position in the new team that signs him. Sam Zell, the new owner of the Chicago Cubs, would be a good candidate to do such an innovative deal. link

Now, let's turn to another superstar pro athlete -- Tiger Woods. ESPN once estimated that Tiger's earning potential over the course of his career is over $6 billion -- that's right, $6 billion from PGA and worldwide tournament winnings, appearance fees and endorsements. link

So, why is everyone up in arms about the auction of A-ROD's talent to the highest bidder, when someone like Tiger stands to earn even more? One of the reasons is the perception that A-ROD's demands are driven by his ego as much as his talent. And unfortunately, A-ROD selected a team sport like baseball rather than an indivudal sport like Tiger. When push comes to shove, an ego driven star might optimize his personal benefit over what is good for the team overall. And that is why many Yankees fans are saying, "Good riddance to Alex."

Ego gets in the way in many workplace situations beyond sports. Take the example of Stanley O'Neal, who recently was forced to retire from Merrill Lynch with an exit package worth around $160 million. The press reports indicate that O'Neal is the latest victim of the Wall Street mortgage crisis. Merrill Lynch incurred $8.4 billion in mortgage write-downs in the latest quarter and O'Neal also made unauthorized merger overtures to Wachovia. The write-downs and talks with Wachovia alone did not cost O'Neal his job. O'Neal is widely known as a ruthless, autocratic leader who frequently forced out subordinates and disregarded the need for building an effective team around him. In the world of Wall Street, O'Neal has more in common with A-ROD than Tiger. Look for his next job to be more of an individual sport like private equity.

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