Many experts and analysts are busy discussing the on the court impact Shaquille O'Neal will have on the Phoenix Suns now that he's officially been traded from the Miami Heat. I'd like to examine the effect the one person mega corporation will have on the business of the Suns.
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Shaquille O'Neal's current contract does not expire until the end of the 2009-10 NBA season. He's scheduled to make $20M per year. He is the third highest paid player in the NBA (behind Kevin Garnett and Michael Finley).
Shawn Marion is making $16,440,000 this season and unless he opts out and terminates his current contract, he'll make $17,180,00 before his current deal expires. Marion is the 12th highest paid player in the NBA.
Marcus Banks is signed through the end of the 2010-11 season and is making $3,888,000, $4,176,000 next season, $4,464,000 for the 2009-10 season and $4,752,000 for the 2010-11 season.
So if you're the Suns, you're on the hook for Shaq for one more season than you would have been with Marion (assuming the Suns and Marion parted ways at the end of next season), but you remove Marcus' Banks horrific contract from your books because that contract extends a season beyond Shaq's contract.
The Phoenix Suns have a payroll of $71M - 11th highest in the NBA.
But the real impact of Shaquille O'Neal on the Phoenix Suns will come off the court. Shaq is a brand name worth millions of dollars. He's the biggest endorsement star the Suns have had since Charles Barkley. Shaq has endorsement deals with Li-Ning and Vitamin Water just to name a few and he's starred in
Super Bowl ads and
ESPN commercials. His face is recognized around the world. According to
Sports Illustrated's "Fortunate 50" list, Shaq is the 4th highest paid athlete in North America earning nearly $35M a year from his contract ($20M) and endorsements ($15M). I saw first hand how big he is in China when I was there in September. Li-Ning, China's largest sports shoe and apparel company, has his picture plastered everywhere.
When Shaq went from Los Angeles to Miami, he was worth nearly 4,000 tickets a night as the team was finally able to move upper bowl seats that had sat vacant prior to his arrival. At $45 a ticket, he generated an additional $7.4M for the Heat. Shaq jerseys flew off the shelves and TV and radio ratings skyrocketed for the Heat.
Shaq is also one of the most charitable players in the NBA so the positive PR he brings to his team cannot be underestimated. Suns owner Robert Sarver is amongst the most community minded owners in the NBA, so having "Shaq-a-claus" as an ambassador of goodwill in his community will be a wonderful asset.
By season's end, the Phoenix Suns will have a streak of 120 straight sell outs. The Suns would have sold those games out regardless of whether or not Shaq was traded to the Suns. But the most important factor about this trade that is not being discussed is that the Suns, like many NBA teams, are sending out letters to their season ticket holders this week asking these customers to plunk down thousands of dollars to reserve tickets for next season. The Suns goal is to renew at least 90% of their season ticket holders.
Its no secret that the economy has declined sharply in recent months and Phoenix has been hit very hard because of the decline of the real estate market. So people are watching their disposable income as close as ever.
But now the Suns will send out their season ticket renewal packets with one of the most recognizable faces in sports inviting customers to renew. Yes Steve Nash and Amare Stoudemire are two of the most exciting stars in the NBA, but Shaq's bigger than life personna may be just the tonic the Suns need to hit their agressive 90% renewal mark. Two premium seats to watch the Suns play starting next year will cost you over $120K.
The most important seats to sell will be the 504 floor-area seats the Suns have that are priced as high as $1500.00 per game. Prior to this season, the Suns had 125 floor area seats instead of 504 seats so by adding the extra seats, they've added $10M to the revenues. Shaq is a household name and he draws the people who will pay the big bucks for these seats. Just like he did in Los Angeles and just like he did in Miami.
Sponsors who may have been on the fence before, may now also be tempted to link their brand to the Suns and Shaq. I'd be willing to bet the team picks up several new sponsors because of Shaq. The Heat signed $2M in new sponsorships when Shaq arrived in Miami from the Los Angeles Lakers.
TV ratings and radio ratings will go through the roof in Phoenix because people will tune in to watch Shaq and see how this experiment works out. When ratings go up, teams are able to command more money for sponsorships.
You can
expect the Suns to sell a load of Shaquille O'Neal Phoenix Suns jerseys the rest of this season. Just like when Kevin Garnett was traded to Boston and when Allen Iverson was traded to Denver, jersey sales of star players spike when superstars change uniforms.
The Suns have the
best website in the NBA.
Traffic to the website will increase drastically with Shaq's arrival. The team has already put up plenty of Shaq-related content and is carrying his press conference live on the site. Can you say
new sponsors??
And last but not least, Shaquille O'Neal will change the franchise value of the Phoenix Suns. Robert Sarver purchased the Suns for $401M back in 2004. Before this trade, Forbes estimated the Suns to be worth $449M, making them the 8th most valuable NBA franchise. But because Shaquille O'Neal is a one man mega corporation and his name brings such visibility to the team he plays for, I'd be willing to bet that Shaq's arrival adds anywhere from $25M - $50M to the franchise value of Sarver's team. Some experts noted that when Heat owner Mickey Arison acquired Shaq, the franchise value increased by $40M.
So talk all you want about how Shaq's half court game will blend with the up-tempo style Steve Nash and the rest of the Suns like to play. But the one thing that is crystal clear is that the arrival of Shaquille O'Neal in Phoenix will mean BIG business for the Suns. He will certainly open up doors with companies and countries (China) that the Suns couldn't open previously. While Steve Nash is the reluctant superstar, Shaquille O'Neal has a magnetic, outgoing personality perfect for team marketers.