It’s getting close to showtime! Mark your calendars for September 13th! That’s Monday night, and it’s on ABC, before Monday Night Football in most places, afterwards on the West Coast.

I can’t wait. I just cut the title sequence and it really sums up whatI was looking for in picking the winner. It has a little more “pat myself on the back” then I wanted, but the reality is (does this count as a pun , that I’m not well known outside of the sportsworld, so ABC wanted everyone to know my resume.

Here is what you will hear in the title sequence to a background of pictures and videos that I dug up:

My first business was selling garbage bags door to door at age 12.

I started my first real business with less than 1k dollars and sold it for millions.

My next business was started with less than 5k, and was sold for billions!

My name is Mark Cuban, and I’m a self-made billionaire.

I know what it takes to be successful.

I have lived the American Dream and loved every minute of it.

Now it’s my turn to share the wealth.

I have taken the secrets to my success and turned them into a game.

I’ve invited 16 people to compete in my game.

The game is a series of tests to reveal the qualities that all successful people have.

The game, like the road to success, has challenges, twists, turns and roadblocks.

How you deal with each, can make or break you.

The winner will be creative, competitive, have an entrepreneurial spirit and be able to rise above the competition and prove to me, they have what it takes to become successful.

The winner walks away with a million dollars!

I AM going to change someone’s life FOREVER.

My name is Mark Cuban.

I am the Benefactor.

This pretty much sums up what I was looking for in the game. The tests also reflect this.

The only bad thing so far in everything I have seen, is that because of time constraints on the episodes, we couldn’t use everything. I guess that’s a better problem than not having enough to use!

The tests were meant to look for the qualities thatI think all successful people have. This isn’t about being successful in business, this is about being successful in anything you try, from the arts, to sports, to business to just about everything. You may agree or disagree, but that’s part of what makes the show fun!

I’llgive you examples of the “success tests” that I created:

1. You don’t get a 2nd chance to make a first impression,including a great example of a time when I didn’t make a such a good first impression.

2. Time is more valuable than money. How you use your time is critical.

3. Work hard, play hard. Pushing to be successful always increases stress levels at some point, how you manage that stress creates a foundation for how you’re energized to go for your goals!

The test for this one is great. Watch the sizzle reel for a hint!

4. Roadblocks to success come from the unlikeliest of sources. You have to always expect and be prepared to deal with someone trying to beat you to the punch, or stop you dead in your tracks. How you deal with the unexpected, speaks volumesfor your ability to succeed.

5. Everyone has the ability to be successful. There is something in all of us that makes us special, the hard part is pushing through boundaries and finding it and not being afraid to show it.

6. One of my favorite tests was based on one of my favorite sayings: It’s not if the glass is half empty or half full, it’s who is pouring the water. Knowing whether you are pouring, or whether your glass is being poured for you, iscritical. In this test, I found out how the contestants figured out which side they were on, and dealt with it.

For all thetests, I giveexamples ofhowIhad to face these tests in my life, and how I passed some, anddidn’t do so well at others, and of course how the contestants did with each test, and whyI cut them or let them go on towards the million dollars.

If you are interested in what it takes to be successful, if you are interested in seeing if you have what it takes, maybe you are interested in seeing if you agree with me or not.

If you want to seehow 16 people take on the challenge with their futures and1mm dollarsat stake, you are going toLOVE this show.

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Thanks to Mike Jackson for posting this

Comments DoubleClick’s Concentration

By Rich Smith
July 27, 2004

Yesterday, we looked at a possible case of severe overreaction-itis affecting Wall Street. Analysts who had expected online advertiser DoubleClick (Nasdaq: DCLK) to earn $0.04 per diluted share (equal to its earnings in Q2 2003) punished the company for missing that estimate by driving its share price down to near green gene levels. The fact that the company had actually improved its operating efficiency by raising its gross and operating margins, however, was ignored.

That said, there was one facet of DoubleClick’s earnings report that deserves criticism: stock dilution. According to the company’s CEO, Kevin Ryan, DoubleClick has “invested in its business” by spending more than $59 million to repurchase stock over the past six months. The result has been that, in contrast with such serial stock diluters as Intel (Nasdaq: INTC) and Cisco (Nasdaq: CSCO), or Oracle (Nasdaq: ORCL) and EMC (NYSE: EMC), since Q2 2003, DoubleClick has experienced a real rarity in the tech world: stock concentration, the act of making each existing shareholder’s slice of the corporate pie a little bit bigger. To be precise, DoubleClick’s share count has declined by 2.8 million shares, or 2% of diluted shares outstanding. Or has it?

If you read the company’s first and second quarter earnings releases carefully, you will see that in Q1, DoubleClick bought back 1.9 million shares at an average price of $10.74 per share and in Q2, 4.7 million shares at an average price of $8.08 per share. Total shares repurchased: 6.6 million, or about 4.7% of diluted shares outstanding. Once more, just to be clear: The company bought back 6.6 million shares, yet its shares outstanding declined by only 2.8 million shares.

The situation seems remarkably similar to what we found when reviewing Symantec’s (Nasdaq: SYMC) claims that it, too, was enhancing shareholder value by buying back shares. Total diluted shares outstanding may have declined at DoubleClick but the company issued new shares almost as fast as it bought up the old ones!

Moreover, consider this: DoubleClick’s shares sold for just $7 a share before Friday’s big drop. Yet the company spent $59 million to buy back 6.6 million shares at an average price of nearly $9 a share. So it is hard to argue that the buybacks created any shareholder value at all. Rather, they just wasted shareholder money in a vain attempt to mask the transfer of even more shareholder money to company insiders through dilutive stock issuances.

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******for some reason, my post got switched to an old file with bad information… I apologize. I hadnt checked it again till just now…This isnt the most updated version, but at least its better.

Again I apologize ***********

Props to Microsoft for announcing a 3 dollar per share special dividend. It’s not inconsequential that at about 32 billion dollars, it’s the equivalent of $300 per USA household. It has the potential to have a definitive impact on the economy. That is if the money doesn’t find itself in the pockets of fund managers.

In addition to the special dividend, which I love, Microsoft announced a stock buyback, which I hate. There is no better example of trying to manipulate earnings and stock prices than through the stock buyback, and there is no worse message to send to long term sharedholders than through the stock buyback.

To stock traders, the buyback makes perfect sense. If you buy stock in the open market, you help maintain the stock price. If you buy back shares of stock, you reduce the number of shares outstanding, which in turn increases the earnings per share.

This of course is completely contrary to every message that every company CEO, particularly Microsoft tries to send, that they are not trying to manage earnings or the stock price.

More importantly, it rewards the exact thing that should not be rewarded. It rewards people getting out of their investment, while not rewarding keeping the investment.

Sell the stock, you get paid. Keep the stock, you get nothing. Yes, I know that the stock price is supposed to go up for those who keep it, but there are no assurances that it will. The only certainty is that the seller has cash in the bank. The holder has the same amount of risk.

Shouldn’t continuing shareholders be rewarded rather than the sellers?

That’s why I am such a big fan of dividends. Dividends are the investors’ best friend for several reasons:

1. The obvious, it’s cash in the bank

2. It reduces your cost basis and rewards you for being a continuing shareholder

3. It can put a cap on how much the company can dilute your holdings. When a company pays a dividend, it’s much more expensive just to issue stock and options to insiders. They have to consider the cash implications of each additional share or option issued. That’s a good thing. It keeps companies with legitimate dividends from going nuts.

4. It creates a precedent of rewarding shareholders, hopefully with increasing dividends.

On the flipside, share buybacks are horrid for several reasons

1. It allows companies to manipulate earnings per share. Buy back enough stock, and you will hit your Wall Street expectations.

2. Companies will undertake risky cash management strategies to pay for the share buybacks. Since its one time, they can take greater risks

3. Companies will undertake buybacks with CEO and management incentives and bonuses in mind. Hit those numbers, earn lots of stock and options.

4. Companies will buyback stock so that they can re-issue it to themselves and employees. In essence they use the market as their personal and corporate piggybanks. They Buyback stock to push up earnings in hopes the stock goes up. Then they issue the stock to themselves. Then if the stock goes up, they sell the stock they awarded themselves to unsuspecting shareholders who have no idea the money they are paying for shares is going to insiders.

Stock buybacks are a very bad idea for investors and a very profitable idea for insiders and traders.

*****below is in response to some emails and comments this post has been getting********

You are assuming that once a buyback takes place everything else stops in time. It doesn’t.

First in a buyback, you have no idea what price they are paying, or why they choose to sell at a certain price. All you know is that they cant sell at the end of the day. So they may try to prop up the price, unsuccessfully. They may pay any price but the best price, and most likely they will, given how difficult it is to get the best tick.

2nd. No one knows when the buyback takes place. So ifyou wanted to generate cash from a transaction, you have no idea if you are selling into the buyback or not. Which in turn means you are creating incremental transactions that impact supply and demand, and therefore the price of the stock

3rd. Cash is the most valuable asset a company has, when you give it to people exiting the stock, or selling a portion of their holdings, you are diminishing the most valuable asset available to the remaining stockholders. No other asset a company can intrinsically create more cash with zero risk

4th. You are using earnings as if it is a number that has real meaning , whether to the company or to investors. It has value to neither. Earnings is supposed to reflect the results of operations. They don’t. Cash is the only variable that reflects the results of operations, and in giving it to people who are exiting the stock, you are rewarding the wrong people. Worse, if you think just because a company earned the same amount of money year over year, and there is a reduction in shares, you still have a very difficult time determining if the company’s cash position increased. Still worse. There is a better than even chance that the company handed out stock and options to employees, so whatever benefit you thought you got from the buyback, has been diluted away. The shareholders who sold their stock, got cash. The insiders who sold their stock got cash. You got diluted back to where you were , at best, with no cash in hand.

5th. Still on the topic of earnings, you are assuming that stock price is a function of earnings. Its not. It’s a function of the demand created for a stock. You could argue that stockbuybacks creates demand. I would argue its artificial demand that only reflects the inefficiencies of the market and the heard mentality of investors. Analogous to stocks going up after announcing a stock split.

How long that is sustained is a huge risk for a holder of stocks that has no dividends coming in. Just ask the holder of any Nasdaq tech stock the last 5 years.

Your position , prays that everyone follows the same investing rules in the same way so that everyone values stocks based on the same metrics. That works for spurts, but not over the longhaul. There are far more years in the historic database when stocks were valued as a multiple of dividends than as a multiple of earnings.

It also assumes that companies don’t create continual dilution. They do.

Bottom line is that there would be far less need for buybacks if companies didn’t dilute their shareholders with stock and options to insiders. Without this continual dilution, companies would only use buybacks to try to manipulate the stockprice, which, while not a good thing, would be far more obvious

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With all the discussion about trades and free agents, I thought I would offer some housekeeping so that everyone can understand what can and can’t happen in regards to trades and free agents in the NBA.

First. A team cannot just take and trade an unrestricted free agent to the team of their choice. The free agent has to want to go that team, has to agree to the trade and fully work outcontract terms with that team. So whether it was Steve or anyone else, before any trade to a team could be worked out, the free agent would have to negotiate and agree on a deal with the destination team. In essence this is the equivalent of a no trade clause. The free agent is just that, and can choose to go or not go to a team.

2nd. If a team signs a free agent or a rookie, that player cannot be traded till the 15th of December. So we can’t sign a free agent from another team and immediately trade the player. Nor can we trade Devin Harris or Marquis Daniels for example.

3rd. In trades, if the teams exchanging players are over the cap (and the Mavs are), then current year salaries exchanged must be within 15pct plus 100k dollars of each other. So if the Mavs trade a player who makes 1mm per year, we can take a player, or players, whose total salaries in the current year equal $1.25mm. That breaks down as 1mm plus 15pct of 1mm plus 100k. Rights to players or draft picks who are unsigned do not add any monetary consideration to the totals.

If one or both of thetradingteams are under the cap, they may receive a player up to the amount of their cap room without giving up equal salaries. If a team is at or over the cap, they must adhere to the above rules

4th. If you acquire a player in a trade, you may trade that player straight up for another player immediately. If you wish to package that player with another and make a trade, you must wait 60 days.

5th. In a sign and trade deal, the deal must be for at least 3 years, and the first year MUST be guaranteed, the next 2 or more years do not have to be guaranteed.

6th. If a player is part of a sign and trade, and that player receives more than a 20pct increase in salary, that player is considered a base year player. When a player is considered a base year player, the team can only take back salaries equal to 1/2 of the current year salary of the base year traded, or 120pct of the previous year salary (whichever is higher)* if that player is traded to a team at or over the cap. If the player is traded to a team under the cap, base year does not apply.

The reason for this rule is to prevent teams with a players bird rights (the ability to pay a player any amount up to the max)from offering a player an inflated deal with only 1 year guaranteed in order to get a higher priced player from a team that may be trying to dump salary.

So for instance, if we wanted to do a sign and trade with a player whose salary jumped from 4mm to 8mm dollars, we would only becredited for 4.8mm in salary for that player in the trade. We would then add the 15pct plus 100k to the 4.8mm, meaning we would be able to take back a player making $5.62mm. This would make it impossible to do a 1player for 1 player deal. We would have to make the deal bigger or bring in more teams in order to make the deal work.

Making up the base year trade penalty is why you see trades get very big when there is a player included who is receiving a big raise.

7th. There are 3 exceptions available to teams that are over the cap. (If a team is under the cap, they may not use the exceptions.)

a. The mid-level exception.Thisallows teams to sign a player to a 6-year deal with a starting salary that isthe average salary of the entire league. If the player is your own player, you can offer up to 12.5pct increases. If the player is from another team, you can offer 10pct increases. Increases are based on the first year of the contract. So a 5mm dollar contract with a 10pct increase, increases 500k per year. A 12.5pct increase would be 625k per year.

b. The 1.6mm dollar exception. This can be a2-year contract only and a team can not use this 2 years in a row. If you use it one year, you do not have it available the next.

c. The minimum salary exception. A team can sign as many minimum salary players as they have roster slots for.

8th. 99pct of deals that you read about were never proposed, and 99pct of the deals that are proposed never happen.

9th. You will never hear me, or anyone in the Mavs comment on rumored trades. I learned my lesson the hard way about this when I first got into the league. I was playing basketball with a friend, and we had a trade about to go down with another team. I told some of my buddies at the gym about the trade. They told some people, the next day we were reading about the proposed trade in the paper. The other team got very upset and killed the deal. Lesson learned.

This is why prior to our deals, like the deal with the Wizards for the #5 pick, or last summer’s trades, you never heard a word about the deals prior to them happening. Those trades caught everyone by surprise and so will anything else that we do.

10th. Watch the American Century Championship on NBC this weekend.I willbe auctioning off my incredibly poor caddying services to the highest bidder,with all proceeds from this and other great auction items going to theFallen Patriot Fund.

Hopefully this helps provide guidelines for fans. I realize that it is still somewhat technical in nature, but these are the basic rules for making trades.

If anyone out there knows Sam Smith, please provide him with a copy of these rules since he obviously has no idea how the trade rules work.

*there are some exceptions to this, but not worth listing, this is a good rule of thumb.

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“How could you let Steve Nash go?” It’s a question I’m going to hear for a long time. It’s a question Mavs fans deserve an answer to. As best I can, I will try to go through all the logical, illogical, emotional and financial
scenarios that we explored in putting together the offer that we thought would keep Steve a Dallas Maverick for the rest of his career.

In the beginning….

When I first got to the Mavs, Steve’s name was one that was often included in our trade proposals. At the time, he was an often injured, unproven point guard of a team that hadn’t been to the playoffs in 10 years with a brand new, long-term contract. As is often the case in the NBA, the best deals are the ones that you don’t do. During and following the ‘99-’00 season, we explored several deals that included Steve. In every single case, no team wanted Steve and his contract. It seems so stupid looking back. It also seems like it was only yesterday. It was almost 5 years
ago.

That’s the thing about the NBA, seasons don’t go by quickly, but the years do. One day a player is untradeable from a perennial loser, the next day he is a star on a perennial playoff team…and vice versa.Fortunately, we
didn’t become a victim of our stupidity. The talent, work ethic and perseverance that Donnie and Nellie saw in Steve blossomed.

Steve went from a player that was booed by Dallas fans as an overpaid failure, to a two-time all star loved by everyone who knows him or watches him play. I felt the same way. Steve was more than just a player on our team for me as well. We got to be friends. My first year, when we visited Vancouver and Phoenix, he made sure his friends became my friends. They still are. How can you not have a great time with and love a guy whose best friends include a guy named SmallBalls, and another guy who goes out with us wearing a shirt that says “I F**ked Your Boyfriend”?

Three years in a row we were part of a Mavs group that went to the All Star game together, and had a great time. Although we didn’t really get a chance to socialize during this past season, Steve was one of the players I could phone and use as a sounding board. Whether the team was going well or poorly, we could talk about anything and everything that was happening with the team, knowing it would be honest and confidential. This past year was difficult for all of us, and we talked more than usual, I know it helped me. I think it helped Steve as well

I guess this was all a way of saying that I wanted and expected Steve to be a Maverick for life. Making that happen meant having to deal with contracts and agents, and that’s often where things get difficult.

With Steve in an option year of his contract, our first opportunity was to extend his contract. The process started during the season when we asked his agent, Bill Duffy, if he would consider allowing Steve to accept an extension. We said we would extend him out the full term that we were allowed 6 years. Financially, we would be able to increasehis salary by the 12pct base (This means we take 12pct times his last year salary, and then we can increase his salary  by that same amount each year). The upside to Steve would be the certainty of having the extension, and the protection against a career ending or impacting injury during the season that might affect his value as a free agent.

Bill and Steve decided that it wasn’t in Steve’s best interest. That was understandable. It also meant that Steve knew he was going to be a free agent. Coming off a year where we went to the Western Conference Finals, and he made the All-Star team, it made sense.

At that point, we both decided separately, and agreed together, not to negotiate during the season. To me, that was a good thing. Steve couldn’t officially become a free agent until he opted out, by getting the message to the media, it would reduce the continuous barrage of questions from them. Hearing the same question over and over and over and over, even though you give the same answer over and over and over is distracting, draining and a waste of everyone’s time.

On top of the media, I don’t have the greatest relationship with his agent. I’m not a big fan of his and he knows it. There have been multiple times where we have expressed an interest in players of his, and he has placed them other places without even talking to us first. I’m not sure how or why we got to this point, but last summer was a perfect
example. We asked him about Olowakandi, and he told us he didn’t think he would be available for the mid-level exception. Next thing you know, he signs for the mid-level exception with the TWolves. That’s his choice, but I don’t think he even presented the Mavs as an option to Mike.

Bottom line, I felt that my relationship with his agent could create tension, and I didn’t want that during the season. To the credit of Steve andDuffy, it didn’t.

Which brings us to July 1st the first day of Free Agency.

Steve and his girlfriend had spent the summer traveling overseas. We exchanged a few emails, and he let us know that he would be back June 30th. We asked Steve’s agent to get us information on how much money he was looking for. Not unexpectedly, rather than giving us “his price”, he faxed us a presentation that really set the tone for what we were up against. These presentations, which agents love to do, would get laughed at in any normal business environment. They show all kinds of numbers and stats reflecting a player’s performance. What makes them unusable from our perspective is, as you would
expect from a player’s agent, it only shows the numbers that reflect the player’s performance positively. It’s not anhonest assessment at all. What makes these presentations dangerous is that they always onlyinclude salary comparisons that only include players whose salaries are at the top of the pay scale. The performance comparisons included Chauncey Billups, Sam Cassell, Jason Williams, Gary Peyton, Tony Parker and Rafer Alston among other point guards, but the salary “comps” only included those point guards who were maxed out or very close Jason Kidd, Baron Davis, Mike Bibby, etc. What makes these things dangerous is that the agents show them to the players and use them to set the players’ contract expectations.

It’s easy to find stats that make Steve Nash look good. There are a ton of them. It’s easy to see the intangibles that make Steve Nash valuable. What is difficult is to make honest assessments about where the team is and where it is going and how Steve or any player fits into a championship.

On the intangibles side, Steve is a great guy to have in the locker room. He gets along with everyone. He isn’t going to give a locker room speech. He isn’t going to get in anyone’s face. He isn’t going to get into other people’s business. He is definitely what I would call a quiet leader. He leads by example. He is the kind of guy anyone in any business would want to go to war with. He gives 120 pct and all of his teammates see that.

So on the intangible side, Steve is incredibly valuable.

It’s also that kamikaze spirit and approach to the game that is Steve’s greatest weakness. The most improbable stat from Steve Nash is how few games he has missed in the last few years. I have seen the pain he goes through before, during and after games, yet he still manages to trot out there and play at an incredibly high level. To protect Steve, Nellie has tried to limit Steve’s minutes to 33 to 35 per game, with the goal of getting that number lower and lower every year. It’s why we drafted Devin Harris. It’s why we would draft a point guard at all. We have Marquis Daniels as our backup point. Yet we still felt that we needed to have another point guard on the roster. We wanted to have someone who could come in and play this year, plus be trained by Steve as our point guard of the future. This would allow us to
use Steve more effectively and reduce his chance of injury. Our feeling was that we were fortunate that Steve had been so injury free. That it was only a matter of time before his style of play caught up with him. Between Marquis and Devin, we felt like we had taken the steps to not only protect Steve for this year, by not having to overplay him, but also we could extend his career because of the reduced minutes. We were going to have 3 point guards on the roster, all of whom we felt would be contributors.

With all that said, the issue still came down to how to determine what you pay any player. We had made the commitment to pay 3 point guards. But how much should I offer Steve?

Figuring that out is far more emotion and art than science. It’s Donnie and Nellie’s job to pick which players we go after. It’s my job to figure out how much to pay them.

In the pre-luxury tax days it was easier. If you made a mistake and overpaid someone, it wasn’t difficult to move him. Teams would take chances. I will trade your mistake for mine, and we can see what happens. Now, if a team is at risk of going over the tax threshold or the cap, they won’t make that move. Not only does the cost double for tax teams, but for non-tax teams, taking just a little bit more salary back than you gave up can mean the difference between being under the tax threshold and collecting millions, or being over the tax threshold and forfeiting your
share of the tax money and paying a tax on top of that.

Not to get too far off topic, but the crazy thing is, no one in the NBA ever expected that the luxury tax would ever be activated. The league wouldn’t say it directly, but every capologist or GM in the league would tell you that the TV contract was going up in value every year. That meant the tax would be very unlikely to kick in. That is until the TV revenue stopped going up and in fact went down and the tax kicked in with a vengeance. Now that we have had two years of the tax and are looking at a 3rd, the amount of flexibility to move players with big contracts has fallenconsiderably, even for last year guys. Yes, deals can be done, but it is far more difficult. If you sign a player to a long term, high dollar contract, the expectation has to be that you will not be able to trade that person…ever. He will
play out his contract. If at some point in that contract, the player no longer plays at the level he was at when thecontract was signed, you have a huge problem.

The problem is not just how much money you have to pay. The bigger problem is that you start chewing up roster spotsand you lose the ability to add players. For better or worse, because we “went for it” in making trades, hoping that the deals could get us to a championship, we have ended up with several players who don’t get much playing time with
us, yet have contracts that are difficult if not impossible to trade. You can only have so many of those before you have zero roster spots available and you have to trade players who really do contribute in order to package them with less desirable contracts and free up spots that can be used to add draft picks or players signed with the mid-level or
some other exception.

Lastly, there were two significant business variables that played a big part in how I decided what to offer Steve  or any other free agent for that matter. The first is that the Collective Bargaining Agreement is coming up for renewal by the end of this year. I have no doubt that there will be changes. If the changes are conservative financially, which
I can guess that they will be, then high dollar players with older contracts will be even more difficult, if not impossible to trade. The 2nd element was that the national NBA TV contract expires in 4 years. We saw TV revenue decline with our last TV deal, and given the climate that exists in the TV biztoday, until something changes, areasonable businessperson would have to expect that there is a material chance that the dollar value of the next deal could be less and possibly even drastically less. If I’m wrong and the contract goes up, great. That’s gravy, and when it does I’m happy to give it to the players. On the flipside, if it doesn’t, and the league’s largest source of revenue declines or even disappears teams are still on the hook for those salaries. In what is probably the ultimate stupidity of any business I have been involved with, we sign contracts that are guaranteed for periods when none of our revenue sources are.

If you look at the Mavs’ contracts, only our rookies and soon Marquis Daniels have contractsthat extend beyond the TV contract, and in each there is an opt out. In the event there is a draconian change in how we do business in the NBA, I should be ok. If the business of the NBA excels I have a boatload of cap room to reward Dirk, Marquis
and the team and add new players.

Which brings me back to Steve. I had fears in terms of his durability. I had roster fears. I had the business fearscited above. I had to come up with a number. So I did the only natural thing, I tried to figure out what the other guys might pay him.

Every summer at this time, agents go to the media, or have their friends do it, and talk about how much in demand a player is. Every agent wants it in the media that every team wants his guy. There is always far more smoke than fire. The key is separating one from the other. Agents are a good source of information. There are quite a few that are
straight up, just looking for a good deal for their guys. They will share information with you about their guys, and
that in turn gives a good feel about what each team may or may not do. After making my calls and Donnie making his
calls to friends and family around the league, we pretty much knew that the only team with a real interest in Steve was
Phoenix. The Suns were out there telling everyone they were going after Kobe Bryant, but I just couldn’t see that
happening. Mr. Colangelo had gone through a lot with his team a few years ago and I couldn’t see him dealing with the
off-court uncertainty attached to Kobe. So I needed to try to figure out what the Suns might offer.

The Suns had just taken on new owners, so I didn’t know if they came in flush with cash, or would be conservative.
So that didn’t help me. What I felt strongly about is that the Suns would want to add more than one player with their
cap room. They were doing everything possible to maximize their cap space available, beyond what would be considered a
max out amount, so that cemented that perspective. Looking at their roster, they probably were looking for a center to
go along with their interest in Steve.

To gain the most flexibility with that cap room, after signing Steve,they would need to retain more cap space
than the mid-level exception. The big problem is that although teams are out there saying how much cap room they have,
they don’t really know how much cap room they have. The league doesn’t give us the cap number until we can start
signing free agents.

Worse still, we can’t even really calculate or give a good guess on what the cap is. Roughly speaking the cap is
League Revenues times .48, divided by 29. League Revenues have very specific inclusions and exclusions, and also
include an 8pct fluff factor that has to be adjusted each year. So we can guess the cap, but we don’t know the cap.
What we do know is salaries that each team is paying.

So I tried to figure out what the Suns could offer Steve. I knew that with salaries and cap hold, they had just
under 30mm committed for the year. So if the cap would come in at a very generous 45mm dollars, they would have 15.5mm
dollars in cap. For every dollar the cap came in less, their cap room would be reduced. We also knew that the mid-level
exception would be around 5mm dollars (it’s based on average salaries, not revenues). So if they wanted to sign a 2nd
player other than Steve, and they wanted to be able to offer more than the mid level of 5mm, that would use at least
5.1mm in cap room. So best case, the Suns would be able to offer 10.4mm to Steve in the first year.

That is the best case. The cap would have to come in at the high end, and they would have to be able to sign the
player they want, at pennies over the mid-level exception (kind of what Seattle did to us with Calvin Booth). I then
guessed and this was completely a guess that the Suns would want some cushion to sign the 2nd player and to protect
themselves in case the cap came in lower than expected. So I guessed they would reserve 6mm dollars to get the 2nd
player they wanted, and they would put the cap estimate at 44mm. That would reduce the dollars available to 44mm cap
minus 35.5 committed (current salaries, 1 cap hold and 6mm for their 2nd player). That would mean a first year number
of 8.5mm dollars.

If you start with 8.5mm and take it out from there with the annual increase allowed of 850k, that means for a 4 year
deal the total is 39mm, for a 5 year deal the total would be 51mm. I talked to Donnie, I called some people around the
league and asked what they knew and if my logic was sound and my numbers seemed reasonable, low or high. Without
exception, all thought it was reasonable and there was no way the Suns went higher dollars or longer than 5 years. I
knew there was a lot more guessing than fact involved. There was more emotion than facts, but that is the way it
works.As I went to bed on the night of June 30th, I thought that the 5 yr/51mm deal was the best the Suns
wouldconsider offering.

The morning of July 1, as I got ready to go to Steve’s, I had determined that I would offer Steve 9mm dollars a year
for 4 years, with a 5th year with half guaranteed, but he could get the 5th year fully guaranteed by playing enough
games and minutes the year before. I was guessing we would end up doing 60 games and 20 minutes per game to get there.
I thought it was very fair.

There was risk of Steve getting hurt. His contract being unmovable.I was going past the length of the TV deal
and into the new CBA. Butthis was for Steve Nash. I would have preferred to stick to 4 years, but Duffy had been
telling some people that he wanted more than 4 years and I thought this might be an ego point for the agent, so I
offered the 5th year with the terms.

Donnie wanted me to offer 10mm a year for 4 years straight up. Both were fair offers. Both had lots of risk. I knew
that I was going to let Steve see if he could get another offer, and I knew that Steve would give me the chance to
match, and I would ifI thought it was reasonable.

That morning we all met at Steve’s house. Some small chitchat and stories. It was emotional for me and Donnie and
Steve. But we were here for business and we got started talking about the deal.

I told Steve directly thatI wanted to be fair, and that I wanted to pay him more than any other team. I said
that I didn’t want to negotiate against ourselves and play games. That if another team came in and paid him a max-like
deal, what I called an extreme deal, outside the norm, then he would have to take it. There has only been 1 player ever
over the age of 30 to get a max out deal or anything close and if Steve was the 2nd, more power to him. I would be
happy for him. Then I gave him our offer.

He seemed very, very receptive to it. In fact, when Donnie and I left, we both felt very, very good about it. They
were supposed to call us back over the next couple days because Steve wanted to go out of town.

In a normal business situation, this is not how I would handle it. IfI were negotiating a big deal and
offering to buy something for this much money, it would be make your decision now. If I walk out the door, the offer
walks with me. That would not have beenright in this case.

As Steve’s friend, if Duffy can get a team to pay him max out like dollars, Steve deserves to get it.

About dinner time that night I got a call. Donnie said I had to call Steve. I did. To make a long story short, Steve
said he got an incredible offer from the Suns. He wouldn’t tell me the exact numbers, but every time I said a number,
he said it was more. He said they flew down a whole group of people, including Amare Stoudemire to recruit him. He was
calling because he felt like he owed me the opportunity to match it. I was stunned. I told him to give me a little bit
of time to think it over and I would call him back. He was fine with that.

I called Donnie and told him the range of numbers that I had given Steve, and that the offer was higher. I think
Donnie was as stunned as I was. Based on the ranges I had thrown out to Steve, this might not have been a max out deal,
but it sure sounded like it was close. There was no way I was going to match it. The amounts were higher and the length
was longer than I was willing to go for all the reasons I wrote about.

I really don’t know how long it was before I called back. It was amazing all the things that were going through my
head. I felt sick to my stomach. I also knew that there was no way that the Suns had called Duffy that morning and
arranged to have all those people come to town and meet with Steve.Duffy had set this thing up and knew exactly
what was going to happen. In hindsight, I should have known when Duffy barely said anything during our meeting with
Steve that something was up.I missed it. Not that it would have changed the outcome.

When I called back to talk to Steve, upset at having to tell him we couldn’t match, and that we wished him well,
Duffy answeredthe phone. I confirmed some of the numbers that Steve had given me and the term. I told him that I
didn’t think we could match the Suns offer. I then asked him if we could work out a sign and trade. He said he would
ask the Suns, he put down the phone for a minute and came back and told me that they wouldn’t consider a sign and
trade.

He obviously wasn’t my favoriteperson at the time,and I asked him when this Suns meeting got setup. He
told me they had called that morning. I said there was no way, and he said, no wait, they called late last night. There
was nothing more to our conversation than that. That said it all. I wonder how much he told the Suns we were offering
Steve.

I then asked Duffy to put Steve on the phone. I wished Steve the best. I truly was happy for him as a friend and I
told him so.He had additional financial security. It wasn’t easy for me. I knew it wasn’t going to be easy for
anyone associated with, or fans of, the Mavs. It was Steve’s choice to leave for money. It was my choice not to pay him
the money.

Now you have a better understanding of what went through my head as all of this happened. It may make sense; it may
not. Let me assure you it was not easy at all. As I read through this again, I’m sure I will add and change it to
reflect things that come to mind.

I feel better having written all of this,knowing that although Mavs and Nashie fans might not like the result,
might not agree with my approach, might think I’m an idiot, buthopefully will know that I know this was an
important decision that impacted all of us, and I thought each and every one of deserved to know what went on.

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