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Lessons in Game Theory

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What LeBron James’ uniform says next season could be a simple matter of game theory

LeBron James continues to insist his upcoming free agency decision will be based purely on the potential to win.

It’s not about legacy. It’s not about marketing. It’s not about becoming basketball’s first billion-dollar man.

If that’s true, it’s all just a simple bout of game theory.

The game consists of a set of players (LeBron James, Dwyane Wade, Chris Bosh, Amare Stoudemire, Carlos Boozer and Joe Johnson), a set of moves available to those players (Cleveland, New York, Chicago or Miami), and a specification of payoffs for each combination of strategies (title or no title).

LeBron is clearly aware that he is the centerpiece of the upcoming free agent class. He knows that whatever move he makes will be followed tit-for-tat by the other players. So all he really needs to do is break down the potential scenarios and weigh the likely outcomes.

LeBron’s possible destinations:

1. Cleveland

If LeBron chooses to remain in Cleveland, the Cavs get no better than this past season.

Dwyane Wade re-signs in Miami. Chris Bosh joins him there. Miami still has another $10 million or so with which to round out its roster.

Chicago then makes a strong push for, and gets one of, Amare Stoudemire or Carlos Boozer. The Bulls hold right there, unless someone is willing to take on Kirk Hinrich or Luol Deng.

New York re-signs David Lee. Joe Johnson becomes the consolation prize.

Net Result: James’ decision will have created two more perennial powerhouses, and one significantly better organization, with which to compete on an annual basis. The odds of LeBron winning a championship decrease dramatically. Not a viable option.

2. New York

If LeBron chooses to embrace the Big Apple, Chris Bosh eagerly joins. The Knicks have some nice complementary pieces in Danilo Gallinari and Jared Jefferies but they will have let David Lee go in the Bosh swap.

Dwyane Wade re-signs in Miami. Amare Stoudemire joins him there. The Heat makes a strong push for Joe Johnson. Ultimately, after an ugly and public battle with the Bulls, they get their man. Warm weather and all.

Chicago is left scrounging for leftovers. The Bulls sign Carlos Boozer. The offseason is considered a failure, but they’ve still made significant strides.

Net Result: LeBron ends up asking himself whether such a Knick team could even beat the 2009/10 version of the Cavaliers, let alone worry about the improvements of two Eastern Conference foes. Not a viable option.

3. Chicago

If LeBron chooses to consider the windy city, he’ll come with a list of demands for owner Jerry Reinsdorf. Actually, he’ll come with just one. Create an additional $16.6 million of cap space in four business days.

Reinsdorf does absolutely everything in his power to shake loose of Kirk Hinrich or Luol Deng. He promises a lifetime of free summer-time boat tours of the second city (they’re absolutely delightful) to any party which enables it to happen.

Remember, this scenario by definition assumes Reinsdorf is successful.

So… James signs on the dotted line. Chris Bosh joins him.

Net Result: Nothing else matters. James has created his own dynasty. The balance of power in the east has been forever altered. LeBron gets his billions and his four championship rings. All hail to the King.

Of course, Pat Riley will try to play it cool in Miami. He’ll tell everyone he had envisioned and planned for this all along. He’ll reassure us all that a LeBron/Bosh tandem is in actuality not a good fit, desperately attempting to convince supremely wealthy but horribly gullible Heat fans to buy up those season tickets. They do exist.

Don’t get me wrong. The Heat will still find offseason success. Riley will land Amare Stoudemire. Wade will still re-sign, because he needs the money to pay off all his court battles. The Heat will in fact improve, potentially to as high as third in the East, but will never achieve the ultimate goal.

4. Miami

James takes on South Beach with full fury. An elated Dwyane Wade re-signs in a flash. Chris Bosh comes a-knocking on Pat’s door. But in a surprise move, Riley slams it shut.

See, Riley would rather spend his $16.6 million to acquire both David Lee and Brendan Haywood. And now, self-reassured, he has the stones to do it.

Days later, while vacationing in his Los Angeles summer home, he invites Hollywood, Florida native Steve Blake on by. It’s a relatively easy sell. A million bucks for the chance to start on a championship-caliber ball-club that features some of the most exciting names in basketball history.

Finally, fifty weeks later, Riley jumps all over the quietly brilliant move he made back in June 2010. He swapped first round picks with XYZ. He’s now sitting on up to three (assuming the Raptors makes the playoffs) 2011 first round draft choices. An eager-to-rebuild ABC team swaps its lottery pick in exchange for three core pieces of its future. And the Heat uses the lottery pick to select…

The rest is the stuff of legend.

***

Game theory. It explains everything. If LeBron is truly only motivated by winning, the pieces are already laid out for him. He only needs to follow the natural progression.

In the end, I believe that if Chicago finds a way to create the required cap space for Chris Bosh to join him on the roster, James’ decision is set. It’s not as far fetched a scenario as you might imagine. Here’s a look at what it would take.

Working out the timing of all this maneuvering will be very tricky. Timing is everything. The world won’t stand idly by as Chicago tries to jettison unneeded contracts. The window will be small.

And the Heat will be waiting.

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