September 17, 2013   //   Tax   //   By Randy Rupp

Growing up in Chicago, we had very little to cheer about until the Bulls great run through the 90’s.  Oh sure, there was the 1985 Bears, the White Sox were close in 1983 followed by the Cubs failed run at it in 1984, but nothing had been done over a sustained period of time until Michael Jordan and Scottie Pippen put it all together in the 1990’s for six championships.

Michael and Scottie were the constants on those teams.  There were a number of role players that came and went.  From John Paxson to Steve Kerr, from Bill Cartwright to Will Perdue and from Horace Grant to Dennis Rodman, each of them played a key role in executing the team’s offense, the infamous “TRIANGLE OFFENSE”.

The triangle offense, or triple-post offense was critical to the Bulls’ success.  The offense was developed by Sam Barry, head basketball coach at the University of Southern California in the 1930’s.  It was taken to a whole new level in the 1950’s when Tex Winter took what he learned under Sam Barry to Kansas State University.  The offense was a huge success at the college level.  In 15 seasons at Kansas State, the team made six NCAA Sweet Sixteen appearances, four NCAA Elite Eight appearances and two NCAA Final Four appearances.  Over that time, the team won 69% of all games it played and 73% of its conference games.

In 1985, Tex joined the Bulls and began teaching the offense to a young phenom out of North Carolina named Michael Jordan. The rest is history.

At its core, the triangle offense is relatively simple.  There is a sideline triangle created by the team’s center (C) standing at the low post (the area near the basket but outside of the free throw lane), the team’s small forward (F) standing at the wing and the shooting guard (G) in the corner.

 

The offense allows for the optimal spacing on the court.  Every pass and movement by an offensive player has a purpose allowing for the best chance of achieving the offense’s objective, to score.

Similarly to the offense of a basketball team’s primary objective to score, a closely held business has as its primary objective, the security and well being of the owner and her/his family.  And, much like the basketball team, one strategy that can be employed by business owners to achieve this objective is by running the triangle offense.

In this offense, the entire triangle represents the business owner’s net worth.  At the top of the triangle is the superstar, the Michael Jordan of the team, the business.  The business must operate with keen efficiency, because it is the engine that will allow the other corners of the triangle to do their share to help achieve the ultimate objective.  The bottom left corner of the triangle is the owner’s “pre- tax” investments.  You know; the 401K and other assets that have received beneficial tax treatment.  At the bottom right corner is the owner’s “after tax” assets.  In this corner you will find investments that the owner has made by employing post tax dollars.  This is where real estate, taxable mutual funds, and other investments reside.

Below is an illustration of how the offense works, with the outer triangle being the owner’s total net worth:

To have an effective strategy, business owners need to be cognizant of and utilize their primary asset, the business, as the engine (the Michael Jordan’s) to create wealth outside of the business so that they are not so dependent on the business.

Michael Jordan was the best player on the Bulls and one of the best players in the game when he entered the NBA in 1984.  It was not until he had Scottie Pippen and together, they mastered the triangle offense that he became a champion.

So now the question that you need to ask yourself; how close am I to mastering the triangle and bringing the championship home?
Randy Rupp, CPA, CCIFP at rrupp@muellercpa.com or 630-524-5270