King James and King Cash

Chris Ballard’s Sports Illustrated column suggesting that LeBron James should sign for the NBA minimum in 2010, wherever he signs, amazed me for two reasons.

One is that I found myself reading, in the pages of SI, a totally new, non-ridiculous idea I had never considered before. SI remains a great magazine: full of great photography, great profiles of interesting athletes, great tear-jerking stories, and sometimes even great moral force. It’s never been so strong on the ideas. That’s not really what it’s for (though maybe it should be), and we’ve got the internet for that.

But, and this is reason two, “LeBron for a buck” seems like such a terrific idea that I started to go a little crazy for a couple of minutes after reading Ballard’s piece. “This argument is so convincing,” I thought to myself, “that LeBron’s actually going to do this. Not ‘should do it’; ‘will do it’. He has to. The value of being the guy who took the bare minimum to win some championships, who chose a franchise totally without regard to salary and gave up his own money to get the best teammates, is too big to pass up. It puts Jordan and everybody else, everybody in any sport, in the shadows instantly—even if it doesn’t work.” The ploy isn’t even vulnerable to the “Why should a rich guy be expected to give money back to some even richer guy?” line of attack, if the team agrees, in an enforceable way, to spend close to the salary cap on top players.

But in short order I came to my senses, as you probably already have. Here’s the problem with Ballard’s idea.

“I think it’s very smart,” says one Western Conference general manager. “LeBron’s personal brand is worth way, way more than any salary he could draw from a team. It’s myopic to think otherwise.”

This unnamed GM (I’m guessing his name rhymes with Daryl Morey) is obviously right. Considered as a revenue stream, LeBron’s future salary from playing basketball is small in comparison with the value he can potentially earn as an endorser, speaker, businessman, totem… the off-court value of the LeBron brand. And championships inflate that brand value. Sure, fans in 29 cities might look slightly askance at a move that could injure the competitive balance of the league for a while, but ultimately, championships are the sources of the best stories, and the stories are what makes athletes attractive. Stacked superteams aren’t bad for sports leagues, they’re good. (If they weren’t, the Premiership would have gone under ages ago.) When those teams win, we talk about “Are they the best ever?”; when they lose, you’ve got David and Goliath. Everybody loves to hate the Yankees.

The problem is that brand value is more fragile than the value of a playing contract. The personal-branding stream may be bigger, unless something bad happens to harm the personal brand—like, say, your supermodel wife chasing you down the street at 2 a.m. trying to kill you with the tools of your trade.

Think about Tiger Woods: he might not have done anything worse than let his attention wander to his iPod when he should have been watching the road, but the hard financial cost of what happened to him on Friday has to be in the high eight figures, no? How does he shape up as an automobile endorser for the immediate future? You think the ads where he’s giving away Buicks still work?—is GM the kind of firm that can afford to shrug off a little ridicule right now, play around with its image? Every firm that employs Tiger as an icon needs to recalibrate now. He has always been portrayed as sort of half-human, half-automaton, a mischievous magician you can cheer for in spite of his gifts from God. He has appealed equally to both sexes; I’m pretty sure that won’t be true anymore.

That’s just a subtle, perhaps even overstated example of how quickly a brand can be damaged by the actions of others, of course. Forget Tiger; think Kobe. Brand value is ephemeral, and not entirely within the control of the athlete. Good character and smart decisions can help maximize it, but they can’t guarantee it. Whereas an NBA salary—that’s money no crazed spouse or tabloid journalist can take away from you. It’s money they have to pay you even if your leg falls off (as Greg Oden’s probably about six months away from proving empirically). It’s the low-risk segment of the portfolio. And as an athlete, you’re made constantly, nightmarishly aware that any contract might be your last. LeBron’s not signing for (the equivalent of) a buck. But it would still be pretty cool if he did.

King James and King Cash

  1. Wow, LeBron James, NFL Picks, several Tiger Woods updates… I guess Macleans is the place to come for US sports commentary.

    Understandable, since nothing interesting happened in Canada this past weekend…

      • <spit-take>

        Touchy…

        Well, I'll respond. What's it like being someone who cares about our domestic sports culture and the dwindling number of writers who follow it? It's a bit frustrating at times, but it doesn't keep me up a night. Oh yeah, I watch fair amount of NFL football and the other kind of football as well.

        So, Colby, what's it like to rehash sports stories from a US magazine that treats hockey like darts or roller-derby?

        S'okay. LeBron needs the extra attention.

        You know, there are guys out there like Dave Naylor who actually impart a passion for Canadian sports. It's not impossible. It just puzzles me that Macleans seems to go out of its way not only to ignore anything that happens here, but to pile on to reheated stories from you-know-where.

  2. There's a chasm of opportunity between signing for minimum and signing for the highest salary ever paid, which is what he could likely command if that was his only concern. Even taking a pay cut from his current $16 million to say $10 million would still give a team cap room to get a point guard and a star big man to play with him. Might be an opportunity for the team to pay him a bonus in shares if they win a ring.

    • It might be, though the collective bargaining agreement probably anticipates this somehow, or else a lot of guys would be getting shares.

      • Why would they take shares? The only time this happens (like with Mario Lemieux), they end up losing.

  3. I'm betting the other players in the league wouldn't be too happy,

    • Well, the players on OTHER TEAMS anyway, lol. His teammates could probably get on board.

  4. like, say, your supermodel wife chasing you down the street at 2 a.m. trying to kill you with the tools of your trade

    This is a misinterpretation of events. Elin Nordegren was once a model, but she was never a "supermodel".

    Also, as for "You think the ads where he's giving away Buicks still work?" No. I don't think those ads EVER worked. I don't think a single person who wouldn't have bought a Buick anyway ever bought a Buick because Tiger Woods was hocking them. Does anyone on the planet believe that Tiger Woods drives a Buick? (Or, at the very least, would if he weren't being PAID to drive a Buick?). Tiger Woods as the face of Buick never made any sense to me whatsoever. It's like having Dean Martin as the spokesperson for club soda, or Charlie Sheen doing PSA's promoting abstinence.

  5. I liked the column. I liked the idea of James' wife (does he have one?) throwing a basketball in anger at his Hummer (or Buick, as the case may be).

  6. Whenever I get pissed about athletes getting paid millions of dollars, I always remember Michael Jordan's riposte when he was quizzed about getting $40 million for one year: "Would you rather the owners kept the money?"

    So too with James – anything he declines to take will be vacuumed by someone else, and not magically shared out in some worthy cause.

    This is also one of the gaps that is filled by meaningful international competition; players are paid to turn out for their clubs, but they play for their countries for the glory.

  7. "Would you rather the owners kept the money?"

    I would rather not have to pay more than $100 to see a game/match and keep more of my own money. Owners and players can go hang. I believe athletes should be well compensated but the massive salaries, and high ticket prices, are ruining sport as far as I am concerned.

  8. Supply and demand…

  9. I agree. Just bitchin'.

    But I do think professional sports are slowly being ruined because many young people, sports future clients , are being shut out because of high prices.

  10. anything he declines to take will be vacuumed by someone else, and not magically shared out in some worthy cause

    Well, yes, but Mr. Cosh acknowledges this, and it's kinda the point of this hypothetical. I mean, the "worthy cause" in this scenario, such as it is, is "getting Lebron James a Championship ring". No one's suggesting the excess funds will go to charity, the idea is that they go to a point guard, or a big man for the middle (or parts of both, or something else the team he signs with needs). In that sense, any money LeBron doesn't take WILL be used towards his cause, presuming Mr. James can get the team to agree "in an enforceable way, to spend close to the salary cap on top players". The difference between paying Lebron $20 million and paying Lebron $10 million is that you can get one more really good player, or two more good players, to play along side him with that extra $10 million (or, you can replace your $5 million point guard with a $15 million point guard, or, or, or…).

  11. My favourite item from Sports Illustrated is there "Signs of the Apocolypse." Always entertaining and sadly true.

    Also, I agree with MaggiesFarmboy re. the dearth of coverage of Canadian sports stories here at macleans.ca. There were two fantastic Canadian footlball games played thisweekend and what does macleasn.ca give us? Nothing …

  12. I think an equally interesting question would be whether or not it would be a good idea for Lebron to take himself public.
    The idea isn't without precedent (I think Frank Thomas turned a portion of his future earnings into a bond) and you could address the obvious moral hazard problem (but not solve it) by giving Lebron a ton of stock options. Instead of deferring his compensation for the promise of larger riches down the road, he could monetize 10 years of anticipated earning potential in a day.

    I think it would be cool to own a piece of Lebron Inc. Instead of loathing the Corporate side of sports, I would instantly become its biggest supporter. His stock price would be like a real time Q rating, and I would be pumped every time I saw a kid wearing his shoes.

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