Is there any doubt left about LeBron James’ standing as the most important athlete in American sports? The 48 hours following his decision to return to Cleveland should give naysayers a clue: no major NBA free agent moves happened before James announced his decision, but In the weekend since? Pau Gasol, Paul Pierce, Luol Deng, and Trevor Ariza all signed with new teams.
In a LeBron free agency year, nobody moves until The King does. Impressive as that is, it’s far from the biggest impact that his move back to Northeast Ohio will have on the Association or its economics. And no, I’m not talking about LeBron’s ability to save Cleveland.
I’m talking about LeBron James becoming the next owner of the Cleveland Cavaliers. Far fetched? Not really.
As I wrote in this space two weeks ago, James has spent his career deflecting criticisms of his character while quietly amassing the kind of power that no other active athlete (yes, I’m including MJ there) has ever wielded. Whether or not he reaches the six rings that His Airness accrued, LeBron’s legacy as the greatest athlete-entrepreneur ever may already be solidified. The hallmark of his career off the court is that he makes sure he owns a piece of every company he gets involved in.
Why not own part of his hometown basketball team?
Is it too hard to imagine a scenario in which James, the most influential player in the National Basketball Association, with business partners as powerful as TV producer Tom Werner, as smart as Red Sox/Liverpool owner John Henry and as wealthy and powerful as Warren Buffett, might wield some of that influence to change the very paradigm of ownership in the NBA? That he couldn’t pull together the financing to buy at least a minority stake of the team? It’s been done before. Michael Jordan owned a minority stake in the Washington Wizards in 2000 when he came out of retirement and played for the team. That was short-lived, but it set a precedent. An athlete owning a stake in the NBA team he plays for can happen. It has happened. It could happen again.
LeBron’s new contract positions him to be a free agent again in two years, when owning an NBA team becomes potentially more lucrative than it is today. The NBA’s TV contracts with ESPN, ABC and TNT will expire in his contract year. Under the NBA’s collective bargaining agreement, players’ max contracts are linked to revenue streams like the multi-billion dollar TV contract. That means LeBron’s next contract will certainly be worth more than the $42 million he’ll get from the Cavs between now and then. It’ll be the perfect time to renegotiate.
But something even more important happens when a sports league’s TV contracts get renegotiated: the value of almost every team also increases. It’s the reason the Los Angeles Dodgers, a laughing stock on the field and financially, still sold for a baseball record $2 billion in 2012, a year before new owners Guggenheim Partners signed a whopping $7 billion deal with Time Warner cable to start a new network with the Dodgers as the featured content. This increase in value will happen for the Cavs and every other NBA team when the league renegotiates its TV deals in 2015 or 2016. What’s more, LeBron can already argue that his presence in a Cavaliers uniform makes the team an appreciable asset. According to Forbes, the team’s value plummeted after he left for Miami in 2010, while the Heat’s value skyrocketed. LeBron giveth and he taketh away. Is there any reason to expect he won’t try to negotiate for a piece of the bounty he created?
Four years ago, Cavs owner Dan Gilbert made a fool of himself by excoriating LeBron in an insulting letter written, insultingly, in Comic Sans. Critics of LeBron’s return to Cleveland like to point this out in arguing that Gilbert’s sin should never have been forgiven and that LeBron should have stayed away. Something tells me that LeBron and his advisers might see things differently.
Grabbing a piece of the hometown team for yourself sounds like a far more appropriate penance than a Comic Sans apology.