HoopsHype Business rumors

October 8, 2014 Updates

James and LRMR understand that the marketplace is shifting. It is no longer enough to star in a television commercial during the Super Bowl. Athletes must engage consumers in myriad ways: digital and social media, streaming content and athlete-to-fan interaction. The fact that LRMR has recognized and succeeded in this space provides more value to LeBron’s partners. All of these endorsements have added up for LeBron, and this is likely just the beginning. LeBron heading back to Cleveland makes him even more likable. James already has deals with Nike, McDonalds, Samsung, Beats by Dre, Dunkin Donuts and Audemars Piguet watches, and he is in position to add more if he chooses. With Maverick Carter at his side, we know that whatever LeBron chooses will align with his marketing strategy. The Fields of Green

October 7, 2014 Updates

Based on one team's estimates, James could earn $28 million as a free agent in 2016—a 36 percent leap from his current salary. Assuming a four-year deal with maximum raises, James would earn an NBA-record $34 million in the final season, the most any player has earned in the max-contract era. Michael Jordan made a record $33 million in 1997-98, the season before the NBA capped individual salaries. Bleacher Report

Although the players' share of revenue has gone down, their actual earnings are about to spike dramatically, thanks to the new infusion of TV dollars. The average salary, currently $5.5 million, could leap to about $7.3 million in 2016, according to team executives. Bleacher Report

And the riches could be spread far and wide, as the salary cap surges from $63 million this season to a projected $84.4 million in 2016-17. Every team in the league could be under the cap in two years (even the spend-happy Nets), creating a cash surplus that—under the NBA's system—must be spent on players. Bleacher Report

The current collective bargaining agreement actually runs through 2021, but either side can opt out in 2017, and the players are almost certain to do so, for obvious reasons: 1. The union made massive financial concessions in 2011, giving up $300 million a year. 2. The new TV deal, as James indicated, removes the NBA's rationale for those concessions. "I think it's a pretty good bet, based on both of those things," that the players will opt out, Michele Roberts, the union's new executive director, told Bleacher Report in a recent interview. She added, "It would be silly for anyone to assume" otherwise. Bleacher Report

Roberts made that prediction before the new TV deal was completed, but both sides have long known that the huge revenue spike was coming and that it would prompt a reassessment of the labor deal. Indeed, Roberts said, "The minute I was told I was selected to be the executive director (in July), I started preparing for the opt-out." Bleacher Report

Forbes estimates LeBron James has replaced Tiger Woods as the athlete with the top brand value. The magazine said Tuesday the brand of the Cleveland Cavaliers star is worth $37 million — the amount his endorsement and nonbasketball earnings exceed the average of the NBA's top 10. Woods had topped athletes on Forbes' Fab 40 list each year since 2007. Boston Herald

The league right now projects a jump to $66.5 million for 2015-16, a modest rise pegged to the final year of that modest $930 million TV deal. If the new TV deal kicks in for the 2016-17 season just shy of $2 billion, the cap could exceed that same $14 million leap, all the way to around $80-plus million, in a single year. If for some reason the new TV deal starts north of $2 billion in the first year — meaning it would include smaller year-over-year jumps — the cap for 2016-17 could leap even higher. If it started at that exact $2.68 billion figure, it would break $90 million, according to my own math and some bleary-eyed late-Sunday projections from cap gurus around the league. The plans as of now are to start at $2.1 billion in 2016-17, the first year of the deal, and escalate in even year-over-year increments to a peak of $3.1 billion in the final year, per sources who have reviewed a memo the league sent to teams today. Grantland

Other smoothing mechanisms would need to involve the union, and the league is open to that. Some team executives have floated the idea of retroactively bumping up existing contracts that carry into the new TV deal, to make sure those players get their share. That would draw opposition from teams who signed those contracts specifically with an eye on how their value would evolve. Grantland

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