After opting out of his contract with the Cleveland Cavaliers, LeBron James became a free agent for the third time in six years Wednesday.
His decision this time, however, promises to be less dramatic than in his previous forays into free agency. There will be no live televised specials or heartfelt letters to the city he grew up in. No, after bolting Cleveland for Miami in 2010 and then leaving South Beach to come back home in 2014, James is planning to stay put this time. The only similarity connecting each outcome is that James will once again be the most underpaid athlete in professional sports.
There's nothing James or the Cavaliers can do about this. He plays in a league with maximum contracts and salary caps. James, who is expected to make about $22 million next season, can try and squeeze as much out of the current system as possible, but it will always shortchange him at least half of his actual worth, according to estimates from industry experts.
It might seem like an unlikely disparity, but it makes sense when you look at what stars in uncapped professional leagues make. The closest comparison to the NBA, in terms of global appeal and marketing, would be international soccer.
When Forbes released its annual list of the world's highest-paid athletes last month, James finished sixth at $64.8 million, combining his salary of $20.8 million and endorsements of $44 million. Cristiano Ronaldo ($79.6 million) and Lionel Messi ($73.8 million) were third and fourth on the earnings list, respectively. The big difference is that each of those soccer stars made about $52 million in salary. It's a staggering figure -- and one that James would almost certainly surpass if the NBA was a free market, void of salary caps and max salaries.
"I think LeBron James is off by himself," said Kurt Badenhausen, a senior editor at Forbes who compiles the annual list of most valuable franchises and highest-paid athletes. "I don't think there's anybody close in terms of the impact that one player can have on a franchise. I think you have to go back to Michael Jordan's last years with the Bulls, pre-max salary. Jordan was getting paid $33 million, and that was 30 percent of the Bulls' revenue back then. If you look at 30 percent of the Cavs' revenue, that's $60 million, and I think you can certainly justify LeBron being worth that."
Jerry Buss, the late Los Angeles Lakers owner, once said he thought Kobe Bryant was worth $70 million a year to his franchise. Bryant opined last year that James would probably be worth $75 million in an open market. It's hard to exactly quantify values, but comparing James' potential worth in a hypothetical uncapped NBA to international soccer stars makes sense to Tom Penn, an NBA analyst at ESPN who spent more than 10 years in NBA front offices and is now the president and co-owner of Major League Soccer's Los Angeles Football Club.
"I think as a baseline, if there was no salary cap and no max salary, LeBron would be in the Ronaldo and Messi bucket of talent," Penn said. "I think he would exceed it because of his unique persona, his stature and the economic engine of America that would be behind him, not to mention the media market of America. There would also be some robust billionaire competition for his services. The economic stability of the NBA is more impressive than European football overall, and what you would have is a number of well-heeled billionaires competing, and that would drive the price even higher."
That competition would surely drive James' price into the stratosphere, but there'd be plenty of money left to be spent on other franchise-type players. That's how it's worked in the endorsement market. While James might be in a class by himself in terms of global marketing and recognition, Kevin Durant isn't that far behind him with $35 million in endorsements, according to Forbes. It's not hard to see Durant, who was paid $19.1 million by the Oklahoma City Thunder, or Stephen Curry commanding free-market NBA salaries in the vicinity of $40 million.
If caps were lifted, Curry would likely be in line for the biggest raise in the league in terms of percent increase. The reigning league MVP was just the fifth highest-paid player on the champion Golden State Warriors last season and will make about $12 million this upcoming season. He has been making only $6 million in endorsements, although that figure is on the rise to reflect his status as one the NBA's most popular players. This season, Curry had the most popular jersey in the NBA and was the leading vote-getter for the All-Star Game.
Half of the NBA's owners have a personal fortune in excess of $1 billion, and the two richest owners in sports both own NBA teams. Los Angeles Clippers owner Steve Ballmer is the richest American owner of a sports team, with a net worth of $22.5 billion, and Portland Trail Blazers owner Paul Allen is second with a net worth of $17 billion. What would be the end result of a bidding war for James' services between these two old friends and Microsoft executives?
"The value is almost incalculable," said sports agent Leigh Steinberg. "It would clearly be the most money ever committed to any athlete in the history of team sports. Would there be a percentage of the franchise? He would obviously be a valuable partner. Let's start out with a fact that the team could almost ensure that it would be perpetually in the playoffs and the Finals for the foreseeable future. The value of that is tremendous. It would also guarantee that their roster would be one of the best in the league because, unlike Kobe, people want to play with LeBron. He passes the ball, and he has already shown the capacity to attract superstars around him that want to play with him."
One of the things that separates James from his contemporaries in this hypothetical open market is his ability to transform a franchise almost overnight upon his arrival, on and off the court. James has taken his teams to five straight NBA Finals. While he has won it all only twice, his teams are always maximizing their earning potential in the way of ticket sales, sponsorships, merchandise, etc. The Miami Heat, for example, played in 47 home playoff games during James' four seasons in Miami. They missed the playoffs this season and played in just seven home playoff games in the four seasons before James' arrival. The Cavs played 10 home playoff games this postseason after missing the playoffs the previous four seasons without James and going a combined 97-215. The Cavs were in the bottom half of the NBA in attendance during the 2013-14 season but sold out their season tickets within hours after James announced he was returning to Cleveland last year.
Durant has just one Finals appearance, losing to James' Heat in 2012, and Curry has played in just one Finals as well, beating James last month. They each have also won the league MVP once, with Curry winning this season and Durant last season. Albeit impressive, that's still a far cry from James' four MVPs and six Finals appearances, which puts him in water cooler conversations as one of the best players ever, along with Jordan and Magic Johnson.
"LeBron extends beyond basketball," said Courtney Brunious, the associate director of the University of Southern California's Sports Business Institute. "He is a brand in and of himself the same way Michael Jordan was. The casual fan knows who he is and what he's doing. You don't get the same reaction from Steph Curry and Kevin Durant, who are true stars in the NBA but do not necessarily reach the same fan interest outside of the league."
While James, Durant and Curry are paid below their value because of the league's current salary structure, most NBA players are either paid close to their worth or are overpaid in comparison to their actual production. Bryant, for example, might have been worth more than the $20 million he made in 2010 when the Lakers won their last title, but he wasn't worth the $74 million he has made over the past two seasons while playing in just 41 games as the Lakers finished a combined 48-116.
Evaluating a player's actual worth is an inexact science. One of the main factors that can't properly be quantified but would play a role in the minds of execs around the league is the drawing power of the player, not just among fans, but for other players in the league. Veteran players have already shown they will take less money to play alongside James. They would likely do the same for Durant and Curry. But would they do the same to play with Bryant at the end of his career or Carmelo Anthony?
"You have to look what the addition of Steph Curry and Kevin Durant means to a team," Steinberg said. "They don't have the same power as LeBron, but getting them almost assures that you will have a strong supporting cast. In a free market, Steph Curry could try to do the same thing LeBron does, which would be to arrange his supporting cast.
"The real question becomes, is a player replaceable or irreplaceable? In a free market, irreplaceable players' salaries would skyrocket in value, and those players that are replaceable might not see a big increase from what they're currently making. You'd have a two-tiered system, which already exists but would exist in a more amplified way of the have and have-nots."
While Durant and Curry would likely see their salaries multiply in an open market, there would predictably be a large drop-off after the top tier, which might also include Chris Paul and Russell Westbrook. Although Ronaldo and Messi each make more than $70 million as transcendent figures in their sport, the next highest-earning soccer player is Gareth Bale ($35 million, with $25.5 million in salary), who is unrecognizable to most non-soccer fans.
James knows he's underpaid, and after being unanimously elected as the first vice president of the National Basketball Players Association earlier this year, he may finally be able to do something about it when he takes his seat alongside friend and union president Paul at the bargaining table. Players and owners can opt out of the current collective bargaining agreement following the 2016-17 season.
"It's going to be a very important negotiation," James said after being elected. "And I think I'm a big part of the process."