Why The King Should Rule LA

by Spencer Suk

ESPN

ESPN

It is pretty far-fetched to talk about LeBron James suiting up in a Clippers uniform next year.  The Clippers already have around $70 million committed to their roster for the 2014-15 season.  Furthermore, word around the league is that Blake Griffin is “untouchable,” meaning the Clippers will have to find a way to unload DeAndre Jordan’s contract along with some combination of JJ Redick, Jamal Crawford, Jared Dudley, and Matt Barnes in order to offer James the type of money he will command in free agency.  While Jordan has blossomed into one of the more desirable centers in the league, none of those other players will be easy to trade (except for Dudley… who is downright untradeable at this point).

But what if LeBron James was willing to sign for the veteran’s minimum of $1,448,490?  I know what you’re thinking: “It’s rumored that LeBron wants the max. So why in the world would he sign the veteran’s minimum?”

The simple answer: endorsements.

To get a better idea of how James makes his money, we will compare his salary to that of Los Angeles Lakers star Kobe Bryant; endorsement estimates were found on Forbes.  The following graph shows James and Bryant’s NBA salaries since LeBron entered the league.

Estimation based off basketball-reference

Estimation based off basketball-reference

Bryant clearly amassed more money in this time frame, as he was already on a veteran’s maximum contract while James was only beginning his rookie deal; Bryant piled up $233,481,822 from 2004-14 while James earned $129,155,913.  But now let’s take a look at the endorsement money.

Estimation based off Forbes

Estimation based off Forbes

James is a marketing machine, earning more endorsement money than Kobe every year since he entered the league.  In total, James has accumulated $326,386,893 in endorsement money since 2004, while Bryant has made $255,600,000.  Overall, Bryant and James have earned $489,998,082 and $455,542,806 respectively in this time span. 

While James’ endorsement money has exploded (especially in the last couple of years), the world’s best basketball player could possibly make even more per year by signing a veteran’s minimum with the Clippers for three reasons: 

I. TV Market Size  

It is a common misconception that Miami is a big TV market.  According to Nielsen Television Market Estimates, Miami isn't much bigger than Cleveland (it is about 1.12X bigger than Cleveland).

Info from tvb.org

Info from tvb.org

LeBron James’ market value appeared to level off in Cleveland, as his endorsement salary started to stagnate from 2008-2010, only growing from $28,000,000 to $30,000,000 after doubling his endorsement salary from 2004-2008.  Interestingly enough, James’ endorsement money only increased to $33,000,000 through his first two seasons in Miami.  In other words, his endorsement salary in Miami was 1.1x what it was in Cleveland after two years (we will get to his last two years in Miami in the next section).  But this makes sense, considering Miami is about 1.12x as big as Cleveland. 

Now consider the fact that Los Angeles is 3.4x as big as Miami in market size.  While it is unrealistic to expect LeBron James’ endorsements to more than triple with the levels they are at, James would only need his endorsement salary (of $53,000,000) to increase by 1.38x to cancel out the financial losses of not signing a maximum contract. 

II. Impact of Winning Championships  

In the past two seasons, LeBron James’ endorsement salary has grown from $33,000,000 to $53,000,000 annually.  While some of this could be attributed to his relocation from Cleveland to Miami, it seems that the majority of the growth comes from his two championships.  In 2013 (the year after James’ first ship), LeBron earned $42,000,000 in endorsements; in 2014 (the year after his second ship), his endorsement salary rose by yet another $11,000,000.

James hasn’t experienced this kind of a year-over-year endorsement revenue growth since 2005-2006 (when his endorsement salary only rose $5,398,560).  This recent growth suggests a very high correlation between endorsement revenue and winning it all.  

III. Roster Fit

The Clippers are currently the best basketball team in Staples Center.  Their core of Chris Paul, Blake Griffin, and DeAndre Jordan, can rival almost any other team in terms of talent.  However, one of their biggest weaknesses is a lack of a strong wing presence at the shooting guard and small forward positions.

The Clippers’ leading win sharer on the wing was Jamal Crawford with 5.3 win shares.  While this isn’t admirable, it isn’t nearly good enough to win a championship.  For championship teams since 2000-01, the average win share for the best wing on the team is 11.06.  In fact, only one team has won the championship with their leading wing producing less than Crawford’s 5.3 wins:

Info from basketball-reference.com

Info from basketball-reference.com

So how does LeBron James fit into this puzzle for the Clippers?  He is arguably the greatest small forward to ever play the game and contributed 15.9 win shares last season, which was the second highest in the league.

While it seems ridiculous for LeBron James to sign for the veteran’s minimum, it could be worth it for the King to rule LA.