Cleveland Cavaliers’ LeBron James is introduced before a preseason exhibition basketball game against Maccabi Tel Aviv Sunday, Oct. 5, 2014, in Cleveland.
LeBron Jameswill earn $20.6 million this NBA season. Kevin Durant will earn $19 million.Kobe Bryant will lead the league with a $23.5 million salary.
Yet all three of them, who are among the NBA‘s biggest stars, aren’t making as much as they should relative to the value they bring the league and their respective teams. Welcome to the parallel universe of being a professional basketball megastar, where you can earn $20 million per year, say you’re underpaid — and actually have a point.
It’s not a new gripe. Bryant raised the issue a few months ago. But a new number shows Bryant’s line of thinking may be something to consider: $24 billion — the value of NBA’s newnine-year broadcast deal with ESPN and Turner.
The deal starts in in 2016, and the NBA will earn about $2.6 billion per year. For reference, the league’s current deal with those same broadcast partners was agreed to in 2007 and pays the NBA about $930 million per season. Translation: The NBA and its billionaire owners are about to see a lot more cash coming their way.
Those same owners mollywhopped the players’ union in 2011, when an extended work stoppage resulted in the players taking a 6% cut in their revenue split with owners, down to 51% from 57%. Now, say many players, the stars who make the league go won’t allow franchise owners to cry poverty — without providing any real proof of such — again when it’s time for a new round of collective bargaining in 2017.
“The whole thing that went on with the negotiation process was that the owners were telling us that they were losing money,” James told The New York Times the day after the new TV deal was announced. “There is no way they can sit in front of us and tell us that right now.”
Kevin Durant echoed James’ sentiments. “That’s a lot of money,” he told The Oklahoman on Tuesday. “That’s a lot of money. I don’t see how owners can say they losing money now.”
Even if a given team loses some money in a particular year — and most make money — the appreciating value of NBA teams as a whole means the owner of that money-losing team is still likely sitting on a cash cow. Herb Kohl bought the Milwaukee Bucks for $18 million in 1989 and sold them this April for $550 million. Donald Sterling bought the Los Angeles Clippers for a little more than $12 million in 1981 (when they played in San Diego) and sold them for $2 billion this year.
A star-driven league
More than any other professional sports league in America, the NBA is driven by its stars. Players aren’t hidden beneath hats or inside helmets. They’re allowed a creative freedom — which their athleticism amplifies to jaw-dropping effect — with the ball you don’t find in othersports. One player can have a bigger impact on a game’s result than in football, soccer, baseball or hockey. Its biggest stars are icons the world over.
Of course, many players are drastically overpaid, compensated at a value far greater than what they bring to their squad’s on-court results or their team owners’ bottom lines (we’re looking at you Amar’e Stoudemire and Joe Johnson). This distorts the conversation. So does the sheer magnitude of the numbers we’re talking about; after all, $20 million is a lot! But the plight of the select few — players whose ability and popularity approaches that of Bryant, Durant and James — is real. Relatively speaking, of course.
The NBA will soon get a cash infusion and superstar players like Kevin Durant don’t plan to be left out.
IMAGE: SUE OGROCKI/ASSOCIATED PRESS
If you want to point to one culprit, look no further than the NBA’s tough salary cap, which penalizes teams for paying its roster above a certain collective threshold ($63 million this season). Ostensibly a measure to ensure competitive balance, owners typically are in favor of this because it keeps their payroll costs down. Players are typically against it, because it limits what they can earn and allots only a portion of the total cap to one superstar player. The salary cap is another negotiating point the league and its franchise owners won resoundingly over players during the collective bargaining negotiations of 2011.
“The owners started with what they usually ask for, a hard salary cap,” writes NBA.com‘s David Aldridge. “They didn’t get that, but they got the next-best thing: incredibly punitive financial penalties on teams that continued to exceed the salary cap.”
The upshot is superstar players are faced with a strange choice when it’s time to renegotiate their contracts. On the one hand, they can take the maximum permitted under salary cap rules, but thereby hamper their team’s ability to surround them with other quality talent and be given the damning label of a player who values money over winning. On the other hand, they can settle for less than they’re worth under league rules — never mind if the NBA labor landscape was a free market.
Bryant spoke to this dichotomy via Twitter on Tuesday.
Millionaires vs. billionaires
When talking about players who already make millions upon millions of dollars per year, it’s hard to summon much sympathy for money left on the table. But when your NBA earning potential is very finite, you could suffer devastating injury at any time and, often, you come from a poor background and are looking to set your family up for generations to come, every million counts. Add to that the fact that these millionaire players are negotiating contracts against billionaire owners and the calculus changes just a bit.
Not even counting the income injection the NBA will get when its new TV deal kicks in, what’s a player like LeBron actually worth right now? That’s a nearly impossible number to pinpoint, but most agree he’s worth more than the $20 million he’s due this year. A Forbes estimate from July pegs the real number at about $28 million; a Deadspin analysis from June put his actual value last year at $44 million.
What would a superstar like Kobe Bryant be worth in a free market? It’s impossible to pinpoint, but fascinating to consider.
IMAGE: LENNY IGNELZI/ASSOCIATED PRESS
Now, one could argue that without the NBA there is no LeBron James; but a more convincing argument is that without players like James, there is no NBA. Other leagues such as the NFL would stand a much better chance of surviving if, say, their top 20 stars walked away to start a new venture. A league of player-owners sharing in all of their glorious revenues and eliminating the middle-man franchise owners? It’s fascinating idea to consider, but extremely unlikely to happen.
What’s more likely is the player’s union pushes for no max contracts in 2017, or no salary cap at all. Owners fight back with their own stern demands; abolishing the guaranteed contract, perhaps. Then collective bargaining negotiations stall, there’s a work stoppage, ultimately an agreement is reached and that agreement is a better deal for players overall yet still leaves the very best of them feeling slightly shortchanged.
Still, even in that scenario, James emerges a winner of sorts. When he was a free agent this past summer, the NBA’s very best player signed only a two-year deal with the Cleveland Cavaliers when he could have opted for the security of a longer contract with more guaranteed money. So what was he thinking? Well, that two-year deal expires in 2017 — just in time for his next contract to cash in on the NBA’s new TV-money infusion and its expected amplifying effect on player salaries.
As The Wire‘s Stringer Bell once said, there are games beyond the game. James is playing them admirably — even if, in theory, he could still be pulling down several million more dollars per year.