In Major League Baseball, there is no salary cap, and teams are allowed to sign as many players to as large of contracts they want, as long as they can pay those players and a luxury tax. In the NBA under the current Collective Bargaining Agreement, teams can still go over the salary cap and pay luxury tax, but they cannot pay players as much as they want. For contracts signed under the current CBA, the maximum players can be paid a season is 35% of the salary cap. Because of this, LeBron James’ next contract will pay him a maximum of $20.3 million a year, no matter what. But what sort of annual salary could LeBron get if NBA free agency operated on an open market like the MLB?
The Value of LeBron
There’s no real debate that LeBron is one of, if not the, best player in the league right now, and one of the most dominant players in recent history. In the most simple analysis, his contract should be higher than any other in the league, which would make his annual salary start around at least $30 million, which is what Kobe Bryant will be paid next season.
The next step in determining his money value is how much he affects the money value of the franchises he has played for. According to Forbes Magazine, the Cleveland Cavaliers, LeBron’s former team, devalued $121 million the season he left. In contrast, since he joined the Miami Heat, their franchise value has risen $261 million, up 72% since before he joined the team.
Certainly, some of the Heat’s value gain since LeBron’s arrival can also be attributed to the arrival of fellow All-Star Chris Bosh, their Finals appearance in 2011, and championship in 2012, but the bulk of it must be attributed to LeBron. This valuation difference indicates that LeBron fairly deserves more than $30 million a year, somewhere closer to $50-$75 million a year.
His presence on the Miami Heat has not only made them a much better team, he has also made them a considerably more profitable franchise. His play puts people in seats, gets others to buy season tickets, buy jerseys, and watch games, all of which make the Heat a more profitable franchise.
So Who Would Pay Him, and How Much?
Here’s the (multi)-million dollar question. Obviously, only certain franchises with serious revenue sources could afford to even pay LeBron fairly on a multi-year deal, which he would undoubtedly seek. Even a fair, yet conservative, contract for LeBron (think $200 million/5 years) would eliminate most small market teams, which can’t afford to allocate that much money to one player and then pay twelve other players decent salaries.
But it’s likely that this hypothetical contract would be closer to $70-80 million a year, supported by the evidence you saw above. The only teams that could/would offer such a contract are the New York Knicks, Los Angeles Lakers, Heat, Dallas Mavericks, and Brooklyn Nets, with the Chicago Bulls and Cavaliers having heavy outside shots at this sort of a contract as well (the Bulls have the revenue, but their owner, Jerry Reinsdorf, is historically miserly, and the Cavaliers would need a serious feel-good/hometown discount to lure LeBron back to Ohio).
Any of these teams could offer some serious money to LeBron, and it isn’t far-fetched to imagine a scenario in which one of the teams would offer $100 million, even if for just one year of a multi-year contract. In earnest, the most likely landing spots for him would be Miami, where he might not get as much as with other teams, but would be an attractive spot due to his success there; Los Angeles, which has a history of landing prized players unexpectedly (see Steve Nash) and spending lots of money in free agency (see Kobe Bryant); or New York, which is currently the most valuable and well-funded NBA franchise.
In any case, LeBron’s total contract could reach as high as $400 million, which would easily be the biggest contract in sports history. Perhaps the most remarkable thing about that contract, however, is the fact that he’d probably deserve it.