LeBron's Move West Is Likely to Shower Cash on Nike and Networks
(Bloomberg) -- LeBron James once again shifted the basketball world Sunday night, agreeing to a four-year, $154 million contract with the Los Angeles Lakers. The move pairs the NBA’s biggest star with its most iconic franchise and stands to improve the fortunes of more than just the team’s fans. Here are some of the biggest winners from the NBA’s biggest offseason news.
Lakers’ valuation will soar
The team owned by the Buss Family and Anschutz Entertainment Group is already one of the league’s most valuable franchises. Forbes last year pegged its value at $3.3 billion, trailing only the New York Knicks ($3.6 billion), thanks largely to the team’s brand strength and local-media deals that bring in more than $150 million a year. Snagging James should propel the Lakers to the top of the list, valuation expert Peter Schwartz says.
LeBron’s off-court ambitions
James has been public about his business ambitions, many of which will benefit from playing in L.A., the so-called Entertainment Capital of the World. He and business partner Maverick Carter founded SpringHill Entertainment, which produces films and TV shows, and Uninterrupted, a media platform for athletes that has raised money from Warner Bros. and Turner Sports. In joining the Lakers, he also joins forces with Earvin “Magic” Johnson, one of the most successful athletes-turned-entrepreneurs ever and president of the team’s basketball operations.
More exposure for Nike
James, the shoe giant’s most important basketball ambassador not named Jordan, has been with the brand his entire pro career and recently signed a lifetime deal. James can sell shoes no matter where he’s playing -- his 15th signature model was released this year -- but the added exposure from L.A. should boost the company. Nike also just completed its first season as the NBA’s official on-court apparel provider, so its logo is seen on jerseys, shorts and socks.
More exposure for sponsors
The move is great news for corporate partners that include office-supply company Staples Inc., which has a lifetime deal to keep its name on AEG’s Staples Center, and Wish, the San Francisco-based e-commerce site that last year became the team’s first jersey patch sponsor. Wish reportedly agreed to pay $12 million-$14 million for the sponsorship. With James in L.A., Wish may get as much as $35 million a year in exposure, Apex Marketing Group estimates.
A windfall for ticket resellers
The Lakers routinely sold out home games even without James, filling the Staples Center to 99 percent of capacity in 2017-2018. The boost will be in the secondary market. Market aggregator TicketIQ says the average price for the team’s home opener this coming fall more than doubled, to $1, 761from $780, after the James announcement. Here is how that compares to recent Lakers home openers:
Jersey sales spike
James is consistently one of the league’s top jersey sellers -- No. 2 this year behind Steph Curry -- and there’s always a jump when a top player switches teams. This will benefit brick-and-mortar retailers as well as Fanatics, the privately held licensed-sportswear giant that operates the official online shops of both the NBA and the Lakers. The surge of interest when the new James jerseys were unveiled made Sunday one of Fanatics’ Top 10 NBA sales days -- even though the posting wasn’t made until 8:45 p.m. New York time.
More eyes on NBA broadcasters
Putting the four-time MVP in the country’s second-biggest media market is a win for the NBA’s broadcast partners, particularly ESPN and Turner, which share the national television rights. James will likely command a larger audience but won’t dramatically change the schedule. Turner, for example, can feature an NBA team a maximum of 12 times during the regular season. Despite missing the playoffs last year, the Lakers were on 11 times. Locally, the Lakers own a piece of Spectrum SportsNet, the team’s English and Spanish-language home. That network may see added viewers, command higher prices for advertisers, and be able to charge rival pay-TV companies higher fees to keep the channel in their lineups.
A new form of NBA Playoffs?
James’s decision adds to the NBA’s geographic competitive balance problems and could shift how the league approaches its playoffs. Of the 15 current players who have ever made the All-NBA first team, 12 are now in the Western Conference, along with most of the league’s top teams. The NBA has been under pressure from a few owners for years to abolish the conference format for the playoffs, and Commissioner Adam Silver has said the league will consider other possibilities, including seeding the 16 playoff teams based only on regular season records. “It’s time to go 1-16,” said Dallas Mavericks owner Mark Cuban. "If it creates issues we didn’t anticipate, we can always switch back."
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