LeBron James and the theory of price controls

by on July 13, 2014 at 7:42 am in Economics, Sports, Uncategorized | Permalink

NBA salaries are subject to price controls at some margins, so neither Miami nor Cleveland could pay LeBron more.  Therefore a theory of profit maximization predicts LeBron will choose the deal that extends his career the most, so as to maximize lifetime income and perhaps also fun.  Another year playing also probably means higher endorsement income than a year in retirement.

In Cleveland he is not actually expected to win, at least not right away.  They can play the young guys a lot and rest his legs and extend his career, while developing the quality of the overall team.  And if the mix of players somehow comes through in a year or two, he looks like a basketball genius.  The East seems weak enough that Cleveland will at least make the Eastern Finals for the next few years, thus avoiding embarrassment.

Given their demographic structure and Bosh’s accruing softness, Miami is a contender only if it pushes LeBron very hard and thus shortens his career.  I speculate that he was very upset that he was pushed and played so hard all year long, to rest Wade, only to develop those disabling leg cramps at the end of game one against San Antonio in the Finals, which caused him to lose face.

I haven’t seen other analyses take career length into account.  LeBron is entering his thirties and watching the physical implosion of Kobe Bryant, one of his role models.  He knows Michael Jordan took two years off and ended up as a geezer on the Washington Wizards.  He sees Wade — one of his best buddies — a broken player at age 32.  Why not choose the outcome that might give him a few extra years of both salary and fun?

Addendum: Apparently LBJ is taking only a two-year contract with Cleveland.

James could have taken a four-year contract worth more than $88 million from the Cavs. But he now will be able to negotiate a better contract in two years and also has the choice to opt out after one season to renegotiate next summer. Player options only can come before the final season of a contract, another reason for the two-year deal.

That is emphasis added, the pointer here came from Angus.  I would mention that the theory of profit maximization is often underrated and that this Cleveland deal really is a good one for LBJ.

gregg dourgarian July 13, 2014 at 7:55 am

Is it possible – God forbid – that the theory of choice could encompass non-financial factors? Like maybe someone as nutty as it seems would be willing to trade one unit of financial gain for 10 units of helping people back home?

TMC July 13, 2014 at 12:12 pm

He still has the house by Akron, and story is that the wife never liked Miami and wanted to come home.

Brian July 13, 2014 at 4:14 pm

You mean like, “Therefore a theory of profit maximization predicts LeBron will choose the deal that extends his career the most, so as to maximize lifetime income and perhaps also fun.”

greg July 13, 2014 at 8:04 am

That would indicate he doesn’t really care where he lives or who he actually plays for.

I don’t know much about salary caps in US sport (the idea of it, and the closed leagues all seem crazy to me) but even with that in place, add his earnings and his endorsements and he never needs to work again, and likely nor will any of his children either.

I would imagine in such situations while his agent will be pushing him to do what this says and mazimise his career gains, if I were him the non-financial aspects would play a much bigger component.

Do his kids (if he has any) want to move school, move closer to or further away from family and friends, what about the place he’ll have to live does he like one place more than another, or who his team members/managers/bosses will be. Maybe he could want to go where the best sport is not the easiest money.

If I were him and as rich as I imagine he is money wouldn’t really matter that much. You’ll try and ring out from it what you can but you’ll do what will be the best thing for you.

Nylund July 13, 2014 at 10:29 am

I think what you’re essentially saying when translated to econspeak is that he’s already so rich that the marginal utility of an extra dollar is much lower than the utility concerns of the non-financial factors.

dan1111 July 13, 2014 at 11:57 am

It seems this way only from afar.

Jason W. July 13, 2014 at 4:58 pm

His agent is his childhood friend from Ohio, and has long been trying to get Lebron to return to Cleveland.

rayward July 13, 2014 at 8:28 am

Playing to win takes its toll. Tiger Woods comes to mind. As do any number of football players. “Journeyman” is the term used to describe a so so player who enjoys a long if undistinguished career. Only a very few are willing to push themselves to the limit and make the sacrifice that comes with it. The obsession with winning in sports extends down to youth leagues. I’ve coached boys baseball, and have watched many young players with great potential burn out physically and mentally by the time they reach high school. High school! Early in my career (law) a mentor told me that law is a marathon not a sprint, which could be said of many professions as well as many sports. I’m nearly old and still enjoy my work.

chuck martel July 13, 2014 at 10:07 am

” Only a very few are willing to push themselves to the limit and make the sacrifice that comes with it.”

No, only a very few are blessed with the talent to rise above the journeyman level and the good fortune to avoid the inevitable injuries that are such a factor in sports.

dan in philly July 13, 2014 at 8:34 am

I would like some consideration of the declining utility of marginal income, but you accounting for fun works as a proxy. I doubt money is all of his driving motivation, but you can say his desire for honours and fame can be a factor.
If he sees Cleveland as a way to extend his career, and maybe if he wins a title there he will have accomplished something Jordan and Bryant never did. I don’t think you can discount the negative utility of being hated in a place he wants to be loved as a consideration, too.

John Thacker July 13, 2014 at 8:50 am

Could not Miami effectively pay him more due to the absence of a state income tax?

Andrew' July 13, 2014 at 10:13 am

Or do what any respectable student-athletics team would do and cheat.

Z July 13, 2014 at 9:00 am

LeBron James Inc is leveraging the toadies in the sporting press to increase the value of his brand. That letter was written for the jock sniffers at ESPN, knowing they would spend the next year giving LeBron Inc free marketing. That’s worth tens of millions. Keep in mind that LeBron made more than four times off the court than on the court. He’s not a basketball player who endorses products. LBJ Inc is a marketing firm with a president who plays professional basketball.

In short, Tyler’s theory is great as long as you don’t look at any of the evidence.

Yancey Ward July 13, 2014 at 1:47 pm

Bingo. Loved the “jock sniffers” part, but it applies to every single sports journalist out there- every single one.

Edward Burke July 13, 2014 at 9:02 am

Have industry dynamics begun to alter substantively from their depiction in this popular internet account:

http://en.wikipedia.org/wiki/Personal_finances_of_professional_American_athletes

?

fallibilist July 13, 2014 at 9:09 am

This assertion strikes me as unwarranted:

Another year playing also probably means higher endorsement income than a year in retirement.

NBA players are typically on the downward slope of their (offensive) production when they quit. Those post-peak years add to their “place in the record-books” and their “legacy” but was Shaq really picking up endorsement deals in 2010? Was he accruing earning power? Did Michael Jordan really burnish his basketball legacy or become more of a commercial juggernaut due to his years on the Wizards?

Both of the prominent examples that I used illustrate the nearly unavoidable tragedy of late-NBA years. Kobé is currently in this stage.

We are talking about exhausted, worn-out, past-their-expiration-date athletes. They can only hope to not embarrass themselves too badly.

At least they’re rich.

Colin July 13, 2014 at 1:43 pm

Yes, financially speaking. The rules are different for elite players, when it comes to endorsement money. It doesn’t fade the way you would expect. Kobe is, as you say, old and in decline. And yet he made the second-most endorsement money in the league last year.

Also, Jordan is a quirky example because of the multiple retirements. Lebron is 8 years away from Washington Jordan, and that’s not even accounting for the deleterious effect of 3 years away from the game before the Wizards years. Realistically, he may be 10 years away from that.

Thirsty for Marginal Substance July 13, 2014 at 9:15 am

Why can’t MR post more substantive and thoughtful pieces like this? I come here often and find that most posts are just links to other (sometimes) interesting things accompanied by opaque comments, sarcasm, or opaque AND sarcastic comments – which can get pretty depressing.

This is much better. More please, MR.

Brian Albrecht July 13, 2014 at 9:33 am

Is there any evidence that playing fewer minutes and “resting one’s legs” extends a player’s career?

KLO July 13, 2014 at 12:02 pm

I don’t think the mileage matters as much as injuries and playing with injuries does. More minutes equals a greater chance to get injured. Moreover, players who play with small, nagging injuries are more likely to become more seriously injured. What you typically see is an injury cascade that begins with one leg or back injury and develops into many more serious leg and back injuries.

Limiting minutes limits the chance that a player will become injured. The more important piece, however, is to limit the minutes a player plays while injured. The latter is difficult to do because players are not forthright when it comes to minor injuries that they could play through and setting lineups and minutes based on how a single player feels harms team chemistry.

Slocum July 13, 2014 at 12:06 pm

The San Antonio Spurs? Tim Duncan is 38. Manu Ginobili is 36.

Jason W. July 13, 2014 at 5:07 pm

Mileage absolutely matters, both in a single season and over a career. I haven’t bookmarked any of them, but there have been a bunch of things written about this in the basketball world, and it’s accepted as common wisdom that playing more now means reduced effectiveness and increased injury rate later.

Roger Sweeny July 13, 2014 at 9:43 am

Z, why does it have to be one or the other? Why can’t Lebron have an extended career AND increased endorsement income?

Z July 13, 2014 at 9:58 am

I never suggested any of this, one way or the other. James has at most five more years at the peak of his ability. Basketball player peak around 25 and begin to decline around 32. Great players are very good before 25 and often extend their peak years beyond 32. Given the nature of the way James plays, he will be done by 35 at the latest.

As to his off-court earnings, he will make $55 million this year endorsing products. He will make over $30 million from investments (the headphone deal) and he will make roughly $20 million from the NBA. This move is intended to extend his endorsement career beyond his basketball career. It also lets him extend his marketing platform to younger athletes. He is running the Johnny Football Show, for example.

It seems rather obvious to me that this move has nothing to do with his “market” as a basketball player or his desire to extend his career. This is about building a branded marketing platform that will carry on long after James retires. His model is Russell Simmons, not Michael Jordon.

Jaunty Rockefeller July 13, 2014 at 11:16 am

I agree with you that this move is about maximizing his post-career brand, which he probably concluded can best be done by (1) winning and (2) making himself more broadly sympathetic, both of which Cleveland offers. But your final point is wrong: Jordan’s brand >>>> Simmon’s brand. I’d bet it’s true w/r/t brand awareness, and it’s certain true w/r/t personal wealth (Jordan: ~$1 billion; Simmons: ~$300 million).

Z July 13, 2014 at 11:30 am

What I was getting at with the Russell Simmons reference is the role model, not the result set. Jordon is a one-off. He is completely unique and trying to follow his model is not smart. Russell Simmons is a better role model if you plan to be a mover and shaker in the sports entertainment world. World Wide Wes is another example. Jay Z would be another.

There’s a cultural angle here too. Jordan is a creature of The Man and is now one of them as an owner in the league. James is wildly popular in black America and the sporting press because he defied the man twice. The first time when he went to Miami on his terms. The second time when he let the owner of the Cavaliers gravel for forgiveness. Michael Jordon is Joe Frazier while LeBron is Ali, culturally speaking.

fallibilist July 13, 2014 at 12:33 pm

It’s Michael Jordan, FFS.

jonathan July 14, 2014 at 2:51 am

Lebron didn’t suddenly become popular among black people or the liberal section of the sporting press because of his move to Miami. Rather, among those people, his popularity fell less than among other groups, because of feelings that the backlash against him was exaggerated (e.g. Gilbert’s completely insane letter). This time, he and Gilbert did a mutual apology, I’d hardly call that groveling.

He did call for Sterling to be kicked out, but he was hardly alone there.

Colin July 13, 2014 at 1:46 pm

Define “done.” A declining Lebron would still be a pretty damn good player, given the peak it is declining from. He also has the sort of physical skillset that lends itself to longevity, unlike Wade. Larry was still playing an a high level at thirty five, and that is with the back injuries. If Lebron avoids catastrophic injuries, he could be better.

sansfoy July 13, 2014 at 9:43 am

I think you’re pushing too hard to give him an economic reason for making this decision. NBA and ex-NBA players aren’t exactly known for making good money decisions.

mulp July 13, 2014 at 3:02 pm

Economists believe that all athletes who end up broke or drug addicted or dead or brain damaged chose to end up that way at age 17.

Life, to an economist, is all about choices, not chance.

Art Vandelay July 14, 2014 at 11:54 am

Apparently, then, you have chosen to be an idiot.

Bill July 13, 2014 at 9:50 am

The should have granted LeBron tenure as a way to get around price controls.

He plays. He then coaches.

Andrew' July 13, 2014 at 10:51 am

What about the part that sports is the opposite in terms of what makes tenure desirable?

Darren Johnson July 13, 2014 at 9:51 am

Can I assume control of all further LBJ related posts? With James, Irving and Wiggins the Vegas market will have them as title favorites within a month of the beginning of the season. If Kevin Love comes over, then just forget about it. All they need to do is find some spot shooters at this point and maybe a seven footer.
They will win the title next year. The cramps were an outlier. There was no AC in San Antonio. His body can take another ten years of hoops because it is his natural body and he takes care of it. I saw him play in high school and he was built the same way. For the record, watching him play D3 high school hoops against other small Catholic schools was hilarious. Some people just don’t have to lift weights much. He just needs to avoid landing on someone’s foot and breaking a leg.

Darren Johnson July 13, 2014 at 9:55 am

He should play tight end for the Browns though.

Darren Johnson July 13, 2014 at 10:32 am

The salary cap cedes roster control to stars like LBJ. In return, he has more control of his brand and is able to make it more profitable. The Cavs would win more games with James in charge than Dan Gilbert. I am dead serious about this.
It’s good for the NBA when LBJ’s brand is good. It helps them move into Spain and China. It also helps them pick off fans from the NFL and MLB.

GW July 13, 2014 at 11:07 am

It didn’t even take that long. Bovada had the Cavs at 4/1 and favorites to win the title an hour after he signed. That increased to 7/2 before they took it down.

Darren Johnson July 13, 2014 at 1:00 pm

The Cavs were 60-1 to win next year’s title a few weeks ago. I could have made enough money to buy the Baltimore Ravens and move them out of town. Most of their current players are in jail anyways. The legacy of Ray Lewis.

Markb July 14, 2014 at 12:10 am

Yes I’m glad to see someone else who actually knows something about the NBA and the Cavs. I follow the Cavs religiously, since childhood, before LeBron was on the radar. Following that whole history up to today, there are some nice natural experiments for how someone like LBJ makes decisions now that there is more than one.

With his free agency looming in 2008-2010, everyone was worried about whether or not LeBron was getting what he needed and wanted, sufficient to stick around. When he left, fans acknowledged that the Cavs failed to put a very good support system around him, but the response always was that he supposedly never recruited, never tried to attract that support himself. And then there was consternation that he had been coddled, he and his friends given too much freedom, control, leniency. Now we’re hearing that he didn’t think he was given enough of that at Miami, that his family and friends didn’t get enough access and perks.

LeBron is a businessman, but he knows the money can and will come. Jordan made $100 million last year. Beyond money, it’s a tangled mix of legacy, ego, and friends and family. The team and max player salary caps both severely constrain his direct team income potential. And while he can make more in endorsements, investments, etc. he knows he’s making money for his team’s ownership and team associates. Plus, he understands the owner/player general bargaining issues and realizes giving up income hurts them as a group.

So he needs to be compensated as well as he can be, and money is constrained. Championships need to happen, but if that were the only issue he could take one-year contracts and jump to the best team each year. Bad for legacy and adoration/adulation i.e. ego. I think he does deeply care about supporting his family and friends through the team, if not out of altruism at least to maintain the gravity of the solar system surrounding him. And it’s a necessary signal from the team that it knows it isn’t compensating him sufficiently through money. That they acknowledge, and want to rectify this market distortion. And recruiting, that’s ownership/front office work. He’s already doing more work than he should be for his salary.

There are dozens of other factors: planning for the long-term even if he, at least up until now, hasn’t; family dynamics for a high-school sweetheart wife who isn’t as glamorous as the Miami scene; the serious growth and confidence he’s achieved (he used to bite his fingernails like mad); and his expanding ambitions beyond the court (especially now that Jordan’s a billionaire).

Any team wanting to attract and keep LBJ has to do everything it can to secure a long window of championships, but it needs to find ways to compensate LBJ for all the unpaid value he generates. Cleveland has a comparative advantage in certain aspects of that, but needs to be more strategic this time around.

Andrew' July 13, 2014 at 10:14 am

Bringing a title to Cleveland would be worth 2+ from South Beach.

Andrew' July 13, 2014 at 10:33 am

Btw, I’m now a LeBron fan. But NOT because he’s black.

Nyongesa July 15, 2014 at 1:17 am

I’m just excited that’s the first time the word has been used in this thread…. wait, it was used earlier by MRC-jonathan. Oh well back to my rock.

Brian Timoney July 13, 2014 at 10:58 am

Bingo.

Lifetime income as a function of “legacy”. The marginal increment of legacy-building that would come from winning another championship in Miami is small, versus Cleveland which hasn’t won anything in the major sports in decades.

James was the rare player who was young enough to learn deeply, and painfully, about the nature of Public Reputation (The Decision) and understand and effectively build a counter-narrative while still in his prime. He delivers a championship to Cleveland and he’s in line for a lifetime of adulation and respect not only from Ohio locals, but rabid sports fans all over who pine for the romantic ideal of their steadfast loyalty and support being reciprocated by the contemporary multimillionaire athlete.

Jordan is a cautionary tale–the carpet-bagging in DC and his failure as a GM in Carolina, not to mention the broader recognition of his unpleasantly competitive personality. His brand is iconic, but he is not beloved.

A more interesting model is John Elway. Delivering championships to a football-crazed market and creating a second career as a mostly successful executive who consistently polls as the most popular citizen in Colorado fifteen years after retirement.

Brian

Brian Donohue July 13, 2014 at 8:26 pm

ding ding ding.

Bill Harshaw July 13, 2014 at 10:55 am

If the Cavs are going to be a weaker team than the Heat was, I don’t think it’s a fair assumption that James will play less. He’s a competitor, and in the heat of the game will play the extra minute, and who is there with the power to sit him with the long range view in mind?

Paul July 13, 2014 at 10:59 am

I think the two-year deal is largely the result of the player max being due to rise in two years after new national television deals are signed, as per the collective bargaining agreement. James will then renegotiate a full-term deal at the higher max. If he’d accepted a four-year deal now, he’d be locked in at a lower-than-max salary for the final two years. Flexibility is an additional driver, of course. Teams are not, effectively, allowed to compete on price for James, so he forces them to compete on roster quality and needs the threat of early leaving to make it credible.

On resting one’s legs and extending careers, one could argue that Duncan and Ginobli are good examples. This is cherry-picking, but I think some more robust results were discussed on TrueHoop once.

Gabriel Puliatti July 13, 2014 at 1:15 pm

I guess, but the standards are just lower in general. I’m sure being top 2 or 3 seed in the East would be AMAZING for the Cavs, so they can actually afford to lose some games.

He can still do this 25 PPG avg if he wants to, but without taking the physical brunt of the game in the way he was at Miami. I’m very happy for James if he’s taken a page out of the Spurs’ book for this. The way he’s managed to changed public (and my own) opinion of him is amazing.

Donald A/ Coffin July 13, 2014 at 6:25 pm

Paul nails the reason for the 2-year duration. I recently read a post (at ESPN?) suggesting that after the new national television deal goes into effect, the annual maximum contract may rise to as much as $30 million. (Also on using the mobility threat to force his current team to focus on improving the supporting cast.)

DanC July 13, 2014 at 11:35 am

Reports are that LeBron’s wife wanted to return to NE Ohio to raise their children around extended family. Given LeBron’s difficult early family life he may just place a high value on such relationships.

Endorsements will be the major source of income for the remainder of LeBron’s life. If he wins in Cleveland, his brand will live as long as he does in Ohio. Jordan is a better pitchman for national brands but LeBron has not fully exploited his potential, in my opinion.

If he had stayed in Miami he would have been part of an aging team that, because of salary restrictions and draft position, would have a hard time getting top young talent. With Cleveland he has younger talented teammates who will be reaching their peak as he begins to decline. Take LeBron away from both Miami and Cleveland and project what they will be like in 5 years. Then insert Lebron into each team in 5 years. LeBron is just being forward looking. Being on a winning team for longer is more fun and means more endorsements.

someguy88 July 13, 2014 at 1:45 pm

It was a two year deal. So, no.

This is about narrative, expectations, and legacy. This about GOAT.

If he brings a championship to Cleveland, of all places, that counts for 2 or 3 rings on a loaded Houston team.

Think all the lines of a great Roman consul.

This is about conquering Gaul solo instead of putting down some hill tribes in Spain with another consul by your side.

It is not about saving his legs. Cleveland needs to win now. All the indicators are that they will dither and fail and he will be gone in two years.

Jason W. July 13, 2014 at 5:14 pm

He’s never leaving Cleveland again, unless Dan Gilbert kills his family or something. He’s been quite clear that he’s in Cleveland to stay, and that he took a two-year deal only because the NBA is expected to have a much higher maximum salary cap in two years, thanks to a new and much more lucrative television deal. He has already committed to signing a new deal with the Cavs at that time.

someguy88 July 14, 2014 at 11:33 am

Do you enjoy living in the Cleveland area?

If they stink two years from now he is gone. And I have no reason to believe they will get it right. They are already holding off on trading Wiggins for Love. [At least that is the scuttle butt] Maybe it is all just posturing. I hope so for Cav fans. But that would be crazy stupid. They need to win now not 5 years from now when WIggins might be a good player. Love is a 17 win player now.

http://www.boxscoregeeks.com/players

Will Wiggins ever top that?

Jason W. July 14, 2014 at 1:56 pm

Wiggins is unproven obviously, but has tremendous potential. Trading him for Love would be the safe thing to do in the short term, but Wiggins has higher upside. Given that he is also much, much cheaper than Love — Wiggins will be on a rookie pay scale for the next four years, while Love will command max money over that same timeframe — he will also be a much better value than Love even if he falls short of expectations but still performs reasonably well. I wouldn’t argue against trading him for Love, but I wouldn’t argue against keeping him, either. Love makes them stronger at the top of the roster and weaker through the middle and bottom, while Wiggins allows them flexibility to field a stronger all-around roster while still potentially exceeding Love as a talent 3-4 years down the line. And they don’t need to win now. Lebron has already said they won’t, that it will be a long process, and he’s fine with it. He definitely not going anywhere in two years – Cleveland is his home, his wife wants to be there, his kids are going to school there, and he has made it clear he’s there for the long haul. They can start winning in 3-4 years if he plans on playing another 10, and that will still give him 6-7 years to add to his ring total. But I don’t believe it will take that long anyway. Their roster, as currently constructed, could very well make the finals this year, or at least make a nice playoff run. They wouldn’t beat the top 5 or 6 teams in the West, but the East is very weak.

And I’m a Suns fan living in Phoenix, not a Cleveland fan from Cleveland. I just follow this stuff closely.

mpowell July 14, 2014 at 2:55 pm

I agree with Jason. You can get a lot more for Love’s salary with Wiggin plus mid level veterans than you can with Love in the short term.

someguy88 July 15, 2014 at 3:56 pm

You are grossly over valuing potential versus actual production.

http://www.boxscoregeeks.com/players?direction=desc&sort=wins_produced

Love is a Top Five player today. 5 years from now Wiggin might be a top 5 player but probably not. If we go back and we look at #1 pick production the hit rate is something like 50% and not all of those hits were Top 5 players.

1980 Golden State Warriors Joe Barry Carroll
1981 Dallas Mavericks Mark Aguirre
1982 Los Angeles Lakers James Worthy
1983 Houston Rockets Ralph Sampson
1984 Houston Rockets Hakeem Olajuwon
1985 New York Knicks Patrick Ewing
1986 Cleveland Cavaliers Brad Daugherty
1987 San Antonio Spurs David Robinson
1988 Los Angeles Clippers Danny Manning
1989 Sacramento Kings Pervis Ellison
1990 New Jersey Nets Derrick Coleman
1991 Charlotte Hornets Larry Johnson
1992 Orlando Magic Shaquille O’Neal
1993 Orlando Magic Chris Webber
1994 Milwaukee Bucks Glenn Robinson
1995 Golden State Warriors Joe Smith
1996 Philadelphia 76ers Allen Iverson
1997 San Antonio Spurs Tim Duncan
1998 Los Angeles Clippers Michael Olowokandi
1999 Chicago Bulls Elton Brand
2000 New Jersey Nets Kenyon Martin
2001 Washington Wizards Kwame Brown
2002 Houston Rockets Yao Ming
2003 Cleveland Cavaliers LeBron James
2004 Orlando Magic Dwight Howard
2005 Milwaukee Bucks Andrew Bogut
2006 Toronto Raptors Andrea Bargnani
2007 Portland Trail Blazers Greg Oden
2008 Chicago Bulls Derrick Rose
2009 Los Angeles Clippers Blake Griffin
2010 Washington Wizards John Wall
2011 Cleveland Cavaliers Kyrie Irving
2012 New Orleans Pelicans Anthony Davis
2013 Cleveland Cavaliers Anthony Bennett
2014 Cleveland Cavaliers Andrew Wiggins

Also he does not have 10 years. I wish he did but realistically he has 6 max. Name a single NBA wing player who dominated or was even very good in a lot of minutes after 36. Off the top of my head I cannot think of anyone. At 38 Jordan was a joke.

You are over valuing potential, under valuing Love’s current production 17 wins per year at 17 million is a great return, and under valuing just how badly even the very best basketball players will suddenly age.

Jason W. July 15, 2014 at 7:52 pm

I’m not undervaluing anything. I’m explaining to you what the Cavaliers are thinking. And you are still not taking into account just how severely another max contract on this team would limit their ability to build a quality roster from top to bottom, or at least top to middle. My argument is not that Andrew Wiggins is likely to become as good as Kevin Love, although that remains a possibility (and the Cavaliers clearly believe it); it’s that Andrew Wiggins on a rookie contract, plus the other quality role players they could sign with the money they’ve saved from not having Love on the team, could very plausibly be better for the team than Love on a max contract and a shallow bench. It’s the point mpowell made above. It’s more complicated than just Wiggins versus Love.

As for Lebron’s longevity, no one knows. He has been very durable thus far in his career, and he certainly has shown no signs of slowing down. But you’re right, declines can happen remarkably quickly in the NBA, and it’s a stretch to assume he plays another 10 years. Still, I think 6 is too short. I would imagine he goes at least another 7 or 8… this 2-year contract he just signed, plus another 5 or 6 year maximum contract, depending on the outcome of the new CBA in two years. Contrary to popular belief, Lebron has a game that will age well in the NBA. He’s incredibly strong, and he’s developed a reliable jumper in recent seasons. His efficiency numbers are off the chart, which speaks more to decision-making and skill than athletic ability. More importantly, he’s probably the smartest and most versatile player in the NBA, and is one of its best ball handlers and passers. He uses his athleticism to brutalize opponents, but it’s not a crutch for him, and his game won’t be crippled when he starts to slow down.

Also, Jordan at 38 was a joke? What a silly thing to say. He wasn’t his former self, surely, but he averaged 23 points, 5 assists, and 6 rebounds a game, while playing 35 minutes. At 39 he averaged 20 points, 6 boards, 4 assists, and shot 45% from the field. His advanced stats were all down, of course, but were still very respectable. His win share percentage at 39 years old was higher than Luol Deng’s is right now, and Deng was considered a solid free agent acquisition this offseason. Jordan’s PER at age 39 was 19.3, which would have ranked 39th in the league this year, just behind Kawhi Leonard, the Finals MVP. Jordan was most definitely not a joke at that age, he was a borderline all-star.

someguy88 July 16, 2014 at 12:35 pm

At 38 counting 2 FTA as one shot attempt Jordan scored an absolute ghastly .92 points per shot attempt. The NBA average is 1.06 pints per shot attempt. His net possesion numbers rebounds assist T/Os etc are not very different from an average small forwards during his comeback. At 39 he was merely a terrible .97 poinst per shot attempt. From 38 on he was a below average NBA player. Compared to what he once was he was pathetic.

Regarding PER – http://wagesofwins.com/2006/11/24/john-hollinger-responds/ Jordan increased his PER by jacking up a lot of terrible shots.

Wiggins productivity for the next few years will almost certainly be negative. He will cost the Cavs wins with inefficient shooting. The Cav’s thinking is wrong. Again the hit rate for # 1 picks is only about 50% and not all of those hits are top 5 players. If Love is a 17 win player and cost 17 million a year – that is a million per win. At 82 million you would get 82 wins. A million a win is a great return. A few million for negative wins is a horrible return.

Yancey Ward July 13, 2014 at 1:54 pm

I don’t think it out of the question Cleveland can win it next year. With Cleveland, James will have something that Miami never did- very potent guard play. The holes are at the center position, but Cleveland may still fix that by season’s beginning.

Also, the took the two year deal simply to be able to renegotiate the contract at the next raise in the ceiling.

mulp July 13, 2014 at 3:08 pm

The team management can renegotiate down if he disappoints, Which could include something off the court that makes him unpopular and reduces the draw to games.

Yancey Ward July 13, 2014 at 3:22 pm

Yeah, mulp, that is a likely scenario. Only injury could cause his value to decline.

Careless July 15, 2014 at 12:59 pm

Of all the stupid things that mulp has written…

Jason W. July 13, 2014 at 5:21 pm

There have been plenty of articles that have taken his usage into account. Grantland pointed out just the other day that Lebron is just 7 minutes shy of 40,000 for his career, and that he’ll be the third youngest player in history to hit that mark.

Jason W. July 13, 2014 at 5:52 pm

For perspective, Lebron has played more career minutes than Pau Gasol, who is frequently said to have a lot of mileage on his legs, as well as Derek Fisher, who had a long career with lots of long playoff runs. Fisher never played Lebron-type minutes, but that’s the point, and that’s why he could play until he was almost 40. Lebron could well retire as the all-time leader in minutes played. Kareem is the current leader (regular season and playoffs combined) with 66,000. Lebron could top 70,000 if he stays healthy. But staying healthy with that kind of usage will be precisely the challenge.

Urso July 14, 2014 at 4:19 pm

What’s the effect of adding in college minutes to all those pre-Garnett players?

Jason W. July 14, 2014 at 6:42 pm

The record for most games played in college is 157, per Wikipedia. That’s fewer than two NBA regular seasons, and the games themselves are shorter in college, too, although top players actually average more minutes a game in college than in the NBA because college coaches don’t have to worry about the long-term health of their players. If we assume that a player plays 157 college games, and plays 35 minutes in each game, he would have played 5,495 minutes over the course of his four-year college career. By contrast, Lebron, who went straight to the NBA from high school, played 14,558 minutes over his first four NBA seasons, which is roughly equivalent to 2.5 college careers.

Nick July 14, 2014 at 9:04 am

Another fun fact about LeBron’s 2-year deal: beyond the next TV deal (which is a big deal for his next contract) the NBA Collective Bargaining Agreement says that a player cannot sign a 5-year contract past age 31. In 2 years LeBron will be 31 and able to sign that last 5-year deal before he’s limited by the CBA to shorter contracts.

Jason W. July 14, 2014 at 2:01 pm

That might not still be in effect by then. The players are widely expected to opt out of the current CBA before the 2017 season, and the union is already prepping the players to expect work stoppage as a result. The rule you reference will definitely be on the table.

Ed July 14, 2014 at 10:49 am

The Cleveland Cavaliers five years ago was not quite good enough to win the championship with LeBron. So he left, and the team tanked to the point where they got good draft lottery picks and could get some good young players. Had LeBron stayed, their record would not have been bad enough to allow them to do that. Now he comes back to a team that will be stronger than the one he left.

mpowell July 14, 2014 at 2:56 pm

stronger? That’s far too weak an adjective to describe the difference.

sourcreamus July 14, 2014 at 2:01 pm

There are salary slots for rookies which means young players in their first contract are generally underpaid. Older players are paid for their fame rather than their contribution so they are generally overpaid. The Cavaliers have the last two years top pick and the 2012 number 4 pick. That frees up more money for Lebron and maybe another free agent. Kyrie Irving is ten years younger than Wade, who will never be an elite player again, but will stay have a big salary.
By going to Cleveland, James makes just as much money, while going to a younger team with a better future. He also gets praise from fans and sportswriters for being unselfish while not having to actually give up anything.

C July 14, 2014 at 8:46 pm

What is the value of the immortality that a guy like Jordan has? Most people are not endowed with the gifts to buy this, even with 100x the money Jordan has made. Even as an economist it makes sense to me that the chance at legend this move gives LeBron totally swamps salary/endorsements/career length (though the latter is arguably correlated with team optimality) considerations. I suspect even the demand for max salary has more to do with respect and principal (i.e. unfairness of the CBA) than money and given the right circumstances LeBron will again be willing to take less just not to line the owners’ pockets.

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