Should LeBron James hurry up and decide?

by on July 8, 2014 at 7:18 pm in Economics, Sports | Permalink

Joshua Tucker says yes:

…if LeBron waits until every other play has signed, those players will all have made their decisions not thinking they have the maximum chance of winning a championship.  Because they value both winning and making money, every one of those players will have signed for more money than they would have needed to sign had Lebron already signed with that team.  LeBron, upon joining that team, will therefore be playing with players who were more expensive than they needed to be.  This in turn means that whatever team he joins will either (a) have less money to sign LeBron or (b) have less money to sign other players besides LeBron and the free-agents they have already signed.  Either way, LeBron gets less of what he wants (defined here as money + likelihood of winning) than if the other free agents had known he was going to be on that team before he signed.

Therefore the converse should also hold: by moving sooner, LeBron should be able to get more of what he wants. By virtue of being the single best free agent available, Lebron instantly adds more to a team’s chance of winning a championship than any other player, and therefore will drive down the cost of acquiring other players to complement him as he seeks out additional championships.

But I don’t think that is right.  LeBron needed to find out if Wade and Bosh are willing to take significant pay cuts, to help Miami bring in better players.  So far it seems he is learning the answer is “no.”

More formally, you can think of this as threshold and discontinuity issues kicking in.  If LeBron signs quickly with Miami, and Wade and Bosh are selfish in pecuniary terms, Miami can’t do much of anything to become a decent contender.  That is because the salary cap makes it very difficult to bring in other good players at reasonable cost (the “luxury tax”).  No major free agents have stepped forward and shown their willingness to take a big pay cut to play with LeBron.

If that is indeed what has been learned, LeBron now can pit a few other teams against each other — Cleveland, the Lakers, maybe even Phoenix and Houston — and ask how big a financial commitment to winning they are able to make.  (Miami of course can be kept in the mix.)  It takes a while for those teams to signal their intentions, and that also requires waiting on LeBron’s part, if only to let the bids escalate.  That is the way to extract greater sacrifices from other players and also from the owners, a factor which I don’t see Tucker putting at the center of his analysis.

Of course LeBron won’t wait very long.  At some point each team has put its best plan on the table and then he will choose (for reasons similar to those outlined by Tucker), which is likely quite soon.  Still, it is privately optimal for him to start that process with some waiting and with a minimum of non-committal rhetoric, which is indeed what we are observing.

Max July 8, 2014 at 7:25 pm

Tyler, why on earth would any sapient creature give a f*k?

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Brian Donohue July 8, 2014 at 7:46 pm

Sports hater? Or game theory hater?

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Cliff July 8, 2014 at 10:48 pm

sapient?

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BRL July 8, 2014 at 11:06 pm

Don’t hate the game hate the game theory

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charlie July 8, 2014 at 7:33 pm

Wade and Bosh are already taking cuts. Not clear how big.

You’re assuming this is once again not about a team mate banging his mom.

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KLO July 8, 2014 at 7:34 pm

Is there any reason LeBron has not already signed with Spurs? The Spurs have the cap room, they are already the best team going into next season, and, well, Texas (i.e. taxes).

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msgkings July 8, 2014 at 8:25 pm

Florida same tax regime.

Also, does SA really have enough cap to sign LBJ even for a less than max deal? I haven’t heard of them being in the mix at all…

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Kostya July 8, 2014 at 10:38 pm

The Spurs do not have cap room, and Florida also does not have an income tax.

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Ted Craig July 9, 2014 at 7:31 am

That’s not a Spurs move. That’s like asking why the Oakland As weren’t in the bidding for Robinson Cano.

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Cliff July 9, 2014 at 11:56 am

Actually it’s completely different. LeBron is worth every penny of his max contract because his contract is capped. He can only get like $22 million and his value is about $40 million. In baseball there is no max contract so Cano’s contract suffers from the winner’s curse and he will likely not live up to it, let alone exceed it dramatically as LeBron will.

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KLO July 9, 2014 at 12:11 pm

It is also different, because one player makes more difference on a basketball team than on a baseball team and LeBron is the best player in the NBA, whereas Cano is clearly not the best player in MLB.

Now that the Spurs have committed to Diaw they cannot land Lebron without significant moves.

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CMOT July 8, 2014 at 8:22 pm

LeBron isn’t just a player, he’s a lifestyle brand, and winning championships is more valuable to that brand than any salary a team can pay him. I’d say his decision factor isn’t “money + likelihood of winning” it’s something along the lines of “.3 x money + 3 x [brand equity derived from] likelihood winning”.

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dead serious July 8, 2014 at 11:26 pm

I’d say you’re wrong since he has in fact signaled that he values being the highest salaried player in the league and that he expects others to sacrifice financially for the right to play (the real implication is: win championships) with him.

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Ryan T July 8, 2014 at 8:35 pm

I’m glad you’re writing about this.

I was surprised that Zach Lowe’s Grantland piece didn’t make today’s Assorted Links. Maybe tomorrow.

I agree with the first part of what Charlie said above: Bosh is already underpaid and I think he’ll be their second option if the band gets back together. I think Wade is now overpaid, but he looks like he’s going to restructure his contract to make less money, as is Udonis Haslem.

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Z July 8, 2014 at 8:40 pm

James knows exactly where the market max is for his talents. Every team in the league is willing to pay that max so there’s no benefit to a bidding war. He also knows what else a team can offer, as far as a supporting cast. What he does not know and what his people are working on is what else each team can do in the next few years to improve the supporting cast.

This has nothing to do with making the market or game theory. It is about building the pro forma for each possible destination and then selecting the one he likes. That last part is tempting to dismiss, but James is a very wealthy mean with nothing but emotional needs at this point. The team that makes him feel fulfilled, however he defines it, will likely win his services.

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Kostya July 8, 2014 at 10:39 pm

He doesn’t really know what each team has to offer as far as supporting cast. A lot of that is going to be determined in the next few weeks. That’s why I’d wait.

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Z July 8, 2014 at 11:23 pm

Sure he does. It’s not like these teams have blank rosters. There are a limited number of combinations that are possible and working through them was probably done before the season ended. A little fine tuning and what needs to be known is known. Yeah, there can be some tinkering, but not enough to make a difference at this point.

James has smart people who will present to him the financial impact to James Inc over the next five years for each option. They will probably have some discussion about the impact on his post-basketball life. Given his earnings, on and off the court, the emotional factors will loom larger than for the typical player. Brand management is at the top of the list, followed by self-actualization and then the basketball stuff.

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JosieB July 8, 2014 at 10:41 pm

He handled it badly the last time. He doesn’t seem to be doing a better job of it this time. He needs better advice.

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dead serious July 8, 2014 at 11:32 pm

Agree on the first time. The Decision was extremely ill-advised.

As for this time around though, I don’t see what he’s done wrong thus far. He’s pretty honestly signaled that he feels the best player in the league deserves the highest salary and why should he continually sacrifice financially when he’s pretty much subsidized Bosh’s and Wade’s salaries the past few years.

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Darren Johnson July 9, 2014 at 12:54 am

Unusually off the mark here. His NBA salary has nothing to do with it except status. He can’t look weak negotiating, but no one is really challenging the fact he is currently the best player so the status game is minimal. It’s all about his brand. He’ll make 20-40 times more money from his deals outside the NBA. Wade and Bosh got nothing to do with this. NOTHING. Wade is so incredibly washed up that he would get laughed at if he was brave enough to go on the open market. If he was in the NBA draft last week, in his current state, he would have went 3rd round. Wade used to be a great player. He won a championship with a declining Shaq. One must still consider how poorly he has played despite the fact that Lebron gets everyone constant open looks. Bosh isn’t a grand prize either. Maybe the 4th or 5th best player at his position.
Lebron certainly has some anger towards Wade. Wade convinced him during the Beijing Olympics that he should come to Miami. He promised a grand party – they’d win 7 titles and go down in history replacing Jordan and Pippen. Didn’t work out that way. Lebron is on the wrong side of 30 with one NBA Title and one strike season title. Plus Wade tried to act like he wasn’t second fiddle. Basketball is the worst sport to have that kind of uncertainty.

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Koufax July 9, 2014 at 1:12 am

“Lebron is on the wrong side of 30 with one NBA Title and one strike season title.”

Ouch.

Tim Duncan would like a word with you.

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Darren Johnson July 9, 2014 at 1:17 am

Duncan has 5 titles and San Antonio would vote him mayor if possible. No shame in being old.

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Z July 9, 2014 at 7:11 am

The peak years for NBA players are 25 through 32. Players like James will extend their peak years because of their position and style. Still, James is looking at another five year at his peak, assuming good health. A little bad luck and James could be done winning titles in the NBA.

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Darren Johnson July 9, 2014 at 7:43 pm

I’m forbidden from talking about this at home so I’ll bite. There is no data at all to support the claim that LBJ will be able to extend his peak years. There simply has not been any other NBA player built like him before who played similar minutes. He does seem to stay exceptionally healthy so that is in his favor. Still, lugging around a 270 pound frame since age 15 cannot be great for the knees.

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jon July 9, 2014 at 1:20 am

“Lebron is on the wrong side of 30 with one NBA Title and one strike season title.”

The only people who care about the season having 66 games rather than 82 are deranged Lebron haters (admittedly, a rather large group).

As the poster above noted, no one says “Tim Duncan has four NBA titles and one strike season title,” even though that season had 16 less games than Lebron’s first title season.

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jon July 9, 2014 at 1:22 am

You yourself just said he had five titles. Could you explain what makes his win in a season that was 50 games because of a lockout more legitimate than a season that was a 66 games because of a lockout?

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Go Kings, Go! July 9, 2014 at 11:43 am

I have a shirt that reads

in large font: BackTo Back
Small font: full season
Large font: Stanley Cup Champions

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Spencer July 9, 2014 at 1:40 am

Strike season title?!

Is this really a thing people hold against LeBron James?

That’s really deranged.

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Vernunft July 9, 2014 at 2:09 am

…deranged?

Fanboys gonna fanboy…and call their opponent deranged, because don’t you know that being a Lebron fan gives you a PhD in psychology?

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andrew' July 9, 2014 at 5:42 am

I must dislike Lebron just because he’s black , not because he covered for the NSA, oh wait, wrong black guy/strawman. I dislike lebron because he’s a frontrunner and now I know about the short season critique.

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Yancey Ward July 9, 2014 at 11:07 am

James is only 29. Or is that the wrong side to be on?

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Darren Johnson July 9, 2014 at 1:49 pm

I feel so dumb now. He’ll still be 29 before he gets another title, right?

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Yancey Ward July 13, 2014 at 1:57 pm

Yes, you are dumb since that isn’t what you wrote above, and you try to imply it was.

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Careless July 12, 2014 at 1:29 am

James actually makes about twice what he’ll make in endorsements.

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Darren Johnson July 9, 2014 at 1:27 am

Gladly. Wade was able to limp through that season because it was 50 games. I’ll go ahead and give you two titles, anyways. Does that get Lebron even close to Jordan? LBJ has been proclaimed the greatest player ever. He isn’t even close. Not entirely his fault. He did promise Cleveland a title, but who cares, right? Dan Gilbert holds much of the blame too. If he wasn’t so busy writing Quicken loans and running Detroit city government maybe he’d have time to run the Cavs.

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Darren Johnson July 9, 2014 at 1:33 am

66 games, whatever. Watch LBJ highlights from his Cavs days. He was actually better there before he went to Miami.

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mpowell July 9, 2014 at 10:50 am

Well at least know I can be sure you don’t know much about the NBA.

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msgkings July 9, 2014 at 12:31 pm

Actually this xkcd shows James had a slightly higher PER in Cleveland (if the data depicted is accurate): http://xkcd.com/1392/large/

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Darren Johnson July 9, 2014 at 1:50 pm

There are many things I don’t know much about. Basketball is not one of them. I’ll cut you a break because basketball is hard to understand if you didn’t play.

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msgkings July 9, 2014 at 1:58 pm

Um, Darren? I’m agreeing with your assertion, or rather providing data to back you up.
So apparently reading comprehension is one of the things you don’t know much about.

msgkings July 9, 2014 at 1:59 pm

You may have meant to reply to mpowell, so maybe blog posting is one of those things…

Darren Johnson July 9, 2014 at 2:57 pm

Yes, it was for mpowell. I’m OK with data, bad with blog posting. Advanced metrics for basketball are interesting, but just watching game 3 of the 2007 eastern conference finals is also interesting.

mpowell July 9, 2014 at 3:06 pm

One game doesn’t prove very much. The funny thing about your argument is that Lebron’s game was actually much simpler in Cleveland. Sometimes it looked unstoppable because he has always been amazingly effective going to the basket. But on several important occasions opponents were able to substantially reduce his effectiveness by denying him his preferred style of play. The difference in his play in Miami (not counting year 1) has been to sufficiently develop other aspects of his game and other complementary strategies so that it is nearly impossible for any existing NBA defense to effectively neutralize him.

Playing the game doesn’t make you an expert on it. There have been literally thousands of pro baseball players whose opinions on the game were revealed to be completely idiotic by rudimentary statistical analysis. So I don’t generally give people the benefit of the doubt just because they claim to have played the game.

Darren Johnson July 9, 2014 at 3:38 pm

I agree with you. Lebron has added a killer post game and much else since Cleveland. Still, watch the highlights from that eastern conference finals game. He is playing with a pick up team. Ilguaskas didn’t even change a shot on defense in the post much less block anything the entire season. I love the guy and he was a great player, but try to imagine having Big Z as your only stopper in the post. Andy V hasn’t been in proper defensive position since he moved from Brazil. Boobie Gibson? LBJ made him look like a star.

msgkings July 9, 2014 at 4:12 pm

Darren, all of that is true but it doesn’t imply LeBron was a better player himself in Cleveland, it just shows why Cleveland never got over the hump and Miami did. He does clearly seem to have improved his game, which makes perfect sense as he entered his prime age in Miami.

And to me the signature game that announced James was truly the best in the game and silenced the doubters was that game 6 in Boston down 3 games to 2 in the 2013 playoffs. He just single handedly beat them to a pulp in a must win game.

msgkings July 9, 2014 at 4:12 pm

Actually, 2012 playoffs my mistake

Darren Johnson July 9, 2014 at 4:40 pm

Agreed, that game was also a work of art. I’ll note that all of LBJ’s new tricks didn’t fool Kawhi “The Kingslayer” Leonard

Yancey Ward July 9, 2014 at 11:09 am

James is on the button- a good place to be.

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msgkings July 9, 2014 at 12:13 pm

I’ve never understood the James hate, or at least how James is seen vs Michael Jordan. When Jordan was the best in the world everyone stopped to watch him play and marvel at him. You knew you were watching greatness. I feel exactly the same watching James play, he’s obviously ONE OF the best ever, dominating the league like Jordan. And unlike Jordan he’s not a huge asshole, he’s a pretty positive, fun guy who’s made some obvious missteps here and there (The Decision).

Strike season title gets an asterisk? As others have noted then so does Duncan in 1999. Also, most agree the NBA season should be about 66 games, 82 is too many, not that that will ever happen…

Jordan and James were roughly the same age when they won their first titles. So if James plays this right and keeps putting together teams to win rings he has a decent shot of catching MJ in that metric.

As always, xkcd is on point: http://xkcd.com/1392/large/

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Yancey Ward July 9, 2014 at 1:26 pm

Agreed. I will even state that James is the better player, Jordan just had better teammates who played better defense.

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Brian Donohue July 9, 2014 at 4:10 pm

Although he’s 6’6″, I wouldn’t call Jordan a huge asshole, just an average-sized asshole in a huge body.

Jordan had something beyond mere physical skills. I’ll call it WILL. 6 for 6 in the Finals.

As far as teammates, Pippen was great, but Jordan and Pippen won 3 titles with 10 guys, then they won 3 more titles with 10 different guys.

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msgkings July 9, 2014 at 4:16 pm

Well sure, but Pippen was important. The norm is you need at least 2 Hall of Famers to win a title, with the rare exceptions like the 1994 Rockets (one HOFer) and the 2004 Pistons (probably none, except the greatest basketball coach of all time)

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Darren Johnson July 9, 2014 at 5:05 pm

The most important comparison to Jordan is toughness. Jordan wouldn’t have been talked into going to Miami by Wade at any point in his career. Call it ‘being an asshole’ or confidence. No one honestly thinks James is a bad guy. Remember him bear hug tackling the random fan who won 50k hitting a half court shot? He can’t be held fully responsible for The Decision either. He started playing for the Cavs in his early twenties (was it late teens?) and the city hung up 200 foot Christ-like banners downtown. That’d do it for ego. I am a Witness.

mpowell July 9, 2014 at 3:09 pm

The problem comparing Jordan to James is that they are playing under significantly different rule sets. James plays in a system where zones are legal, resulting in the rotating man defenses that have become so common. Jordan played in a game with more hand checking on the perimeter but where it was much much more difficult for a team to commit help to a perimeter player. People conveniently ignore these kinds of distinctions and just assume everything is the same or washes out. But assuming that is silly.

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andrew' July 10, 2014 at 4:17 am

MJ, Magic and Bird were undeniable and essentially team lifers. The only times I’ve been unable to ignore LJ is when he has been spurning a team and its fans. Start there. LJ wants to win championships with a moving truck. Maybe u should hate the NBA. I don’t care to know anymore.

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andrew' July 10, 2014 at 4:17 am

By u I meant I.

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Deserttrek July 9, 2014 at 12:32 pm

if the author is looking at the nba from a pure business view fine. otherwise the nba is a sewer of racism and james is one of them. to support them is to support racism and anti American hate.

the best thing is to take the tax free status from ALL professional sports leagues and let them fend for themsleves

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Larry July 9, 2014 at 6:43 pm

What I don’t get is why the best player doesn’t want to play for the best coach. It worked pretty well for Jordan, Duncan, Bryant and O’Neill. Jordan didn’t become a billionaire by investing his salary…

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