Source: “Don’t Read Too Much into Rose/Riley Meeting”
July 2, 2010Friday World Cup Quarterfinal Recap
July 2, 2010Yesterday, the New York Knicks spent a long time with LeBron James in downtown Cleveland making their case for LeBron to come to New York. Later in the day, Forbes had some of the slides that the Knicks purportedly used in that presentation. The quick summary is that the Knicks talked to the mogul in LeBron James. They talked about international exposure provided in New York. They talked about some mythical “up to” 15% market premium for playing in New York. Anyway, without any more intro, here are some of the more interesting nuggets. The slides that Forbes had were created by a bigtime company called InterBrand. Others (Matt Moore) have discussed this more concisely (and maybe more comically) than I have, but read them later.
InterBrand isn’t an advertising company really. They work on projects dealing with a company’s brand. In the case of LeBron James, they spoke almost exclusively of LeBron in terms of the business entity he has created. In InterBrand’s eyes, LeBron James is a corporation. InterBrand has a gaudy client list from Applebee’s, Dunkin Donuts, BMW, Holiday Inn, ConAgra, Prozac Eli Lilly, and Stolichnaya. According to their website, they even helped Microsoft develop the impossibly obnoxious BING name for their re-branded web browser.
The most applicable example is work they did with Juventus football club. And by football, yes, I do mean soccer.
The challenge for Juventus was to make the big shift from a winning club to a true global brand. Any football club has a clear and obvious mission – to win. So the difference between brands comes from those core values, which bond people around the same flag. Following an all-round audit and research, we focused on the three core values that would distinguish Juventus as a brand – excellence, legacy, and passion.
This kind of language will start to sound familiar. In one of the first InterBrand slides, they say of LeBron:
LeBron James’ success is eclipsed only by his potential. Now he has the opportunity to make a move that will help him realize it. We analyzed the drivers of brand value and their impact on LeBron James’ earnings within the four franchises likely to create the most brand value – Miami Heat, Cleveland Cavaliers, Chicago Bulls and New York Knicks.
Interesting things abound. First of all, I used to make fun of some professors in college who used to read giant overriding themes into extremely subtle details in literature. Some times college professors try to make things more meaningful and important than they truly are to justify their existence. But, when looking at a presentation put together by a company like this, you can assume they did everything for a reason. Like the order of the teams. Their order goes Heat, Cavs, Bulls and Knicks. Obviously they “saved the best for last.” On the right of the slide, they have all the team logos and the order is Knicks on top, then Cavs, Bulls and Heat. In the written form the Heat are again listed furthest away from the Knicks. Does that mean that the Knicks consider the Heat the leaders in the clubhouse right now? Also, there is one team missing. Cross-town rivals New Jersey Nets were not even worth mentioning mostly because many of the same “market” details that are true for the Knicks are also true for the Nets. Or maybe I am acting too much like my college professors. Let’s move on.
InterBrand discusses their methodology. They used 50,000 lifetime scenarios, 200+ variables including championships, all-star appearances, MVPs and more. They used 20+ historical players’ careers and assumed earnings over 13 years from 2011-2023. Finally they used four factors driving earnings including player image, market, performance and franchise. These factors were discussed at length.
Player image, while important, can’t put LeBron over the top. Basketball performance is the single most important factor. According to InterBrand, “the first championship won can bump immediate non-salary earnings an average of 40%.” Also, they say “but its power varies by the market he plays in and the franchise he represents.” In this case, the fact that of all the teams on the list, the Knicks are decidedly in the worst shape roster-wise means that this is actually an argument against the Knicks and in favor of the Cavs, Bulls, and Heat.
But InterBrand’s retort is already in the slide. Under the “Franchise” section, InterBrand states that “aligning with a strong franchise would create a valuable co-branded partnership for James.” Then they drop the laugher. “The longer a franchise plays without winning a title, the more value is created for the star player when the win occurs.”
Let that sit for a second.
So, RATHER than use the prime of your career competing every single year for a championship, LeBron. Why don’t you come to the New York Knicks and build it? The time wasted in the prime of your career isn’t actually time wasted. By spending more years in chasing down the championship in New York, the championship will be worth far more! Forget the risk of injury or the risk that the Knicks won’t be able to put the team together from the ground up around you. Come to New York and bet on the team that hasn’t really been interesting since John Starks was still in the league.
Of course, I know what you Cavs fans are thinking. This bullet point actually should work to the Cavs’ favor. If LeBron already has seven championship-less years built up in Cleveland then the value of a championship for the Cavaliers should be worth decidedly more than a championship in New York. LeBron has non-championship years stored in the bank in Cleveland. If he leaves, those “assets” are left here in Cleveland and wasted.
Finally, InterBrand takes all their research and puts it into vague numbers with the New York Knicks representing an impossibly high value proposition. LeBron’s personal brand value was estimated at maximum and minimum. Before I spout off these garbage numbers that mean basically nothing at all, let’s finish attacking the prospect of valuing a brand value for a business that creates nothing tangible. LeBron is a skill set and a personality. He is a brilliant skill set and some people think a brilliant personality. But really, that skill set drives the entire bus.
Let’s look at Apple because that is an example of a company that is inextricably tied to one personality, Steve Jobs. He is the oracle that drives that company. The company is decidedly better when he is around. At the same time, even if he got hit by a bus tomorrow and died, the stock wouldn’t drop to zero. A more applicable example. Michael Jackson died a year ago and it has been said that he is more valuable dead because he was good at outspending his income when he was alive. The key here is that there are residual incomes because Michael Jackson produced songs that continue to drive revenue to his estate. If LeBron got in a car wreck tomorrow and died, his brand value wouldn’t drop to zero, but it would be really close. The point being that InterBrand and the Knicks are making points based on pie in the sky values of a brand that mean nothing because even if LeBron wanted to, he couldn’t actually sell it.
YouTube was a brand name that had brand value. That’s why YouTube sold to Google for $1.65 billion. The Knicks and InterBrand say that LeBron’s brand value as a member of the Knicks could be worth anywhere between $460 million and $1,940 million. In a maxed out situation, they think LeBron’s brand value can be bigger than YouTube’s actual value, including their brand value at the time that Google acquired it. Which would you rather purchase with your $2 billion?
Then the whole presentation turns into a bigger mess. On the next slide, InterBrand refers to the range above as potential earnings, when on a slide previous they called it value. So, which is it? There is a difference between earnings and value. No matter. Ultimately, InterBrand’s numbers are largely made up estimates used to predict something that is so wholly unpredictable that it doesn’t even matter. The bottom line is this. The InterBrand presentation pumped up the Knicks, ignored the Nets, and actually probably helped the Cavs.
How? In all their propaganda, InterBrand and the Knicks ended up doing their best to bury the Heat and Bulls. By attempting to make it a two market race between Cleveland and New York, I think it actually helps the case that LeBron should stay in Cleveland. The Knicks team has money. That’s it. The Knicks almost haven’t been a topic of conversation lately because money became available in Chicago and Miami where those teams have decidedly better rosters. In fact, I might even argue that if the Knicks did the best they absolutely could have done that they still might have only reinforced LeBron’s desire to go work for the Nets if he is intent on making the move to the New York market.
As Cavs fans we just need to hope that LeBron saw right through this propaganda and is thinking about the things that weren’t in the presentation. Most notably, LeBron relies on his image for marketability, but how will his image suffer with the likes of Page 6 hounding him all over the various boroughs of NYC? How will he feel when the media is reporting incessantly on his business partners, girlfriend, mother and kids? What will it do to his marketability to be under a microscope like that? We have all heard the un-reportable whispers of stories that are only whispers because they happened in Cleveland. You can argue that the sports media here in Cleveland aren’t doing their jobs, but I look at it as a positive. Hopefully LeBron does too.
50 Comments
Great article.
Since the Cavs have never won a title, shouldn’t the implied value of winning a title here be infinity?
Juventus was terrible last year. Someone should tell Lebron.
Honestly, I think the Knicks realize they have little to no shot at landing Lebron based on cap space alone…they’ve painted themselves into a corner with zero picks for the next few years in anticipation of being able to land big names this summer and so far it looks like they’re getting the shaft.
Lebron can have a global brand in Cleveland, or Portland, or Des Moines it doesn’t matter. I think the Knicks may have hindered what little chance they may have had with that presentation.
“Since the Cavs have never won a title, shouldn’t the implied value of winning a title here be infinity?”
One would think. But their method of thinking involves a completely made up curve that is added in due to the fact that more people (larger market) would be impacted by the win. Being a “hero” in NY is simply more impactful than being a “hero” in Cleveland. Per Interbrand.
Best part about the presentation is that they put Cleveland ahead of Chicago and Miami in this scale, ultimately helping CLE’s case against the other competitors.
Reminds me of that episode of Entourage where Vinnie was looking for a new agency and when he visited them they each put on the same presentation on branding.
“Let’s look at Apple”… OK Denny, uh, I mean Craig
Also, Craig, you forgot that 10% of Youtube is LeBron’s dunk montages. Thats how he gets to be more valuable
Off topic, but I read that if the Twoves resigned Darko then Al Jefferson is on the trading block. Darko reportedly agreed to a 4 year- 20 mil deal… so any word if the Cavs would be interested in trading? Are the Cavs talking with anyone right now? Wouldnt it make sense for them to have something ready to go this weekend (upgrading roster wise) so they can tell LBJ we have this, we are getting younger and getter so on so forth…
swig,
I can’t believe they trotted that out. The subtext is “we think you’re a fool, and that’s how we’d treat you.”
It’s compellingly illogical. Maybe it’s genius.
“Your logic ties me up and wrecks me…”
Well done indeed. Another way of separating New York from Chicago was the assertion that LeBron will make $1 billion in NY, $700 million in Cleveland, and $500 million in Chicago. Doubt Chicago is after Cleveland in terms of market, but thanks for putting us above Chicago anyway…
He realizes that they provided him with a “value” range of about $1.5 billion dollars, right? “Well LeBron, you could be worth anywhere between zero and $1.5 billion. Come to New York!”
good thing the Knicks took that stuff LeBron’s camp put out there about this decision being purely on “basketball” to heart.
who is left for the Knicks now anyway?
NY hearts Raymond Felton?
Yo, Donnie Walsh, can you say “backfire”?
This historic free agency will end up as basketball’s Ishtar. Same experts yakking it up incessantly will pivot and be ridicling it in, oh, about 72 hours. And in their embarrassment after talking up the Knicks for 2 years they’ll now not only ridicule them but try to take LeBron down a few notches as well.
are we talking about lebron james or steve lebron here? i ALWAYS get those two mixed up. im sure if either one played in NYC id have it straight.
“basketball’s Ishtar”
*snicker*
meant “ridiculing”
Where the heck is my Friday proofer.
i would think the NBA would NOT want these three to join up on one team. that would validate this philosophy of tanking for 3-4 years in order to (hopefully) build a super three-man team. if this works, and these three sign up together, teams will start tanking asap to clear cap space in order to make a run to sign the next super-group, like Tyreke Evans, Steph Curry and Blake Griffin.
If Jobs died tomorrow, the stock wouldn’t hit zero, but it’d come pretty damn close.
mike
agree.
I wonder also if the FAs are talking less about playing with each other than “sending” someone out west to beat the Lakers and, thus, increase the odds of facing each other in the finals. While the Clippers are the only WC team in the FA race (right?), an S&T with a WC team is possible in my imagination.
I like how every report mentions what LeBron was wearing, what he arrived in, and What time he arrived compared to that of his suitors.
I’m not into this for me this is nothing but a glorified soap opera but great write up all the same. All this “wooing” is pretty shameful but understandable. I don’t hold LeBron accountable I mean it’s not his fault he’s good enough to be so desired. Until he says something or does something I’ll ignore everything else.
Interesting to read the whole slide deck.
Key assumption: “From now through his retirement (at age 38) he will play for the same team”
Why not sign a 3-year deal to stay, win a championship for Cleveland and reap the estimated hundreds of millions in lifetime brand value… and become a hometown legend along the way. Then, when he’s 29/30, decide if he wants to go try to recreate that in some other championship-starved, bigger market city… or stay home and become the next MJ.
what does Juventus being horrible last year have to do with LeBron? And although Juventus was horrible last year they are one of the most successful soccer clubs in the world of all time, probably only surpassed by Barcelona.
Dang it…We are screwed…Lebron can only make 700 million in Cleveland…bye bye Lebron
craig, i completely agree with your assessment. i’m sure many of us build TCO/ROI analyses to justify a sale or other decision-making. for the COO/CTO who already knows that he wants to buy, the TCO is a nice tool to push across the desk to CFO to justify budget. but any CFO worth his salt drills right in the soft costs and how assumptions were used.
(eg, in high-tech, usually the biggest line item in an ROI deals with cost-avoidance by needing fewer loaded headcount if they deploy your system. and since those are pretty much fixed costs, the CFO tends to erase 2 admins @200K/year x 3 years =1.2MM savings as being bogus.)
and the interbrand preso, while interesting and professionally prepared, is VERY HEAVY on soft costs and assumptions.
we’ll see if lebron bought it soon enough.
@21 – The deal is likely to be a 6 year deal. There will be a new CBA and everything I am hearing says it is going to hurt player contracts. The idea here is that Lebron opts out and signs a 6 year deal(wherever) for max money and gets grandfathered into the new CBA because he signed his deal before it came into effect. Signing a 3 year deal would limit his income greatly. That is why your seeing so many other guys like Paul Pierce opt out as well.
I totally agree with the idea that the Knicks’ presentation was rediculous, because it almost completely focused on branding and ignored basketball.
I seriously think LeBron is going to stay. It seems like he really likes being close to home, and New York has been a basketball black hole for about a decade now. Plus, the Cleveland media, for the most part, treat him very well.
Win titles in Cleveland and retire a local/international legend. That should be the plan as opposed to “play in the big city, hope for the best, and retire like Patrick Ewing – loved by fans, but just one blip in the NYC sports universe.”
Yahoo’s Woj is reporting that Knicks are closing in on a 5 year guaranteed deal w/ Amare. I don’t think that will lure LBJ in, but it does take an attractive free agent away from more realistic suitors CHI, MIA and NJ. I think Bosh is headed for MIA and Boozer will choose between CHI and NJ.
AMC
Is Bosh to MIA a hunch, a hunch with extra sauce, or a hunch with a side of fries?
who will play PG for the Knicks? I wish Walsh would at least throw out some rumors/suggestions.
i wonder if that interbrand report took into account cleveland’s potential marketing ties into china. i think those guys are wavering since lebron hasnt committed yet. my guess is, if LBJ is out then those guys are out. If LBJ is in, then those Chinese guys are in.
“Scott Sargent, WFNY…”
Is the Knicks logo supposed to be a crotch?
I love how the Knicks didn’t portray Cleveland as a bad decision. They said, financially, the Knicks would be better. I do like how they slammed Miami’s fan base with their slides. lol.
according to Windy’s tweets…
“All these teams working on big-name partnership includes #Cavs. Source said Raptors like some of Cavs players in potential sign-and-trade.”
“Cavs could provide package of prospects, veterans, expiring contracts and instant salary-cap relief to Raptors.”
“Difference between Cavs position and others, they can also take bad contracts from Raptors to aid rebuilding effort. Heat, Bulls can’t.”
This is exactly what I was saying about Bosh and Turkoglu’s bad contract for Vareajo, Hickson, West, Moon, Shaq
@34 I like those ideas I’d take Turkoglu and Bosh for that assortment from the Cavaliers.
Shaq is out of the question. The guy is a FA and there is no way in this world he is going to agree to be traded to Toronto. Maybe if he wanted to retire he would agree, but most people are saying he wants to keep playing.
On a side note, and no one in the media is really talking about this, but Wade, the so called lock for Miami, is meeting with the Bulls for a second time. That doesn’t sound like a lock to me…
ESPN, in fact, has SOURCES (ZOMG) that say he’s “leaning” toward Chicago. If true, that’s HUUUUGE for Cleveland as Chi can’t pull off a big 3 like Miami – and I just don’t think Chi with Wade, but not Bosh is as attractive to James. Not only will he be playing in MJs shadow, but he’ll be competing with the hometown kid for points AND the fans’ love.
Bosh this year, Paul next. Go Cavs!
I’m calling bogus on the Wade leaning to Chicago thing though. He’s been recruiting for Miami this whole time, who here really thinks he’s suddenly just given that up?
i do! i do!
especially if he doesn’t think LeBron will sign there to play with him. as I said above, playing with Wade in Wade’s backyard (which could be either Miami or Chicago) just doesnt afford LeBron the ability to be the MAN like he wants to be. after all, that’s what this whole year + has been about.
ESPN forgets Wade bashing the Bulls organization just 2 weeks ago.
@mgbode – Wade has been playing more games with the media than anyone else throughout this entire season. what wade said a few weeks ago means nothing today – if it even meant anything then.
I had no idea about those Forbe slides. I tell you what, for all the money they probably put into those slides, they look like a 5th grader made them.
They have a good point in that fact that he could be the face of the Knicks for decades to come much like Jordan.. only its in NYC.
Only one problem,
do you really think anyone in the Knicks front office knows how to win games. Seriously… anyone.
@ Alex – not to be picky but Real Madrid is usually looked upon as the most successful soccer club of all time. after that, maybe Ajax or Glasgow Rangers. Man United and Bayern Munich would also, in my opinion, have more merit than Barca. For what it’s worth.
wade, wade, wade. please. he’s robin, not batman. his team had zero heart this year.. and he wants to stay with the heat? that’s fine. he’ll have his t-mobile commercial and pretty wardrobe. yes he has a nice ring… thanks shaq, zo, payton, jefferson, and walker. but does he care about hoops? doesn’t seem like it to me.
he does not belong in comparisons with lebron and kobe. he’s good, sure. but he should be asking to come to cleveland and play with lebron… not the other way around.
plus hickson owns him.
block: http://www.youtube.com/watch?v=x-dK7HxpV0M
dunk: http://www.youtube.com/watch?v=VyIDOQ5sW3Q
@wallace37 said: lebron + bosh this year, chris paul next year. yeah, seriously, why not? but i’ll be cool with lebron this year and paul next year. getting byron scott facilitates this.
I hope Wade signs with Chicago because IMO that helps the Cavaliers chances of resigning LeBron. Wade being a hometown guy should make him more of interest for the Bulls then LBJ I just worry about Bosh going there too. Poor LeBron will resign here and get no more help. Miami is a threat because of the income tax but the Heat’s roster is gutted if Wade leaves. Personally I’d love to see teams like NY, Miami and to a degree Chicago get burned for gutting their roster in an attempt to save salary cap space to sign impending free agents. I realize it’s part of the game and a strategy but I also think it’s kinda weak.
Also perhaps if Joe Johnson and RudynGay resign with their old teams it might influence LBJ in a small, minor way. I also think finally hiring Byron Scott should benefit but I’m sure we’ll hear more today after the Cavaliers meeting with LeBron.
Any chances the Cavs keep JJ in a Bosh trade…
@ bobby – no. JJ is the ONLY tradeable piece on this team really. I can’t see a scenario where the Cavs keep JJ and get anybody worthwhile. That’s the reality of the situation, IMO.
[…] agent Leon Rose and business manager Maverick Carter on Thursday afternoon. The Knicks reportedly presented a marketing piece directed towards James’ desire to be a billionaire – a pitch which many felt lacked […]
you’re an idiot. did you ever look at any quantifiable data to form your opinions? at least interbrand did. you should pick up a phone and call them, they might actually give you an answer, before you call the figures “made up estimates”
name-calling is never a way to solve anything.