LeBron, Team USA Face Angola Next…
August 12, 2008Tribe on the Offensive
August 12, 2008We take a deeper look at the ever increasing threat to the NBA…..European Professional Basketball. Are the NBA players serious about going to Europe? Is Europe serious about making a serious run at the NBA elite? Or are the players using this attention as a bargaining chip?
Oh, the irony. We’re not the first ones to point it out, but as the Redeem Team is over in Beijing wearing the USA across their chests with national pride, they are also all planning their escape from the NBA, and America, for the glory of the Euroleague. Or so they would have us all believe.
In case you haven’t heard, LeBron told reporters that he would consider a $50 million offer to play for a European team. This is the part where we’re supposed to act surprised, I guess. LeBron would “consider” getting paid $50 million for one year’s worth of basketball? How incredulous! You don’t even want to know the kinds of things I might “consider” for $50 million, and my aspirations for world domination aren’t even in the same stratosphere as LeBron’s are. But that’s not what this post is going to be totally about (yes, I’ll touch on it, but we’re going to try to scratch the surface a little deeper).
This post is about my beloved NBA and what is happening to it. I can only watch with equal parts sadness and disbelief as the fundamental truths about the NBA that I hold so dear as a fan of a mid market team (restricted free agency, bird rights, luxury tax revenue sharing, etc) are slowly falling under attack. The problem is, we live in a rapidly changing world, and everything we used to think we knew about sports seems to be changing on a daily basis. This isn’t necessarily a bad thing. I’m not an overly conservative person who is frightened by change of any kind. I’m all for progressive change that makes things better. If we can change the NBA and make it better for everyone….for fans of all teams, large market and small market alike, as well as for the owners, coaches, and players, then don’t we owe it to ourselves to look into it and see what positive changes we can bring about in this product?
What scares me, though, is the thought of change for the sake of appeasement. Rarely does that work out well for……anyone. Is the loss of Josh Childress to Greece enough to spur change? No. Is the loss of LeBron James enough? Perhaps it is. Is the loss of LeBron James AND Kobe Bryant enough? Almost certainly. Is the loss of the entire Redeem Team? Without question. And that’s where this story starts to get interesting, from a certain point of view.
If LeBron fired the first shot, Kobe Bryant was quick to pick up his sword and come along for the ride. Before long, the entire team was expressing how quickly and gladly they would “consider” leaving the NBA for Europe if the price was right.
Said Kobe,
“I’d go. I’d probably go. Like Milan or something like that, where I grew up or something like that… Peace out. Do you know any reasonable person that would turn down 50 (million dollars)?
Because I grew up in Italy it has more significance to me because I’m more familiar with it, I’ve been there and I still have friends there. I’m thinking about buying a house out there. It would be nothing to me to be able to do that.”
Carmelo Anthony added,
“If someone wants to throw $50 million on the table for me, we can talk.”
Dwayne Wade joined in on the fun,
“They throw 30, 40, 50 million a year at me? I can’t turn that down….I think right now it’s very exciting. They’re starting a new buzz. You start to do a little research, and they got money over there. You stay in the States, you make the max, you make $18 million. Take out taxes, and you have 9-10. You have an opportunity to go somewhere and make 25-30 tax-free? We might have to pack our bags.”
Chris Paul said,
“It would definitely be something I’d consider. You can never say never to anything. The Olympics have shown how this game has grown. It’s not just the United States’ game anymore. It’s the world’s game.”
How about that Betrayal Skull Dude (Carlos Boozer)?
“As a businessman, I would have to consider it…if my wife was down and the money was right.”
Chris Bosh added,
“From a business standpoint, you have to at least listen to every offer.”
Interesting. Actually, ‘fascinating’ is probably a better word for it. You read a stream of quotes like these and you can understand how ‘mob mentality’ phenomena like McCarthyism happened. It’s hard to decipher the difference between random mass hysteria and planned ulterior motives. As is usually the case, the truth always lies somewhere in the middle. This could just as easily be a case of everyone getting caught up in Eurocentric Fever as it is a plot to band together and take down the existing Collective Bargaining Agreement in the NBA. It’s probably not either one. Or else maybe it’s a little of both.
People can talk all they want about the weakness of the dollar, or how beautiful Europe is, and how appealing the lifestyle there can be. All of those things are true, but they don’t have much to do with what’s going on in the NBA. At the end of the day, this is an issue of dollars and cents and the limitations of the CBA. If the money were equal, I don’t care how beautiful and scenic and historic Europe is. None of these stars would be saying one word about playing professionally in Europe if the money were equal. The NBA is still the absolute belle of the ball when it comes to professional basketball. The gap is definitely closing, but it has not closed completely yet.
But this story isn’t just about European money. It’s also a little bit of hysteria. The players keep talking about insane amounts of money, as though the European teams have been handing out truck loads of money to NBA players for decades, when in truth, none of these players have been offered $30 million yet for one year, let alone $40 or $50 million. Money isn’t unlimited over there, just as it isn’t here. There are always going to be limitations.
Henry Abbott of TrueHoop, almost always the ever-present voice of reason, comes to the rescue again by bringing us a gem of an interview with Alexander Chernykh, someone who actually covers Russian basketball and is intimately knowledgeable about the way basketball works in Europe. Henry asked Alexander about the likelihood of European teams being able to offer this kind of money to all these American superstars. Chernykh’s answer was intriguing. This quote is long, and I apologize for that (also, please go read the whole post by Henry at TrueHoop because it really is a great read), but it’s essential to the point,
“You’re right, only CSKA, Dynamo and Khimki are the teams with huge money in Europe, along with Olympiakos and Panathinaikos from Greece. So if we are talking about LeBron or Kobe or any other superstar, it all comes down to these five teams. (BC Triumph — formerly Dynamo Moscow Region surprised everybody by signing Krstic to a three million Euro per year deal, but it’s their only big buy so far and nobody knows what will happen next.)
I think it is possible that one of these teams will find the money for an NBA superstar, yet 50 million is still outlandish. We’re not talking about going, roughly, from $25 million team payroll to $32 million as was the case with Childress, but going from $25 million to $75 million.
It would make a little more sense if we were talking about what would be a $50 million a year NBA contract, which would equal about 17 million Euros per year. I’m sure that teams are preparing for talks and nobody is actually ready to just throw out $50 million now. Anyway, it’s hard to predict anything because this will be an unprecedented move that will change the way we think now about sports contracts.
CSKA used to be the team paying crazy salaries compared to other teams in Europe. But for the last several seasons they have been coached by Ettore Messina, and instead of chasing big names they try to get players that will fit the system. This season, when everyone is signing superstars the biggest names CSKA got are Zoran Planinic and Erazem Lorbek. They are not the team that puts all their eggs in one basket. Messina is only signed until next summer, though, so we’ll see what happens.
Also, CSKA has the most success in terms of public relations, is well-known everywhere in the world, and they may be ready to spend to make the next step in these terms.
If you’re Nike, you’d want your player to be in Moscow, which is one of the world capitals, playing for a well-known team.Khimki have been big spenders for several years, and this summer they went over the top. The reason for that is they are hoping to get a contract with Euroleague next summer, when it could become a closed league. It was announced that Euroleague will look at marketability of the teams, so Khimki signed not just quality players, but well-known players from NBA teams and successful national teams in Carlos Delfino and Jorge Garbajosa. They went for the biggest names they thought they could target. Each player received what would be a $9 million a year NBA contract.
The Euroleague contract talks will continue next summer, and if Khimki are desperate to sign the deal, they will have to spend crazy money. Actually, if I were the Euroleague, I would quietly put pressure on the team and say: you get LeBron and we’ll sign you to a Euroleague contract.
On the other hand, this is a smaller city in Moscow region.
Dynamo has a reputation of an underarchieving team here in Russia. They spend CSKA-like money on their roster, yet the results are very different. This year they finally got a great coach in David Blatt and also signed Bostjan Nachbar to what would be again a $9 million NBA contract. They are rumored to be targeting Ben Gordon, now that it’s known that players of this caliber are available for the right money. Once again, it’s impossible to tell how far the team can go in terms of spending, because what’s happening now is unprecedented. For years, Dynamo has been the richest team that is not in the Euroleague, and they are desperate to get in the league.
Still, it is not surprising that it was a Greek team which was the first to hand out a huge contract. Their owners have the most freedom to act, because they are just that, owners, one person for each team. Russian teams have to find sponsors for each deal, either from businesses or local governments, which takes time and pursuasion [sic]. If a Greek owner feels like spending, it will take him a second to give a go-ahead to team management. Eccentric billionaire fan-owners is not what Russia is about.”
This doesn’t make it sound like these stars getting crazy offers from Europe is quite as much of a done deal as they either might want to believe themselves, or at least as they might want the NBA to believe. Furthermore, many (most?) European teams have rules that limit the number of non-European players that can be on their roster (Russia, for example, limits the number of non-European players to 2).
The way I see it, sure, one or maybe two powerhouse teams could make an insane offer that would be big enough to attract LeBron James or Kobe Bryant. Even if they did accept, you certainly don’t get the impression that it would start a landslide of crazy money being thrown at NBA superstars. Instead, it sounds like Europe still has to pick their spots.
So getting back to LeBron, then, the question remains, should we as Cavs fans fear Europe? My honest answer is “probably a little, at least”. Look, if $50 million really is going to be offered, LeBron’s going to think about taking it. Of course he is.
Brandon Hoffman of BallerBlogger made what was, in my opinion, the most intriguing argument yet for LeBron leaving for Europe. He writes,
“Even more enticing to James has to be the revelation that Earl Boykins’ recently signed contract with Italy’s Virtus Bologna includes income from Bologna’s sponsorship and marketing arms. Due to the NBA’s collective bargaining agreement, this sort of arrangement is off-limits in the NBA. But it’s exactly what LeBron James Inc. is looking for.
James is right, he won’t become a billionaire by playing basketball. So he and his management team have begun to look for more than endorsement dollars, they’re now interested in equity stakes in the companies LeBron lends his name to.
What if the owners of CSKA Moscow or Olympiacos — the two teams reported to have contacted James — offered him equity stakes in the teams and/or outside business ventures they accumulated their billions in, in addition to his playing salary?
An equity stake in a billion dollar business would pay dividends long after James called it quits on the hardwood. And it would inch James closer to his stated goal of becoming the richest man in the world.
If the NBA’s collective bargaining agreement allowed it, you can bet that James would negotiate an ownership percentage in the Cavs, or the soon-to-be Brooklyn Nets, or the New York Knicks. Any discussions between James and Olympiacos or CSKA Moscow will begin with what the Euroleague can offer that the NBA cannot.”
The thought of European teams giving equity stake in the team to LeBron is a frightening proposition for us Cavaliers fans. It’s the kind of deal that is right up LeBron Inc’s alley. It’s also the kind of deal that more and more Euroleague teams could use to entice NBA Superstars to play over there.
How would the NBA ever combat this? Dan Shanoff had an interesting thought. He asked,
“I wonder if the NBA will be forced to adopt an MLS-style “Beckham Rule,” where one player (presumably the superstar) can be signed for any amount of money and would not count against the team’s cap. (Or, alternatively, allowing for players to become part-owners.)
Sure, that favors the free-spending NBA owners and it blows the economics of salary management right out of the water, but it beats watching the stars not play in the NBA at all, right?”
I have to admit, I find this kind of solution appealing….certainly more so than abolishing the salary cap altogether. I’ve tossed around some ideas for possible solutions in the past, and so have our commenters, but this is my favorite rule change proposal yet. Maybe I only like it because I know the Cavaliers have an owner who would pay anything and offer anything to keep LeBron in Cleveland, or maybe I just recognize that if Euroleague teams ever do jump on this idea of profit sharing for their free agent targets and thus become true players on the NBA free agent market, then something dramatic is going to have to be done to save the NBA.
The point is, if European teams are going to use their unique advantages to try to pick off the top talent in the NBA, then the Association needs to be proactive and sit down and think really hard about ways they can make some changes that can improve the financial situations for the players while also maintaining the Association’s competitive balance. I want nothing more than to see the NBA owners take this European threat seriously and take aggressive countermeasures to ensure that players like LeBron and Kobe and the rest of the Redeem Team are playing their entire careers in the NBA. In the end, it will only make the NBA that much of a better product for everyone involved.
19 Comments
I love how Carlos Boozer is a “business man.”
Great stuff, although I think a Beckham rule in the NBA would be a disaster. There would be 50 players in the league thinking that they’re worth the top-30 salaries in the league when in fact there are ligitimately five or six guys that I’d say are worth that money…
everyone keeps forgetting that these big names that are being talked about dont even have that option for another 2+ years. the $50million offer is all relative. maybe some owner could possibly offer someone 30million Euro (roughly $50 million) today, but in two years the economy will be totally different. the dollar should (hopefully) be alot stronger in two years vs. the Euro so it would take alot more Euro to equate to $50 million in two years. as the dollar strengthens against the Euro, the incentive go move to Europe goes down. in two years, it might take 40-45million Euro to equate to $50million US dollars. thats a HUGE difference in payroll. by then, it might not be worth that investment (assuming it would be in today’s international economy).
i agree with scott. a quarter of the league already thinks they are worth max-contracts, but arent. in reality, there are maybe 10 guys in the league worth a max contract.
“European teams have rules that limit the number of non-European teams that can be on their roster”
Rock, Did you mean non-European players or am I missing something here?
Yeah, I meant players. Thanks for the heads up.
that confused me too, but I took it as a typo. Great article Rock, your insight is always appreciated.
“Redeem Team” made me chuckle.
If someone offered me a 150% pay increase to move overseas and do the exact same job, I’d be hard-pressed to turn it down.
I will now plagiarize your opinion in verbal form and impress my knuckle-dragging colleagues.
Wouldn’t this move to Europe cost these players a ton of money in endorsements? I know I would want nothing to do with Lebron if he played in Eurpoe
True Mac, but Europeans have money too. Actually, it’s worth more than what we have.
I wouldn’t mind having McLarens thrown at me for endorsement deals.
Roger Federer makes a boat-load of money with mainly European endorsements, we just don’t realize it because we only see him in homoerotic razor commercials with Tiger and Thierry Henry. The same goes for all the European soccer players.
I’m sure Lebron could sell Sprite in Europe as effectively as here.
Don’t get me wrong, I don’t want to see it happen at all – just making a point.
So about that “Beckham-rule”…The MLS is approaching 15 years old. They are still working out their contract strategy, but I think its safe to say the Beckham-rule is still undecided in its success. And that league has ridiculous salary disparaties. One starting player could be making league minimum (19,000, I think) while another starter could be maxing at millions. The spirit of the idea is good, but I think its still too untested to know if its effective in the MLS or would be effective in the NBA.
I so think that the ownership strategy is a good idea. I don’t think any sort of athletism is worth the money being thrown out there. Basketball is a team sport, and having a face-melting-ly good player is great, you still need a team to win games, and to win championships. Evidence? Lakers vs. Celtics Finals, 2008. I’ll take a high quality team over a superstar any day. I hate to say it, but if a championship is in the cards for cleveland, and it requires the departure of LeBron to clear salary space…..so be it.
…is that the sound of an ax sharpening that I here?….
…But seriously, Cleveland can’t pay 50 million for LeBron, nor should any American team pay that. Think of who ends up footing that bill? Fans via ticket prices. I don’t want to pay 500 dollars to sit in nose bleeds to watch LeBron STILL struggle carrying a team. No thanks.
Interesting CJG, but remember that most fans don’t go to the games anyway. They would like to watch at home while companies and filthy rich people pay $500 to go to a game…
CJG: “But seriously, Cleveland can’t pay 50 million for LeBron, nor should any American team pay that.”
I’m not so sure about that. The Bulls paid Jordan $33.140 million in 1998, so I think there are plenty of teams, Cleveland included, that could afford to pay a player $50 million in 2008. The point is, they’re not allowed to under the CBA. If a superstar ever goes to Europe, one of two things are going to happen….either the salary cap will be abolished completely, or else a different, more creative fix is going to be needed. I think the Beckham rule is a fascinating one, and will it’s too vague to say the Beckham rule is responsible for it, the MLS is actually growing. They’re expanding teams and ratings are up as is attendence. The Beckham rule hasn’t hurt the MLS, and I honestly don’t think it would hurt the NBA either. It would just take a few years before teams and players figured out the best way to use it.
Rick- Fair point.
Rockking- You’re right….I meant to say: “Cleveland shouldn’t pay…nor should any american team… yadda yadda”. It just seems wrong to pay that much. Maybe its my mid-western stinginess coming out.
As for the MLS, I completely agree with you on this one. All I am saying is that this particularal idea is cutting edge in a relatively risky business of American Soccer. It is pretty interesting to think that the MLS’s expereinces would be prophetic for the NBA.
@Rock: What amount would you consider to be too much to match to keep LBJ in Cleveland?
I can’t say definitively, because I don’t know the Cavs books and precisely how much money they are making off of LeBron. Nor do I know how much money Dan Gilbert is making with Quicken Loans or how much/if any of the money he makes from his business would be shuffled to the basketball franchise. I do believe, though, $50 million is an amount Gilbert would pay if he had to, and I have to believe with all the merchandise sales, ticket sales, playoffs appearances, TV appearces, etc that the Cavs have the money to throw around. Gilbert is paying huge luxury tax amounts right now without blinking his eye.
But to try to answer your question, $100 million is absurd, and I have to believe that would be more than the team could afford. I’d say that $50 million number is pushing the ceiling. The real question is how much could the Knicks give him?
I just did a little research and found that last year the Cavs were the 7th most valuable franchise, worth $455 million, with $152 million in revenue. Now, I don’t know all the rules (for example, can a team use their own equity as cash to sign players?), but the Knicks revenue was $196 million, so they would have an extra $40 million in revenue alone to outbid the Cavs. In terms of operating income, though, the Cavs were 4th with $31.9 million. The Knicks’ operating income was -$42.4 million. Now, obviously, those numbers change dramatically if LeBron goes to New York, but I guess the point I’m trying to illustrate is that the Cavs do have a ton of money to throw at LeBron in an uncapped system. I don’t know what the breaking point is for them, but I think it’s higher than we might think.
@Rock: Excellent research. Obviously, a capless system would simply destroy small and mid-market teams, but it’s good to know that we’re up there with the big boys…
Rock,
Thanks for the link. I made this comment on Shanoff’s blog too so I’m just going to copy and paste it here:
A European team offering a player of James’ caliber an equity stake in their team or outside business interests doesn’t carry as many variables as an NBA team doing the same thing.
For one, I don’t think James or anyone else that could potentially sign a large contract in Europe would elect to stay in Europe. Mainly because the league is relatively weak and the NBA is still the pinnacle of basketball. A two or three-year contract in exchange for an ownership stake in that team or that owners business interests is basically the same as renting that player for a few seasons.
It’s still a good investment for the player and the European owner if that player chooses to return to the States.
But NBA teams would have to start signing players to career binding contracts if they offered ownership percentages. Imagine LeBron owning 5% of the Cavs and then deciding he wanted to play for the Knicks. There would be conflicting interests and it would open a huge can of worms.
I do think the NBA will be forced to reevaluate the salary cap and luxury tax. Both of those provisions were implemented to ensure competitive balance. One could argue that they’ve accomplished little in those efforts. The big market teams are still able to spend more than small market teams, and the biggest names in the NBA still want to play in the largest media markets.
DWade is wrong in claiming 25-30M tax free. Taxes are much higher in Europe than they are here. I know as a US citizen only your first $80k made overseas are exempt from uncle sam unless you give up your US citizenship, which they wouldn’t do.
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