LeBron James Took A Risky Contract Gamble That's About To Payoff Big Time

By on February 12, 2015 in ArticlesCelebrity News

I'm going to make a bold prediction: LeBron James will be a billionaire by the time he is 40 years old. That's 10 years from now. He might actually do it way before his 40th birthday. Why am I so confident? Because he's that perfect combination of smart and risky when it comes to his money. He knows exactly how much he is worth (as an NBA player, a corporate sponsor and an individual brand) and he won't settle for any discounts. Case and point:

Right before the NBA season began, we wrote about how LeBron James signed a highly unusual contract as part of his return to the Cleveland Cavaliers. Instead of going the conservative route and signing a long-term (presumably humongous) contract that would have been a safe and guaranteed bet, LeBron took a big gamble on himself. He ended up signing a two-year, $42.2 million deal that actually gives him the ability to opt out after just one season. This was risky, because if he got seriously injured at any point, giving up a guaranteed long term monster deal would have looked like a huge mistake. On the flip side, by waiting until the NBA signs new multi-billion dollar deals with TNT and ESPN–assuming he does not get hurt–Lebron will be able to sign a much larger long-term deal under the new expanded salary cap. And by all reports, it looks like the superstar is going to do just that.

LeBron's current contract is a max deal: He's making $22.1 million per year. Under league rules, a max player can earn 35% of the league's total salary cap. That salary cap is going to increase a bit during the 2015-16 season, so by opting out this summer, LeBron is set to make about $1.5 million more next year.

Lebron James
Lebron James / Andy Lyons/Getty Images

His teammate Kevin Love can make a similar move, and actually stands to earn an even bigger increase in cash. Currently, Love has a player option for $16.7 million with the Cavs. If he declines it and signs a new deal, he could earn about $19.9 million–a $3.2 million increase!

Of course, Love hasn't announced or even hinted that he'd opt out of his current deal, but if he did, he, like LeBron, would be banking on staying healthy or the rest of this year. NBA contracts are guaranteed, though few teams are going to want to pay money to a broken down player. The Knicks may be an exception to this rule though.

Love has had a myriad of injuries throughout his career, but LeBron has been a model of good health. It's not unreasonable to assume he'd stay healthy for the rest of the season. He can pick up an extra million and a half next year, and if he makes it through that season as healthy as he is today, he's due to cash in on a huge payday.

Currently, the league salary cap is $63.1 million. But when the new TV deal kicks in at the start of the 2016-17 season, the cap is projected to rise–a lot. It should end up at around $88 million, but since the details of the TV deal haven't yet been finalized, the number could fluctuate. Regardless, it's likely to be in the $85 million to $90 million range.

Even at the low end, 35% of that new salary cap would be $29.5 million per year. That's $7.5 million more per year than the $22 million he would have earned via the conservative contract route.

On the other hand, if LeBron were to suffer an injury before this plays out, the Cavs would have to have at least a little pause about offering him a max deal. But even then, do you really think this franchise would spurn LeBron when he's meant so much to them?

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