LeBron: How Much is He Worth?

Apparently, Lebron James feels underpaid.

On February 1st, he said the following:

"I have not had a full max deal yet in my career — that's a story untold. I don't get (credit) for it. That doesn't matter to me; playing the game is what matters to me. Financially, I'll sacrifice for the team. It shows for some of the top guys, it isn't all about money. That's the genuine side of this, it's about winning. I understand that."

LeBron followed this statement by having arguably one of the greatest months in NBA history. LeBron scored 29.7 points per game on 64.1% shooting with 7.5 rebounds, 7.8 assists, 1.8 steals and 0.6 blocks per game as the Miami Heat went 13-0. LeBron’s month of February put him on pace to have his greatest season of his exceptional career. LeBron is on pace to join the exclusive club of Oscar Roberston, Larry Bird, and Michael Jordan by averaging 28 points, 8 rebounds, 7 assists per game for a whole season while shooting over 50% from the floor. LeBron, if he can continue his current pace, would be the first of the four to hit all of those marks while shooting over 55%.  LeBron is the ninth highest paid player in the NBA this year making $17.5 million, less than the maximum contract. Even if LeBron had signed for the maximum, he would be extremely underpaid. So what is LeBron really worth?

Even if LeBron were paid the highest amount allowed by the NBA, he would earn approximately an extra 1.8 million per year.  LeBron then would still only be the sixth highest paid player in the NBA, and LeBron is definitely better than the NBA’s sixth best player. LeBron is the best player in the NBA, and if he could be paid any amount, what would it be? To understand what LeBron is truly worth, you have to assume that basketball did not have a salary cap and were like baseball in that players could be paid as much as possible.

The first place to start is LeBron’s own comments on the situation. During the lockout of the  summer of 2011, LeBron stated it would take $50 million for a European team to sign him until the NBA resumed play. That estimate appears to be much closer to his actual worth than his current salary.

The best way to determine Lebron's worth is to determine what he is worth to the team in revenue, not just wins. The Miami Heat have sold out every home game since they signed LeBron. They went from fifteenth in the league attendance in the years before LeBron to being top five the past three years. The Cavaliers finished no worse than fifth in attendance the last five years LeBron played in Cleveland and have been nineteenth in the league the last two years of attendance.  LeBron fills the seats, yet he does not get paid for it. The Cavaliers have played three nationally televised games total the last two years while James' Miami Heat have played 52.

The amount of value LeBron James brings to the team goes beyond what he brings on the court.

The extra revenue he brings in terms of ticket sales, as well as the extra revenue that comes from the increased exposure for the Miami Heat brand is of a different magnitude than his salary. The Heat have a waiting list for corporate sponsors currently because of LeBron James. That doesn’t even account for the fact that LeBron’s Miami Heat jersey is currently the NBA's best selling and that the amount of extra Heat merchandise that is sold because of his presence on the team. Although it is impossible to articulate excactly what LeBron James means to his team, it is obviously more than what he just brings on the court.

Since LeBron’s comments about being underpaid, there have been numerous guesses on what he would be worth in an open market. Economists from the University of Oklahoma put the value of LeBron at $40-50 million per year. Bleacher Report’s Jared Wade in a February article put the guess at about $65 million per year. Further, ESPN's Bill Simmons postured that LeBron is worth $75 million per year. Regardless of what LeBron James would be worth in the open market, there is one thing everyone can agree upon:  LeBron James is definitely underpaid.