LeBron James Has No New York Nike Bonus
CNBC Sports Business Reporter
For the millionth time, LeBron James has no bonus in his current contract with Nike—still his original contract—that pays him more if he plays in New York or any other big city for that matter.
I find myself writing this because with speculation that James will be headed to New York in 2010, as the Knicks have cleared out cap space for that season with the rumored express purpose of landing LeBron, people have started to talk again about this mythical bonus. As James played at the Garden and questions about 2010 and New York reached its greatest height, we started hearing about this bonus again.
ESPN The Magazine's Chris Broussard, in an article for ESPN.com, wrote that James "does not get more money from Nike if he plays in New York," but then went on to say that "that clause expired after his rookie season."
That's a new one.
Then I'm driving home from work yesterday listening to 1050 ESPN Radio and Michael Kay, who I think is really a great host. He had on Stephen A. Smith, who had just interviewed James. Kay somehow not only had the rumored bonus in his head, he also had a new number associated with it that we have never heard before—$100 million. That if LeBron James came to New York, he'd get a $100 million bonus from Nike . Although Kay rightly pointed out that he wasn't sure Nike would benefit that much from LeBron being in the New York market since he's already in the global marketplace, he asked Smith what he knew about the bonus. And Smith said he heard it was true and that it not only included New York, but any of the big markets.
Here are the facts.
The $100 million number is LeBron's total contract that includes a $10 million signing bonus. There are other bonuses, royalties and incentives, but there is no New York, Chicago or L.A. market incentive.
James signed his contract with Nike hours before the 2003 NBA Lottery. I reported it was done some time after midnight on the same day of the lottery. The deal was done at that time for a reason.
LeBron's agent Aaron Goodwin rightfully wanted to get it done before it was clear who had the No. 1 pick to benefit off the chance it could have been a large market. LeBron could have easily ended up in New York, Chicago or Los Angeles. The Clippers have the fifth best chance (8.9 percent) to get the No. 1 pick at the time, Chicago (4.4 percent) had the seventh best chance and New York (1.5 percent) had the ninth. Sure, the odds didn't make it likely, but we all know it has happened before.
So the fact that Nike executives at the time didn't have the luxury of knowing that he'd definitely be in Cleveland and therefore couldn't discount it in their offer, if they thought it was an issue, actually benefited LeBron. He, in a way, made money off the possibility of going there.
When Nike figured out their number that assumed that LeBron was going to the best. They figured out how many shoes, how much apparel he was going to sell and what it would cost them if they lost out to Reebok, which was a real possibility as Reebok offered more money in total, but less guaranteed money. But like the New York Yankees, who don't give their players All-Star bonuses because they expect them to be All-Stars. Nike wasn't going to pay more for LeBron if, hours later, the luck of the ping pong balls fell to New York or any other major market.
A couple more final points to make here. All this talk is a moot point. Even if LeBron did have the New York clause in his contract it would be done by the time his contract expired. James' original deal is a seven year deal, meaning it ends at the end of the 2009-10 season, before he would have a chance to go to New York.
As for James' next contract, given the fact that the basketball shoe market isn't what it once was, that Kobe Bryant is a bigger force than James in the market and that Michael Jordan continues to dominate the premium basketball shoe market space, James would be hard-pressed to get more than the averaged out $14 million a year he's making from Nike now. And yes, that's even if he's playing in New York.
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