LeBron James: The Billion Dollar Breakdown

July 2, 2010  |  

by De’Juan Galloway

The self-proclaimed “King of New York” and subtle advocate for Lebron James’ relocation to the area, Jay-Z, may have to reconsider that claim. As the bidding war for James continues, The Knicks’ pitch that James could build a worth of a billion dollars takes center stage – planned with earning potential and international brand recognition that could easily having him wearing the crown. So, how is this magnitude of worth built? New York brand consulting agency, Interbrand conducted personal brand valuation into how this $1 billion would be realized.

An amalgamation of James’ brand-business partnerships, per unit sales incentives, local marketing partnerships and base salary comprise the main revenue streams. While the methodology of the valuation is vague, there were 50,000 computer model scenarios and over 200 independent and dependent variables illustrating Lebron James’ roadmap to being the second billionaire athlete, behind Tiger Woods. Additional financial assessments included the estimated earning potential in Cleveland at $700 million, Chicago at $690 million and Miami at $600 million.

Some say Lebron should go to the Big Apple because it has the largest market value of any other city but does market value play heavily into brand enhancement and earning potential, as we have seen traditionally with players going to big cities? No, it doesn’t. There are two key components that diminish the importance of market value: an athlete’s extraordinary ability to perform [as James possesses] and technology. The extraordinare, Michael Jordan played in Chicago, the third largest market, and has a brand and legacy that is world-renowned and is still highly profitable. The different forms of new media and the quickly evolving landscape of technology can make the Knick’s billion dollar selling-point seem less competitive in the bid.

The advanced technology at our forefront offers immediacy and has drastically expanded locality, exemplifying that a tech savvy and thorough marketing team behind James will give him an iconic, highly lucrative and global presence. Additionally, expanded locality somewhat levels the value of the market plain for all cities that James can ultimately choose .  To this, anything from a branding and marketing standpoint that can be accomplished in New York, can have equal success in Cleveland. Perhaps the Knicks’ selling points could have been that he can re-illuminate the long-standing legacy of Madison Square Garden or be just a ride away from good friend Jay-Z.

Interbrand concludes their brand valuation with “winning championships is the most important driver of brand value.” Which drives home the question to Lebron: “Do you want to win or make money?”A question that will be answered upon LeBron’s chosen actions on this extremely attractive offer.

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