LeBron James' Contract with Cavs Sets Precedent for Other NBA Stars

Grant HughesNational NBA Featured ColumnistJuly 16, 2014

BOSTON - MAY 13:  LeBron James #23 of the Cleveland Cavaliers looks across the court in Game Six of the Eastern Conference Semifinals against the Boston Celtics during the 2010 NBA Playoffs on May 13, 2010 at TD Banknorth Garden in Boston, Massachusetts.  The Celtics won 94-85.  NOTE TO USER: User expressly acknowledges and agrees that, by downloading and/or using this Photograph, user is consenting to the terms and conditions of the Getty Images License Agreement. Mandatory Copyright Notice: Copyright 2010 NBAE (Photo by Jesse D. Garrabrant/NBAE via Getty Images)
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When LeBron James went home, he did it for the right reasons—reasons that, according to him, went "above basketball," per the heartfelt missive he released through Sports Illustrated's Lee Jenkins.

"I have a responsibility to lead, in more ways than one," James said. "And I take that very seriously."

We've all clapped our hands raw in response to James' decision and, more to the point, the motivation behind it.

But James' pledge to lead wasn't just about giving Cleveland something it needed. It wasn't limited to building a team, a city and a region of the country that could use a little rehabilitative construction. It wasn't even only about providing hope, though that was a big part of it.

It was also about setting a financial example that will benefit generations of NBA players to come.


The Contract

BOSTON - MAY 7: LeBron James #23 of the Cleveland Cavaliers gets ready before the game against the Boston Celtics in Game Three of the Eastern Conference Semifinals during the 2010 NBA Playoffs at TD Garden on May 7, 2010 in Boston, Massachusetts. NOTE TO
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James didn't sign a full max deal with the Cleveland Cavaliers, instead opting for a one-year pact with an option that will pay him, at most, $42 million over two seasons. Sure, he's collecting the most annual cash he can. But he's not locked in for the long haul.

Generally, players prefer as many years as possible on their contracts. The possibility of injury, decline and any number of other risks makes assuring long-term financial security the smart move in most cases.

But James took a short deal because it enables him to make the most money possible under the collective bargaining agreement's current structure, while also setting himself up to cash in on an even higher level when that structure changes.

James wields immense power, and he's most potent as a negotiator, trend-setter and culture-changer when he's not locked in to an agreement that limits his leverage.

Players throughout the league should be thanking him, and here's why:


TV Money

MIAMI, FL - JUNE 3: LeBron James #6 of the Miami Heat, from left, laughs while being interviewed by TNT analysts Shaquille O'Neal, Ernie Johnson Jr., Kenny Smith and Charles Barkley following the Heat's series victory against the Indiana Pacers in Game Se
Issac Baldizon/Getty Images

When the NBA renegotiates its television contract after the 2015-16 season, the sport's entire financial landscape could change. Remember, if basketball-related income goes up (which it absolutely will when the next TV deal gets done), so does the salary cap.

Per ESPN.com's Tom Haberstroh (subscription required):

A rising tide floats all boats. Under the current CBA, James can only receive a max contract pegged to a percentage of the NBA's salary cap. Thus, if the salary cap goes up, so does James' earning potential. The league determines the salary cap by looking at the league's BRI (basketball-related income), which derives a big chunk of its cash from television rights contracts. Bigger TV deal, bigger salary cap, bigger payday for James and the rest of the league's elite looking for max contracts.

For guys like James, and others designated as "max players," a rising salary cap means their deals, no matter how long or short, would also spike. So it's not like he signed a short-term contract because he wanted to avoid being locked in to a hard number when BRI rises.

He's getting his hefty percentage of the cap either way.

For James, taking the max now, albeit on a short-term deal, is about getting the biggest return the current system allows—even if that return comes nowhere close to fairly compensating him.

Last year, James reluctantly opened up to Brian Windhorst of ESPN.com about his financial frustrations:

That right there is a story untold. At the end of the day, I don't think my value of what I do on the floor can be compensated anyway because of the CBA, if you want this truth. If this was baseball, I'd be up there.

James may not be underpaid for long.


Lockout on the Horizon

John Minchillo/Associated Press

With another work stoppage looming after the 2016-17 season, the flexibility that comes with James' short-term deal is even more valuable.

That's because one of the biggest discussion topics is expected to be the abolition of maximum salaries, per Windhorst:

You can be assured that James will be heavily involved in those talks. He envisions getting a Michael Jordan-esque payday at the end of his career. Like when Jordan made $63 million over his final two years with the Chicago Bulls, James could put himself in position to get some huge back-end paydays to make up for how he feels he has been underpaid along the way.

If the players are successful in removing the cap on individual compensation, the floodgates would surely open for guys like James. Suddenly, he could request (and probably get) astronomical annual salaries—ones that accurately reflect what he's worth on the court and to the community.

And with his impact on the city of Cleveland hitting estimates as high as $500 million, it's hard to know what he'd actually be worth. Bet on this, though: It'll be substantially more than the $20.6 million he'll collect this season.

After being under-compensated for his entire career (James has never been the highest-paid player in the league), he's setting himself up to maximize his earning power for as long as he continues to play.

So don't worry, Cleveland; James' short deal doesn't mean he's trying to keep his options open or that he's contemplating another quick exit. All he's doing is making sure he gets what he's owed.


Being More

David J. Phillip/Associated Press

James elevated himself in his return to Cleveland. As seems to have been his goal, he's something more than a basketball player now. And really, that's probably what the NBA's most transcendent talent has to be.

He has to be a symbol of sorts. He has to be the guy who invigorates the Rust Belt. He has to be the guy to bring a dying organization to life.

And he has to carry the torch for players who lack his stature.

Change is coming to the NBA, and it's coming soon. The players took a huge hit in the last lockout, bumbling their way to a result that saw their stake of BRI dip from 57 percent to 50 percent. Now, they're serious about rectifying that mistake at the earliest opportunity.

The memo players received from the union, obtained by USA Today, which encouraged them to spread their paychecks out over 18 months instead of 12 in anticipation of a work stoppage, is a good indication of that.

The current NBA climate forces stars to sacrifice in order to win, while owners reap the benefits of skyrocketing franchise valuations that are now hitting the billions. Because of that inequity, players seeking maximum money are viewed as greedy, especially because doing so prevents their team from spending enough to field a contending roster.

These days, we catch ourselves calling max-salary players selfish. And we look at guys like Dirk Nowitzki and Tim Duncan, stars who've taken pay-cuts to give their front office more flexibility, as saints. In what other world do we begrudge employees for trying to maximize their earning power to this degree?

Uncredited/Associated Press

James is through sacrificing—at least in a financial sense. And he's taking this stand on behalf of the rest of the players in his league. Here again, he's acting in a way that benefits everyone around him. He's being something more than a basketball player.

And if that strikes you as at all selfish, it's only because you're not seeing the whole picture.