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  1. #1
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    Economist: LeBron is "getting hosed," should be making closer to $40M per year

    LeBron James is arguably the best player in the NBA. His salary is $17.5 million a year. He's worth much, much more.

    "He's getting hosed," says Kevin Grier, an economist from the University of Oklahoma.

    LeBron used to play for the Cleveland Cavaliers. When he left, the value of the team fell by tens of millions of dollars — and the value of his new team, the Miami Heat, rose by tens of millions. The economists I talked to said LeBron should be making closer to $40 million a year.

    James is profoundly underpaid because there is nothing resembling a free market for NBA players. And, weirdly, this is good for LeBron. (It's also good for weaker players, and for team owners.)

    There's a "salary cap" in the NBA, which limits the total amount each team can pay in salaries. This reduces the amount top players make, and boosts the salaries of mediocre players.

    On top of that, the NBA draft means that rookies have to play for whatever team drafts them (or not play in the NBA at all). And there's a limit on what rookies can be paid.

    Imagine if other fields were set up this way. You're the best young software engineer at MIT, and instead of getting hired for an insane starting salary by Google, you just put your name in a pool with other engineers. The worst companies in America draw random numbers and you get a letter saying you've been hired to work in the IT department at Best Buy.

    Now all these rules are all laid out in the collective bargaining agreement between the owners and the players. Why would the players want this system? Because most players are not LeBron James.

    "The union votes on the contract by majority rule," Grier says. "The guy in the middle is the crucial voter."

    The salary cap means that some of the money that would otherwise go to LeBron goes to the guy in the middle.

    Another reason LeBron's teammates vote to hose him: They want the league to be competitive.

    The salary cap makes it impossible for rich teams to hire all the superstars. That means even teams in smaller markets have a shot at greatness, which draws more fans to support those teams. More fans means more revenue for the league as a whole — and that means bigger paychecks for the players.

    And this, Grier says, is why Lebron James has a reason to support the system. Playing in a more competitive league helps him make more money in other ways.

    "If he was a three-time Olympic decathlon champion, he would in no way be making nearly the amount of endorsement money that he's making," Grier says.

    To earn those tens of millions of endorsement dollars, Lebron needs passionate fans of professional basketball. For that to happen, Lebron needs good teams to play against, even if it's costing him over $20 million a year.
    http://www.npr.org/blogs/money/2013/...s-is-underpaid

    The endorsement angle is interesting. According to Forbes, for instance, baseball's "ten top-earning players will make nearly $250 million total during 2012 from salaries and endorsements. On-field pay makes up 90% of the pie." [Source].

    But is the difference in sources of compensation between baseball players and basketball players really that closely linked to their respective sports's divergent approaches to salary cap/revenue sharing? In other words, is basketball's parity (or apparent parity) and baseball's lack thereof really what's driving this? Would the lack of a cap hurt players more than it would hurt owners?
    Last edited by gotoHcarolina52; 01-25-2013 at 04:15 AM.

  2. #2
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    i agree. nba should have no salary cap and have free market. so players can play with the players they want and to play for the franchise they want without having to worry about salary restrictions. FREEDOM
    My TOP 10 favorite NBA players of All Time

    1. Kobe Bryant
    2. Allen Iverson
    3. Reggie Miller
    4. Andrew Bynum
    5. Wilt Chamberlain
    6. Steve Nash
    7. Lamar Odom
    8. Ben Gordon
    9. Ray Allen
    10. Carmelo Anthony

  3. #3
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    Quote Originally Posted by LakersIn5 View Post
    i agree. nba should have no salary cap and have free market. so players can play with the players they want and to play for the franchise they want without having to worry about salary restrictions. FREEDOM
    Ironically, the salary cap system has in many ways facilitated the formation of super teams. Remove the cap and install a pure free market or quasi-free market (e.g., remove the cap on individual player salaries but leave the punitive team luxury tax thresholds in place) and I doubt Micky Arison (or any other owner) would be able/willing to afford a team of LeBron, Wade, Bosh, etc. (absent, of course, substantial financial sacrifices by the players).
    Last edited by gotoHcarolina52; 01-25-2013 at 04:20 AM.

  4. #4
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    As a Raptors fan I'd obviously be for a free market system with no cap. I'm tired of these small market teams getting lucky all the time especially when I pay a fortune for tickets and they pay the 'soft' prices.

  5. #5
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    Salary cap needs to say. Every league should run like the NFL.

  6. #6
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    Lebron is clearly underpaid. That is a paradox not easily explainable.

    Anyway you slice it, Lebron is giving 2x to 3x the value to the league than he gets back. It's true he does need the league, but in a less safe league where foolish owners could go busto and where some teams were more dominant, Lebron would likely be even MORE valuable, not less.

  7. #7
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    Obviously he is underpaid, just for the fact of how much money he brings in with fans loving him and companies trying to market him.

    A lot of CEOs are "underpaid" its the way of business. Because if someone really loved their job and cares about what they do and try everything in their power to improve that business and then succeed that person will always be underpaid.

  8. #8
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    Quote Originally Posted by ztilzer31 View Post
    Salary cap needs to say. Every league should run like the NFL.
    no. stars wont be able to team up with many stars
    My TOP 10 favorite NBA players of All Time

    1. Kobe Bryant
    2. Allen Iverson
    3. Reggie Miller
    4. Andrew Bynum
    5. Wilt Chamberlain
    6. Steve Nash
    7. Lamar Odom
    8. Ben Gordon
    9. Ray Allen
    10. Carmelo Anthony

  9. #9
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    he knows hes underpaid, i thought everyone knew he took less money so him bosh and wade could play together??? besides he makes millions in endorsements.



    "...THE JUSTICE LEAGUE..."

  10. #10
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    Quote Originally Posted by gotoHcarolina52 View Post
    Ironically, the salary cap system has in many ways facilitated the formation of super teams. Remove the cap and install a pure free market or quasi-free market (e.g., remove the cap on individual player salaries but leave the punitive team luxury tax thresholds in place) and I doubt Micky Arison (or any other owner) would be able/willing to afford a team of LeBron, Wade, Bosh, etc. (absent, of course, substantial financial sacrifices by the players).
    ya right

  11. #11
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    yeah ok lets have more inflation on player salaries
    @paulpierce34 I told Wade I will **** his mom like how my man D. West did his mans. Thats why I got ejected
    Ignore List:
    AIMelo=KillaDUO; Reason: Makes up stories to protect the one he beats his meat to everynight(Melo)
    Chucky Woods; Reason: Packer Homer that just talks outta his Azz
    HaruSoul; Reason: Sanchez homer can't see that he is a POS qb
    Hustlenomics; Reason: Good luck debating with this Ronda homer
    nickdymez; Reason: Kobe/Laker homer but didn't even know how the Lakers got Kobe

  12. #12
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    Quote Originally Posted by chrism8188 View Post
    he knows hes underpaid, i thought everyone knew he took less money so him bosh and wade could play together??? besides he makes millions in endorsements.
    Did you read the article or any of what the economist said? We're talking about way more than a relatively small pay cut to make room for other signings. Regardless of the pay cut he accepted, he is worth considerably more to his team/owner and league than he's getting paid. Kevin Grier (The economist) featured on NPR, argues his market value is closer to 40 million rather than the 17.5 million he curently makes.

  13. #13
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    Including endorsements, LeBron makes $57.6 million a year. So I think he'll be OK.

  14. #14
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    Quote Originally Posted by chicagocubsfan View Post
    Including endorsements, LeBron makes $57.6 million a year. So I think he'll be OK.
    Poor guy, I wonder how he's going to feed his family with that?

  15. #15
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    Quote Originally Posted by ztilzer31 View Post
    Salary cap needs to say. Every league should run like the NFL.
    yep, no cap means you've got the lakers/knicks finals every year.

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