Fortune magazine has a fabulous profile of basketball star LeBron James on their website.
The article provides an in depth look at James' various investment and endorsement strategies. They pay particular attention to the fact that a childhood friend has taken over as his agent.
When he announced that he'd be leaving Aaron Goodwin, the agent who negotiated the $90 million Nike contract, many people questioned the intelligence of handing over his representation duties to a childhood friend.
Fortune attempts to prove that it was the right decision. And they convinced me-for a second. Then I realized they're writing about future earnings, they're approving what is likely to happen, not what has happened.
The subtitle of the piece is "The building of a billion dollar athlete."
Here's what James is worth:
Overall, he has about $170 million in sponsorship deals. In this figure is the $90 million from Nike, $15 million from Coke, $6 million from Upper Deck, $4.5 million from Bubblicious, and $7.5 million from Cub Cadet. His deal with MSN included $3 million upfront, and the partners will soon begin a phase in which Microsoft and LRMR will share advertising revenues sold on MSN's LeBron site - 60% for LRMR and 40% for MSN.
Add in $13 million a year from his basketball salary. I'd say that falls well short of a billion dollars.
But the key word is "building." So what are they building? I'm not certain they've built much beyond a house of cards.
Of that $170 million, Goodwin negotiated $104 million from Nike and Coke, plus LeBron's first NBA contract. The article says the LeBron is looking for an equity stake in the companies he endorses, but they point out few ventures where this is the case. I wouldn't plan on making much from that 60% of MSN ad revenue.
They compare LeBron to Michael Jordan, Tiger Woods and Magic Johnson.
Magic is the most intriguing because they report his investment strategies have earned him $800 million. I'm don't see LeBron's strategies as working in a similar manner.
The Tiger Woods comparison is also interesting, but for different reasons.
In the research his company has done on public attitudes towards James, they've found that people don't:
have as positive an image of LeBron as they do of sports celebrities who have married on-field performance with off-field personality, such as Tiger, Peyton, or Michael. We need to do a better job of appealing to the consumer side of these fans, to start telling the nonbasketball story.
This along with other anecdotes in the story reveal how cultivated James persona truly is. Early in the piece he says, "What I do on the court will drive revenue." This is a rather obvious statement. Every player plays with this mentality. They play hard to earn big basketball dollars. However, LeBron plays hard to earn big endorsement dollars. Nothing wrong with that.
What he does off court will also drive revenue which is why "they are approaching LeBron's personality with the same attention to detail that the Manhattan Project reserved for atomic physics."
They are going to be releasing documentaries about him, really trying to get the LeBron Brand out to the public. Again, nothing wrong with that.
But, it all seems extremely forced and slightly creepy. LeBron is so young and yet so focused on creating, rather than developing a public persona.
I suppose it's better to do this than wind up like Kobe Bryant.
It is a rather childish stance to say let the kid be a kid. I'm all for letting the kid be a billionaire.
My only problem is that in two different places in the piece they write about James authenticity at the start and towards the end:
When someone proposes pitching a "cross-cultural" story to the media involving LeBron and a Chinese athlete, James is skeptical because it violates his business mantra: "It has to be authentic," he says. "I don't want to do it if it doesn't feel authentic."
Does it feel authentic to "let the world know [Lebron]" through endorsement deals and marketing?
Perhaps he'll be able to answer that question when he's a billionaire.