The NBA salary cap is amazing. I like the way it makes rookies come in and prove themselves before they can make big money (TAKE A PAGE NFL!). Even more, I love the way it supports stars staying with teams that they are playing for (The Larry Bird Rule). This rule definitely helped Pat Riley sweeten the deal by getting sign and trade deals done for Bosh/James. For specifics on their salary sacrifices go here. These guys sacrificed not just the salary they were capable of making (approx. $15 million ea.), but now they all are going to have to compete for the major local endorsement deals. Do you know what kind of money any of these guys would have made from local endorsements in NYC!?! Lebron made $28 mil. in total endorsements in 2009 (almost double his salary). I guess we will find out with Amare just how much they missed out on. It is not often that players are critisized for sacrificing all this money. Often, almost ALWAYS, I get upset because I know a player has made a decision for more money. There is a long list, every year, of examples like Darrell Revis or Antonio McDyess circa '98 going from a young up and coming Suns team to sign with Denver for more money and play for a terrible team. This is the norm, this is the business that we all want to deny. The NBA doesn't have a business side, it is a business. It's all about the money, it always has been, and it always will be.
If we want to believe that there are still players and owners who only care about winning and will do so at their own financial cost; Miami is our Jesus. They are trying to guide the NBA to a future where the business side can be downplayed...slightly. I'm not saying we are going to have players sign for half their value in order to play with 5 all-stars on the court together, but this is as close as I have ever seen to some idea like that.
This offseason all we wanted to talk about was the ability for these guys to make a ton of money. The question was more about how much money would they make in a certain city than what type of players they had on that team and their ability to compete. I thought Lebron would sign in Cleveland or NYC and it's because in my experience players go where the money is.
He didn't, he signed for less in order to win! They sacrificed money...to win. God that is a beautiful thing. "These guys sacrificed money and potentially statistics; in order to be a part of something special." (Eric Spoelstra, Heat Head Coach) I think we are on the verge of seeing one of the most beautiful on-court examples of basketball we will ever see in our lives.
RIGHT after I hit submit the Amare commercial I posted to my youtube page, neilruby11, came on...I wonder how much he got paid for that?
ReplyDeleteI really like the possibility of what you're saying, but what about the tax cuts they get for being in Florida? Florida and Texas are the only two major sports markets with no personal income taxes. Florida's max tax rate is 33% (only federal taxes), compared to the 45% plus in New York or California. So let's say Lebron makes 30 mil in Florida, he's gonna keep 20. To keep 20 mil in New York or Cali, he would have to make almost 45 million. Forbes.com says Kobe made 45 mil last year, and I guarantee he wishes he didn't have to pay state income taxes like the Heat, Magic, Mavericks, and Rockets players.
ReplyDeleteReal question though, did either Lebron or Wade lose any endorsements after "The Decision"? I know Jim Gray lost his mind on Corey Pavin, but I don't think that counts.
I think the reduction in taxes (including a low property tax that ranks 28th in the nation, http://www.reference.com/motif/Business/florida-property-tax-rate) made the losses in contract money and endorsements less of an issue. I did some research into how big of a difference it would be to live in Florida rather than NYC (my main example) when it comes to taxation and it is substantial. There is no state income tax in FLA, in NYC for people making more than $500,000 it's just below 9%. (http://www.bankrate.com/finance/taxes/check-taxes-in-your-state.aspx) There is a 2% difference in the sales tax rate in NY (4%) compared to FLA (6%). Even then though the tax rates in FLA are undoubtedly lower and will save the players money. This all made this Miami threesome a lot more attractive no doubt. So the players all took about 13.5% less in their individual contracts with Miami vs. their potential max contracts; but they will pay 9% less in income tax...thats still a 4.5% reduction in real contract value considering income tax. They are also going to take a hit when it comes to endorsements, I'm sure their national deals won't be hindered much (and it should actually help Bosh a little in that arena) but when it comes to a local endorsement in FLA they are all going to be competing for that income with each other. That's just the nature of the business, you have three stars for the Heat to choose from for your local Ford/Lincoln/Mercury dealer instead of just Dwyane Wade. One might say, well that's only a small chunk of change for these guys...so what! They are sacrificing MONEY. I am just glad I can say that. If LBJ went to NYC, he'd get anything he wants, now, he's competing with his friends for that spot. When somebody goes to buy a jersey now they can choose from LBJ, Bosh, or D-Wade. All of these things do effect their superstar status. If these guys can come together and play as a solid team and win a few titles, all this will be thrown out the window and they are gonna all make a TON of money EVERYWHERE. So in 5 years we might look back on this and say...they didn't sacrifice anything, but the day they signed their deals...they did. Now it's time to go get it! On to the "real question." I haven't been able to find any evidence of it effecting him that much, he will make $2 mil. more than he did last year in total endorsements. I can only assume it would be substantially higher in NYC.
ReplyDeletethis is where I got my tax info from...http://www.bankrate.com/finance/taxes/check-taxes-in-your-state.aspx
ReplyDeletehttp://www.businessweek.com/lifestyle/content/sep2010/bw20100923_836149.htm this confirms my thoughts on national endorsements but I am arguing more that the local endorsements will not be nearly as much as they could have been in NYC. They are less popular right now though, as evidence of the drop in Q score (popularity).
ReplyDelete