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July 09, 2021

The economics of LeBron James' decision

Chances are, you did one of two things last night.

You either a) heard about LeBron James ripping the heart from the city of Cleveland, or b) you watched live as the NBA’s most electrifying star wielded a rusty machete, plunged it into every desperate Cavaliers fan and twisted for the world to see.

Yet no matter where you stand on the decision of LeBron, pro basketball’s reigning MVP, to bolt Cleveland for the Miami Heat last night, there is big money at stake with his move that’s worth discussing.

And even before the terms of James’ new long-term deal have been announced, the LeBron-onomics of the free agent frenzy that surrounded the 25-year-old these past nine days are plentiful.

A quick rundown of five fascinating facts:

1. Though a long shot, one of LeBron’s final team choices was the New York Knicks. In the days leading up to last night’s announcement, buzz began growing in the media that James would, indeed, sign with New York. This caused the stock of Madison Square Garden, the company that owns the team, to soar 6.8 per cent on Wednesday afternoon. When a Thursday report stated that LeBron was leaning towards Miami and would almost certainly not sign with the Knicks, MSG’s share price plummeted thusly – by 4.1 per cent.

2. Preliminary estimates have been flying around, but now that LeBron has left Cleveland, his impact won’t just be on the depleted Cavs roster. According to, LeBron’s bolting Cleveland will drop the franchise’s overall value by about $100 million, a 21 per cent hit.

3. Oh, and you think Cleveland itself isn’t pissed? There’s a spoof video online suggesting the city’s economy relies on LeBron James already (skip to 0:30), but there’s fire to that smoke. According to the Associated Press, Cleveland without LeBron could mean a hit of “tens of millions of dollars” to the city’s commerce and local businesses.

4. Meanwhile, think of the new cash in merchandising and ticket sales Miami is primed to rake in. No one out there will even speculate what LeBron’s presence in south Florida will mean to its team, but the Heat were forced to shut down their season ticket system this week after a flurry of Floridians inquired about seats. Look for ticket prices to rise significantly with LeBron joining Dwyane Wade and Chris Bosh, the former Toronto Raptor who also signed with Miami this week.

5. There is one silver lining to last night’s debacle – which, don’t kid yourself, it was for every sports fan that doesn’t live in South Beach. LeBron announced his decision, as you no doubt know, on a live one-hour ESPN telecast. The program was such a hyped show that surely big-name advertisers were bound to come running, and they did: Coca-Cola, VitaminWater, McDonald’s, the University of Phoenix and Microsoft’s Bing all lent a hand. So LeBron and his PR team agreed to donate the commercial money raised from the special to the Boys & Girls Clubs of America, who took home $2.5 million in cash last night.

“In one day, in one hour, he’s going to do something that’s going to help thousands of kids,” Frank Sanchez, a Boys & Girls Clubs of America VP, told the New York Times. “He didn’t have to do this – he could have just said it and walked away.”

Somewhere, there is a Cavaliers fan appreciative of LeBron’s charity last night. At press time, however, he was falling somewhere between the 25th and 24th floors of his Cleveland-area apartment building.

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...