LeBron James might be the most underpaid player in sports. And he knows it.
The reigning MVP is making $17.5 million this season, the 13th-highest salary leaguewide and about $10.3 million below Kobe Bryant's annual paycheck. Before a game against Indiana last Friday, James was asked whether it bothers him that he's not the highest-paid player in the league.
James insisted he wasn't miffed by his standing in the salary column.
"What I do on the floor shows my value. At the end of the day, I don't think my value on the floor can really be compensated for, anyways, because of the CBA," James said.
"If you want the truth," James said, "if this was baseball, it'd be up, I mean way up there."
OK, we'll bite:
How far "up there" would James' annual salary be if the NBA adopted MLB's system with no salary cap, no max contracts, no limits?
$30 million?
$50 million?
$100 million?
We asked this burning question to execs around the league. One surveyed league GM put that figure at -- get this -- $250 million, citing the unthinkably large revenue streams of the top franchises.
"Maybe higher," the executive added.
James has held many distinctions in the NBA, but "highest-paid player in the league" has never been one of them.
Heck, if you look it up, James has never even been the highest-paid player on his team. Whether it has been Dwyane Wade, Shaquille O'Neal or Ben Wallace, James has always trailed behind someone in the salary department. In fact, amnesty-rule casualties Gilbert Arenas and Brandon Roy are receiving a higher NBA salary this season than James. Arenas has played as many NBA games this season as your grandmother; Roy has played all of five games for Minnesota.
Of course, James could be making more, but he has chosen not to. Along with Wade and Chris Bosh, James turned down a max contract in the summer of 2010 to free up some cash for Heat president Pat Riley to fill out the roster. Part of James being underpaid is his own doing. As a result, James has earned $92.5 million up until this season, which is about $2 million less than fellow 2003 draftee Carmelo Anthony, according to Basketball-Reference.com.
Still, it's hard to ignore that James has been woefully undercompensated for his basketball abilities. (And yes, it's definitely possible to be underpaid even when you're making $17.5 million.) How can we estimate how much James would be worth on the free market?
Look at the going rate of his colleagues.
Now, this is much trickier to gauge than, say, checking the price of unleaded fuel at your neighborhood gas station. But for a production measure, we'll use Kevin Pelton's trusty Wins Above Replacement Player (WARP) system to assess how good a player was on the court. In the summer of 2010, I found that teams were, on average, offering about $2 million per WARP to non-max free agents.
For example, Paul Pierce received an annual $15.3 million after a 7.6 WARP season in 2009-10, which is about $2 million per WARP. Some were paid much more for their production (hello, Travis Outlaw!) and some came much cheaper (sorry, Ben Wallace). But overall, it shook out to a price of about $2 million per WARP.
Let's apply this rough exchange rate for James, who delivered 25.4 WARP in his 2009-10 MVP campaign. If James was being paid like his peers, then he should have received a contract that gave him $50.8 million. Huge money. Instead, he was paid $18.3 million annually, mostly thanks to an artificial cap. That means the Heat received James at a 63 percent discount compared with his colleagues.
The going rate of $2 million per WARP fluctuates slightly from offseason to offseason. On the low end, Pelton found that teams paid about $1.6 million per WARP in the 2011 free-agent market. So if we apply that conversion rate to James' current full-season projection of about 25 WARP, James checks in at a $40.5 million value for 2012-13.
But here's where it gets interesting. If we use that $1.6 million conversion rate for James' career, we find that he should have been paid roughly $346 million just purely looking at his output on the court. Instead, he has amassed $110 million in salary through 10 seasons. In other words, James has been shortchanged about $250 million over his career.
A quarter of a billion dollars.
Just looking at James' production on the court, it's easy to see that his MVP-caliber play is worth anywhere from $40 million to $50 million a season. The players understand this. Two years ago Wade claimed that superstars should be netting $50 million a year.
But that $50 million figure that Wade cited is probably much less than what it would actually be on an open market like baseball. Because a superstar in the NBA is worth way, way more than any other team sport. An NBA superstar plays almost all game, on both ends of the floor and alongside only four players. The Yankees thought Alex Rodriguez was worth an annual $27.5 million even though he gets up to bat only once every nine turns, doesn't pitch and fields maybe a handful of grounders a game.
Not only are NBA superstars more valuable on the playing field, but that's true off the court, too. NBA players are far more marketable than players on the gridiron or on the diamond. For one, you can actually see NBA players' faces (thickening headbands are slowly resembling helmets though!). And there's no waiting around as bottom-of-the-order hitters hog the TV screen.
The thing is, we just haven't seen how frenzied front offices would get if a player such as James were put up for an MLB-style auction. Sure, James wouldn't garner blockbuster offers from small-market teams such as San Antonio and Oklahoma City.
But you're telling me that Nets owner Mikhail Prokhorov, a veritable basketball junkie worth upward of $12 billion, wouldn't write a blank check to hire James, the greatest player of this generation, who's in his prime? And that's not even considering the strong possibility that Mark Cuban and Paul Allen and Micky Arison and Jim Dolan and just about every other billionaire NBA owner would throw in outrageous bids just to drive up Prokhorov's price tag. I mean, Prokhorov loses track of his 200-foot yacht while Allen makes sure his yacht is bigger than your yacht.
Considering the bidding premium, James' immense on-court and off-court value, the $250 million annual price tag thrown out by one GM isn't quite as egregious as it seems at first glance. This is all a pipe dream for James, however. It's easy to see why the players' union wouldn't go for it. In a market defined by a fixed share of basketball-related income, every million that James makes is a million that James Jones does not. The union's top priority is satisfying the majority of the clients, not the top 1 percent of its constituents.
Still, there are logical ways that James and other superstars could receive $50 million a season and conceivably improve the so-called competitive balance issue. As Henry Abbott has proposed, the league could simply do away with max contracts and keep the salary cap where it is. Owners couldn't afford to build superteams if James and Wade were receiving $50 million annually apiece. Every team would get a superstar.
But that probably still means that James would be underpaid. Yes, it's hard to come to grips with the fact that someone who has made nine figures over his professional career probably isn't getting a fair shake. And yes, it's true that James could lead a charge to break up the players' association and start a new player-led league if he thought the CBA was unacceptable.
But when James says that his free-market salary would be "up way up there," it doesn't mean that he's a greedy monster. It means he's a realist.