Like a lot of news programs, National Public Radio has taken to trying to explain the complexities of the economy to people like me with a new segment — Planet Money — that breaks it all down into layman’s terms.
Their piece on Friday — how LeBron James is underpaid at $17.5 million, but that is good for the league overall.
“He’s getting hosed,” says Kevin Grier, an economist from the University of Oklahoma…
Now all (the rules of the salary cap and maximum salaries) 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 James goes to the guy in the middle.
He then goes on to talk about how the salary cap and luxury tax make it possible for Oklahoma City or even a medium market like Miami to have a title contender. Otherwise, the Lakers and Knicks could just go Yankees on the league and guy everyone good up. Even with the cap there are times it feels like they do (because they are willing to pay a tax others are not).
It should be noted LeBron with endorsements, LeBron is making $57.6 million this year, according to Forbes.
This is a lot of stuff we talked about during the lockout — if you really wanted to kill off “super teams” you would remove the max salary but leave the cap and tax in pace. Someone like LeBron would draw $40 million a year — not just because what he does on the court but because what he means for ticket sales, sponsorships in the arena, regional television revenue and more. At that price you couldn’t pair superstars.
Of course, is that what fans really want? Some say yes but ratings say no — we watch the super teams.
But I don’t think you’ll see a dramatic change in the salary structure in the NBA in the near future. As the economy picks up and revenue starts increasing (as it is this year) I think there will be a balance and a desire on both the part of the owners and the players to not go through another lockout. At least I hope they look at hockey and think so.