LeBron James opted out of his contract with the Cleveland Cavaliers and became an unrestricted free agent, but there’s no doubt where he’s playing in 2015-16.
James returned home to Ohio in order to bring a championship to the city of Cleveland, so it’s not like the four-time MVP is bolting after a disappointing loss in the NBA Finals. Rather, the latest development is a perfect example of a business decision.
James opting out makes perfect sense. It also makes a ton of cents.
According to ESPN Stats & Info, the Cavaliers star can sign a five-year deal worth more than $200 million if he waits until 2017 to ink a long-term contract.
Based on projected cap, LeBron James could sign a 5-year deal for over $200 million with Cavaliers in 2017 when they have his Bird Rights
— ESPN Stats & Info (@ESPNStatsInfo) June 29, 2015
When someone is under contract with a team for three full seasons, that franchise then holds “Bird Rights” to that player and can pay him more than any other team.
Plus, since the salary cap is projected to rise to $108 million in 2017, per Jonathan Givony of DraftExpress, the contracts that will be signed two years from now will smash previous league records. James is among the players who will demand—and be worth—that type of deal.
According to Joe Vardon of Cleveland.com, James is expected to sign a one-year contract worth $22 million. James was slated to earn $21.6 million this year, but by opting out, he can receive a $400,000 raise.
However, his new contract will assuredly contain a player option, this process will likely be repeated next year because it makes the most sense—and cents—for James to do.
The salary cap will continue to rise consequent to the new TV deal. Per Givony, the cap will increase by approximately $22 million next summer, so James’ slightly raised salary for 2015-16 means a slightly bigger 2016-17 payday after he opts out and re-signs.
Then one final time, James will opt out. But during the 2017 summer, he’ll presumably sign the richest deal in NBA history. James will be due a pretty penny—nearly four billion more copper coins ($40 million) more than he would’ve earned if he signed a five-year max contract this summer, per Business Insider.
That’s a lot of cents. And it makes perfect sense to start the process of earning all those cents right now.
Photo: USA Today Sports