The Marketing Studio

In the wake of last night’s Boston Celtics series clinching win over the top seeded Cleveland Cavaliers, there is much speculation that the “king” Lebron James, now a free agent, is going to end up a New York Knick next season.   New York of course is the “media capital of the world” and will provide Lebron with the biggest stage.  The biggest stage means the most money, right?

Why wouldn’t New York provide the best opportunity for Lebron to grow his business enterprise? This morning on ESPN Radio’s Mike and Mike, CNBC sports business columnist Darren Rovell explained why it’s a misnomer that New York provides the biggest revenue opportunity for Lebron.  In fact, the Knicks may slow down Lebron’s growth as a global brand.  I do my best to summarize Darren’s points below:

• Lebron James was on national television 36 times during the 2009-10 season; it is unlikely this coverage can get any higher, no matter what team he plays for
• National media coverage of a mega star like Lebron is not tied to his team, whether it be Cleveland, New York or any other city
• Lebron’s Nike contract (his biggest revenue source) is not contingent upon the NBA team he represents
• The guarantee in Lebron’s Nike contract will not increase based upon his team BUT does have a variable compensation component, tied to “Lebron” sneaker sales worldwide
• Nike’s growth in the US is slowing, but the company is seeing double digit growth in China (where 300 million people play hoops, equaling the entire US population …think about that!)
• Traditionally, sales of a sneaker brand in China is highly correlated with “winning NBA titles” (aka Air Jordan; this is exactly why Kobe Bryant is currently the “king” brand in China)

Kobe's championship rings has made him a king in China

Conclusion: In order to maximize Lebron James as a business (and sneaker salesman), he must not choose his next team by market size, but identify the franchise that will provide him the best chance to win multiple NBA titles.  Based upon the current make up of the New York Knicks roster, and their recent history of basketball operations’ mismanagement, it is fair to be skeptical of their chances to win, even with Lebron, in the near term.  Darren Rovell concludes that Lebron’s next team will be a franchise with a roster that has the potential to win a championship in 2011 or 2012 (this entire dialog of course assumes that Lebron and his advisers are choosing his next team strictly upon revenue potential ..a little presumptuous I know).

Write it down … Lebron James re-signs with the Cavs and makes another run at bringing his hometown an NBA championship (in my humble opinion).

This entry was posted on Friday, May 14th, 2010 at 11:01 am and is filed under Blogroll, Marketing, sports. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.