Bloomberg Business Week
Friday, July 11, 2014
LeBron James will play for the Cleveland Cavaliers next season. The biggest prize of this year’s free agents announced in a statement at Sports Illustrated that he will return to the team where he played the first seven years of his career. James’s homecoming is the bookend for a four-year stint with the Miami Heat, during which he made four trips to the NBA finals and won two. The decision, and the way he delivered it, will make an instant and profound impact on the competitive balance of the league, the choices of other free agents in the market, James’s ever-shifting reputation, the emotional life of the city of Cleveland, and the fortune of Cavaliers owner Dan Gilbert.
When James left the Cavaliers four years ago, he endured a torrent of criticism—for abandoning his hometown team, for joining two other established stars, Dwyane Wade and Chris Bosh, and for making his announcement in a drawn-out live TV special on ESPN (DIS). Today’s statement stands in sharp and explicit contrast. In 952 words told to SI reporter Lee Jenkins, James delivered a love letter to Northeast Ohio and a gentle self-rebuke for the hurt he caused last time around, when Cleveland fans burned his jerseys in the streets.
“If I had to do it all over again, I’d obviously do things differently, but I’d still have left,” James says of that day. “I’m not having a press conference or a party,” he says later. The letter is the most public evidence yet of James’s steady maturation over the past four years and his increasing ease with his status as the world’s most famous basketball player. The statement attempts both an atonement for and validation of his actions four years ago. James frames his time in Miami as an education: “Miami, for me, has been almost like college for other kids.”
VIDEO: Can LeBron James Go Home Again?
Today’s biggest beneficiary is Cavaliers owner Dan Gilbert. When James left in 2010, Gilbert lashed out publicly in what was, until today, the most famous missive in the history of Cleveland sports—a rant, in comic sans typeface, calling James “narcissistic” and “cowardly.” Months later, when I profiled Gilbert as he began his first season without James, he would not use his former employee’s name, referring to him only as “the player that left,” or “that one person.” James now says the bad blood is behind them. “We’ve talked it out,” he writes of Gilbert, “Everybody makes mistakes.”
This forgiveness is worth hundreds of millions in franchise value to Gilbert and the Cavaliers, who become instant title contenders again and are no doubt fielding nonstop season ticket requests at the moment. When James left in 2010, Bob Whitsitt, the former general manager of the Seattle Supersonics and Portland Trail Blazers who now consults on franchise transactions, put the damage to the Cavaliers at $140 million. That was before a series of record-setting team sales, including Steve Ballmer’s recent $2 billion bid for the Los Angeles Clippers, which would seem to raise the multiplier for revenue-to-franchise value.
The Cavaliers have been shambolic since James left, with the lowest win percentage in the league and a revolving door for coaches and the front office. Gilbert’s team has done little to deserve this second chance. They are, as James makes clear, the beneficiaries of his loyalty to the region and his desire to raise his family there. “This is not about the roster or the organization,” James says, “I feel my calling here goes above basketball.” The Cavaliers also benefit from a salary cap system that keeps players like James from earning their full market value and leaves them to make team choices based on factors outside of salary.
VIDEO: LeBron James: I’m Coming Home to Cleveland
By going back to Cleveland, James has placed an exceedingly high value on the soft, psychic rewards of being the hometown hero. The Cavaliers spurned him once. They cannot pay him more than other NBA teams (that have space under the cap). And James openly acknowledges that they do not give him the best chance to win a title next year. Despite all that, Cleveland is where he wants to be. Even at the height of the bitterness four years ago, James imagined a scene like today’s. ”If there was an opportunity for me to return,” he told GQ in 2010, “and those fans welcome me back, that’d be a great story.”