Economics of a superstar

LeBron James #23 of the Cleveland Cavaliers in Game Six of the 2007 Eastern Conference Finals. The Cavs beat Detroit 98-82 to win the series 4-2.

TEXT OF INTERVIEW

MARK AUSTIN THOMAS: Like many sports, the NBA can be viewed from the perspective of its dominant teams and players. There was the Celtic era and Showtime with the Lakers. We've seen duels between Magic and Bird and between Michael Jordan and everyone. But in the past few years the NBA hasn't really had one player who dominated or a young star maturing into a superstar. That's important because a popular player means more revenue for the league. Well, the waiting is officially over. David Carter is the executive director of the USC Sports Business Institute. Welcome.

DAVID CARTER: Good morning.

THOMAS: So has the NBA officially entered the dawn of LeBron?

CARTER: Well, it certainly looks that way but I think you have to go back. You know, the NBA's been anticipating this, obviously Nike has. Nike signed him to a long-term $90 million contract before the draft, before he was the No. 1 pick in the draft in 2003. So I think a lot of people have been anticipating this. Certainly the fans from Cleveland have, but even with all these accolades I think you have to be very careful. There is only one Michael Jordan, and for any athlete to live up to an icon like that . . . very, very slippery.

THOMAS: As far as the league is concerned, I mean financially, it doesn't really matter if the Cavaliers win the NBA Finals or not does it?

CARTER: Oh I think it matters a great deal. All sports leagues, not just the NBA, really prefer the big market teams do well. And in fact they also prefer and clamor for their big superstars in the league to be playing for these big, branded teams and that's not quite the case right now. You mentioned in the setup, Los Angeles and Chicago and Boston. Those are top 10 sports and media markets. Well if you look at San Antonio now and you take a look at Cleveland, these are markets that are way down in terms of the size of their designated market area. And so that's a problem. LeBron James making it in is a little bit of a savior I think because now a lot of people are gonna want to tune in, a lot of people are very curious about him and I think casual fans are gonna want to check him out. So he's a little bit of a buffer for what otherwise would have been two small market teams playing in the finals.

THOMAS: Whether Cleveland wins it all or not, they're going to have to spend a little money in the off-season aren't they, to build a stronger team around LeBron?

CARTER: Well that's a great question, I guess that's why you're sitting in that chair. Because you have to go back, you have to take a look at the NBA salary cap. And the Cavaliers have been very close or slightly over that lately and so the amount of wiggle room they have under the salary cap might be limited. But where I think it really might pay dividends is athletes at that level, they want to play for a winner, they want to play for a team that's well-managed, well-owned. And to the extent that LeBron James is gonna be on that team long-term, maybe a tipping point for some free agents that may, you know all things being equal in terms of salary, they may wanna play in a place like Cleveland if they think that that will generate a championship ring for them

THOMAS: Thanks a lot David.

CARTER: Thank you.

THOMAS: David Carter is the executive director of the USC Sports Business Institute. And in Los Angeles, I'm Mark Austin Thomas. Thanks for joining us. Have a great day.

TEXT OF INTERVIEW

MARK AUSTIN THOMAS: Like many sports, the NBA can be viewed from the perspective of its dominant teams and players. There was the Celtic era and Showtime with the Lakers. We've seen duels between Magic and Bird and between Michael Jordan and everyone. But in the past few years the NBA hasn't really had one player who dominated or a young star maturing into a superstar. That's important because a popular player means more revenue for the league. Well, the waiting is officially over. David Carter is the executive director of the USC Sports Business Institute. Welcome.

DAVID CARTER: Good morning.

THOMAS: So has the NBA officially entered the dawn of LeBron?

CARTER: Well, it certainly looks that way but I think you have to go back. You know, the NBA's been anticipating this, obviously Nike has. Nike signed him to a long-term $90 million contract before the draft, before he was the No. 1 pick in the draft in 2003. So I think a lot of people have been anticipating this. Certainly the fans from Cleveland have, but even with all these accolades I think you have to be very careful. There is only one Michael Jordan, and for any athlete to live up to an icon like that . . . very, very slippery.

THOMAS: As far as the league is concerned, I mean financially, it doesn't really matter if the Cavaliers win the NBA Finals or not does it?

CARTER: Oh I think it matters a great deal. All sports leagues, not just the NBA, really prefer the big market teams do well. And in fact they also prefer and clamor for their big superstars in the league to be playing for these big, branded teams and that's not quite the case right now. You mentioned in the setup, Los Angeles and Chicago and Boston. Those are top 10 sports and media markets. Well if you look at San Antonio now and you take a look at Cleveland, these are markets that are way down in terms of the size of their designated market area. And so that's a problem. LeBron James making it in is a little bit of a savior I think because now a lot of people are gonna want to tune in, a lot of people are very curious about him and I think casual fans are gonna want to check him out. So he's a little bit of a buffer for what otherwise would have been two small market teams playing in the finals.

THOMAS: Whether Cleveland wins it all or not, they're going to have to spend a little money in the off-season aren't they, to build a stronger team around LeBron?

CARTER: Well that's a great question, I guess that's why you're sitting in that chair. Because you have to go back, you have to take a look at the NBA salary cap. And the Cavaliers have been very close or slightly over that lately and so the amount of wiggle room they have under the salary cap might be limited. But where I think it really might pay dividends is athletes at that level, they want to play for a winner, they want to play for a team that's well-managed, well-owned. And to the extent that LeBron James is gonna be on that team long-term, maybe a tipping point for some free agents that may, you know all things being equal in terms of salary, they may wanna play in a place like Cleveland if they think that that will generate a championship ring for them

THOMAS: Thanks a lot David.

CARTER: Thank you.

THOMAS: David Carter is the executive director of the USC Sports Business Institute. And in Los Angeles, I'm Mark Austin Thomas. Thanks for joining us. Have a great day.

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