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Monday, March 22, 2010

The Future of Business LeBron

Posted By on Mon, Mar 22, 2010 at 4:03 PM

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The LeBron news of the day is the seemingly imminent renewal of his contract with Nike. Brian Windhorst reported this morning that James appears close to reupping with The Swoosh, though no numbers are available right now. His original $100 million deal expires in a few months. This comes on the heels of LeBron's new contract with McDonald's, his second deal with Coca-Cola, and additional contracts with State Farm and others.

As rumors continue to swirl about The King possibly chasing endorsement money in New York once free agency starts, it's perhaps a good time to talk about the future of Business LeBron. It's already abundantly clear that LeBron doesn't need to chase anything, let alone the money. People come to LeBron. Playing in Cleveland, LeBron's already one of the highest paid athletes in the world, raking in $40 million last year. On Forbes list of highest earners, James was sixth, behind only David Beckham, Kimi Raikkonen, Kobe Bryant, Michael Jordan, and Tiger Woods.

Anyone still clinging to the notion that zip codes will determine how much cash LeBron can amass hasn't been paying attention to how #23 has gone about his business off the court. More to the point, anyone still clinging to that notion also probably thinks that LeBron's business off the court starts and ends with endorsements, or at least that endorsements are the only possible key to the Scrooge McDuck vault of of gold that LeBron will undoubtedly have installed in his house one day. They are, after all, the traditional means for athletes to pad their bank accounts off the field. It's business, extra business, lucrative business, but business as usual to some extent. A smiling mug, a commercial, a billboard or five, and a big check for pimping a product — soda, lawnmowers, vitamins, whatever.

But what indication has LeBron or his team ever given that James is content with business as usual? It's quite the opposite, actually, and has been from the very moment that LeBron canned Aaron Goodwin and started LRMR, putting his friends in charge of his empire.

If there was anything of note to take away from the otherwise uninsightful and unspectacular feature on LeBron in Esquire a few years back, it was the forward-thinking business acumen of LRMR and James.


You can see they've talked this over. LeBron and Maverick. They've sat around on gaming chairs, around an Xbox campfire, and they've said, "I've got it, I've got it, we don't do sponsorships, we do partnerships." And maybe Maverick sponged it half off of someone in a Nike boardroom and half off of Jay-Z, but it doesn't matter. Because the reason this business model will work is, here are the most popular kids in school, and now in life, and they are the ones commandeering the bake sale. Nobody wants to be in a partnership with a loser. You want someone who is airborne, someone who can control climate, the guy who can get the girl and win the game and who looks good with his shirt off.

"What are we doing differently?" says Maverick, and you can tell he loves this question, and loves his answer more: "One thing we do differently, we like to control — well, control is a bad word — we like to be involved in every aspect of the brand we're partnered with: who they're advertising with, what the advertiser looks like — if it's a commercial, then who's the director? We really strive on the management side once a deal is done, so it becomes a partnership, not just a deal where they pay LeBron, he shows up."

So why is everyone obsessed with talking about LeBron and possible sponsorship money in New York?

As LeBron's friend Jay-Z said, "I'm not looking at you dudes, I'm looking past you." (Also could have gone with, "I'm not a businessman. I'm a business, man.")

During the hoopla over LeBron's McDonald's commercial, a little nugget of a line from a Wall Street Journal story seemed to slip off the radar, one that sort of hints at where LeBron is taking his business priorities going forward.

The deal signals a shift in Mr. James's strategy. Mr. James formed LRMR in 2006 partly to garner endorsement deals for himself and other athletes. The firm will still seek to land deals for other athletes, But LRMR Chief Executive Maverick Carter says the firm is now "not terribly interested" in finding more deals for Mr. James himself.

Instead, it will focus on expanding his career in other areas, especially the film business, hoping to build on the success of a recent movie project. The McDonald's pact was an exception, Mr. Carter says, because it means Mr. James now has ties with what LRMR considers the most iconic global brands: Coca-Cola Co., Nike Inc. and McDonald's.

What does that mean? Well, first, be prepared for McDonalds, Coke, and Nike to all promote the hell out of LeBron's upcoming movie, Fantasy Basketball Camp. That's exactly what Maverick was talking about when he discussed partnerships and how they differ from sponsorships.

What else? How about LeBron the executive producer. How about Spring Hill Productions, the production arm of LRMR created for the More Than a Game project. How about LeBron hobnobbing with billionaires at the exclusive Sun Valley conference run by Allen & Co. in Idaho, where he met and talked with moguls from every corner of the media world. Could you see LeBron, the guy not interested in taking on more endorsements right now, focusing his time off the court on film, acting and producing?

Any of that would be more in line with how James has run his business than simply lining up endorsement gigs, and, more importantly, more lucrative. And different. And forward thinking. Remember, it's a tough economic climate for companies to fork over millions to an athlete spokesman, even tougher when the world of athletes is getting rocked by scandals. LeBron's beyond that now. Where else do you go when you've already got Nike, McDonald's, and Coke in your back pocket? Forward.

Follow me on Twitter: @vincethepolack.

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