How much would Lebron James make from the Cavs if there was no salary cap? This is a question completely absent from the public consciousness because of how ingrained the salary cap is.
The salary cap has been integrated so pervasively, that some of the top sports publications now create a ‘salary cap analysis‘ for each team. Part of the fun for fans these days is to extrapolate which players your team can afford under the cap in the near future, and the future prognosis of your team based on the “health” of your team’s salary cap for the next few years. Sports fans sometimes call talk shows just to talk about their team’s salary cap. The cap has become a spectator sport in itself.
During tough times for a team, I’ve heard fans comfort themselves that even though their team is losing, at least cap space is being cleared for the future. Talk about strange silver linings! These fans are being influenced to celebrate that their team has cleared out a few million in cap space to spend on next year’s players. They applaud this as if their team is parsimoniously putting aside money to build for the future like a newly married couple, and not actually a behemoth private enterprise with unpublished profits. Either these cap aficionados need a new hobby, or it’s fun to pretend to spend other people’s money, even if it is a fake budget.
One of the lines that is oh-so-common and oh-so-ridiculous is when a fan says, “No way we can afford that guy” when talking about a player coming up for free agency. This statement is not being made based any real financial numbers that make up a budget, as discussed in Part 1 of this series. Rather, it based on the salary cap–a concept that does not belong in a game that is printing money in the United States, unless that game is being played on a board and it’s called Monopoly.
So how much do professional sports players deserve to make? How about whatever a free market system would pay them–the way other entertainers get paid. Over the last 12 months, Katy Perry has made $135 million. So while we hear her roar, it sure would be interesting to see what Lebron James would make from his team without a salary cap. Bloomberg estimates that Lebron’s $21 million a year salary from the Cavs brings the city of Cleveland an added $215 million a year. It’s difficult to find an exact number of how much money Lebron generates for the Cavs, but Cavs owner Dan Gilbert paid $375 million for the Cavs in 2005, and today the team is valued at $915 million. The cap-induced $21 million salary to Lebron is quite a gift to Dan Gilbert.
We will never know what Lebron would earn if there were a true bidding war for his services. All we hear right now is Dan Gilbert roaring with delight as he stands behind the rules and pays his star player a fraction of his value, while the American public looks away and pretends that Adam Smith is not giving us a big invisible middle finger on this one.