Wednesday, June 2, 2010 | 10:48pm
LANDING LEBRON: The $2.7 Billion Economic Impact James Means For Chicago
CRAIN’s Chicago Business Report goes inside the numbers
@Cavs @crainschicago #LebronJames
People of Chicago missed out on a potential Olympic bid last year but landing Lebron James in a Bulls uniform would more than erase any bitterness. While the Lebron James sweepstakes can’t officially get underway until July 1st when the NBA Finals and celebration dust has settled, his pending free agency has at times overshadowed the progressing playoffs. Teams have been creatively dumping salaries for several years in anticipation of landing Lebron or one of his lesser coveted colleagues. Even the Knicks which several years ago boasted one of the highest salaries in the sport have some how found a way to get under the cap and more in the hopes of landing Lebron at the Garden.
However, the most natural fit may in fact be the City of Chicago given the core nucleus of players, the owners commitment to winning, and their salary cap positioning. But as CRAIN’s Chicago Business Report points out it may be more his economic value to the city that will have the greatest impact.
The LeBron effect as they’ve called it could mean an additional $2.7 billion over the life of his presumed six years contract, estimates University of Illinois at Chicago economist John Skorburg. His calculations however, are under the assumptions that the Bulls would perennially advance deep into the playoffs and find a way to wing at least “a few” NBA championships along the way. I don’t know if that’s and unfair or realistic assumption given his exceptional talent.
The calculation factors in a modest $5 million additional revenue for the United Center on tickets, concessions, parking and other spending and another $40 million per game on TV ads, sports-bar tabs, pizza deliveries etc across the Greater Chicago area. Just Lebron hoisting the championship trophy could boost the Bulls’ value by 20% to 50% which is currently valued between $613 million and $760 million, according to Forbes magazine’s estimate of the franchise’s worth. I know from my radio days that broadcast partners can demand higher ad rates, even as much as double following a championship seasons which could mean huge revenue boosts for Comcast SportsNet, co-owned by the Bulls, Hawks, Cubs and White Sox.
Speaking of the other area teams they’ll win as well. The Chicago Blackhawks, currently in the NHL Finals would be able to package corporate suites with the Bulls’ and demand premium pricing.
“The Bulls during the Jordan era changed the whole flavor, the whole attitude of the city,” says James Tyree the Mesirow Financial Holdings Inc. CEO and former Bulls season-ticket holder for nearly 30 years. “I used to get more business done at Bulls games than anybody could dream of. I long for those days.”
Tyree says that after Jordan’s retirement, Mesirow didn’t renew their corporate suite but is considering it again if Lebron signs with the Bulls.
While Lebron likely won’t be thinking about the economic impact he’ll have on the city of his choosing, he will undoubtedly be thinking about his own bottom line. James has publicly expressed an interest to become the first athlete with a Billion dollar net worth, (although some would argue Tiger already beat him to the punch.) With $28 million in annual endorsements way more than any other current NBA player, he is well on his way.