Why LeBron's Choice Could Cost Jay-Z Over $5 Million
It will also cost music star Jay-Z (at right in the photo, with LeBron) about $5.25 million.
The hip-hop mogul owns a 1.5% share of the New Jersey Nets, one of the five teams spurned by James. Over the past few months, rumors swirled that James -- a close friend of Jay-Z -- was giving serious consideration to joining the Nets. There, he'd become the face of a franchise slated to move to Brooklyn in two years.
Nets Value Could Have Jumped
Russian billionaire Mikhail Prokhorov's recent purchase of an 80% share of the Nets puts the team's value at $250 million, which means Jay-Z's stake is worth $3.75 million. Had LeBron signed with the Nets, the franchise's value would have more than doubled -- taking Jay-Z's stake along for the ride.
"The Nets' value with LeBron could have exceeded $600 million in two years," says Marc Ganis, president of Chicago-based consultancy SportsCorp. "The key reasons are tremendous additional inventory -- lots of available seats -- the new Brooklyn arena, re-branding and positioning of the team, new international ownership, and the largest market in the country."
Instead, James will open the 2010-2011 season in Miami, flanked by Dwyane Wade and Chris Bosh. Forbes estimates that the signings will bump the value of the franchise from $364 million to $400 million. A nice jump for owner Mickey Arison, but nothing compared to the impact James could have had on the value of the Nets.
"No team would increase in value more than the Nets if LeBron had signed with them," says Ganis.
Though Jay-Z may have lost out on a chance to pick up an extra $5.25 million dollars, Prokhorov is the one who left more money on the table. His 80% stake in the Nets would have swelled to $480 million, by Ganis' math.
Biggest Impact on Cleveland
Individual losses aside, the most devastating impact of James' move to Miami will be felt by an entire city.
"His greatest financial impact to a team would have been on the Nets," say Ganis. "But his greatest financial impact on a community will be on Cleveland."