Trisity Miller of Fansided wrote that James’s potential payout appears to defy the stereotype of the young, wealthy sports star who blows his money on bling.
It’s not clear whether James recognized Beats as a profitable venture and negotiated the inclusion of a stake in the company. At one point, James and Beats co-founder Jimmy Iovine shared a financial adviser, Paul Wachter, and perhaps he saw the benefit of the deal to both parties.
James would not be the first sports star to profit from an equity deal with a sponsor. New York Mets third baseman David Wright’s business savvy was much touted when he opted for a .5 percent stake in Vitamin Water rather than taking cash to appear in ads. His payout when the company was sold was rumored to be $20 million. In 2010, Tom Brady’s deal with Under Armour included equity. In fact, equity for sports stars is a trend.
The big question is whether the influx of cash means he might consider taking a pay cut to free up money for his team to lure more talent to South Beach.
Last year, James told ESPN he doubted he’d ever get paid what he’s worth because of the NBA’s bargaining rules, but he indicated his willingness to sacrifice for the team: “I have not had a full max deal yet in my career — that’s a story untold. I don’t get [the credit] for it. That doesn’t matter to me; playing the game is what matters to me. Financially, I’ll sacrifice for the team. It shows for some of the top guys, it isn’t all about money. That’s the genuine side of this, it’s about winning. I understand that.”
Despite being a 10-time all-star, four-time MVP and two-time champion, James as never been the highest-paid player on his team. As Roger Sherman of SBNation pointed out, he doesn’t have to be: “His off-court earnings make his actual salary somewhat irrelevant. He can afford to take less money, and allow his team to fit in other quality players under the league-mandated salary cap. And the more his team wins, the more he’ll be worth to potential endorsers, now and in the future.”
What is clear is that James was definitely instrumental in Beats’ success, raising the brand’s profile by wearing its products everywhere he went. According to ESPN, James was involved early in the product testing. Iovine gave a prototype to James, who grew up listening to Dr. Dre’s music, back in 2008. James then asked the company to outfit the entire U.S. Olympic basketball team before they left for Beijing. Everyone asked about the slick headphones with the lowercase “b” on the ears, and a fashion trend was born.
Some have even tried to link success on the court to the headphones – like Air Jordans for your ears.
“In fact, James has been better, according to almost every statistical measure in the four-plus seasons since he began wearing Beats, than he was in his first five in the league,” ESPN noted. Iovine said that Beats can “really help these guys focus and get them to push even further because they have more emotion and feeling than other headphones.”