On July 1, when LeBron James officially becomes a free agent, the effort to woo him will resemble something like a cross-country row of fraternities during rush week .. but with hundred million dollar checks instead of free Chipotle dinners. Such is the power of single player in the NBA that $30 million a year for LeBron is almost certainly a bargain considering his impact on ticket sales and and team merchandise.
The LeBron effect isn't unique to basketball, or even sports. As Ira Boudway writes, actors and hot shot lawyers have similar game-changing qualities that can justify otherworldly compensation packages. But once these outliers hit the ceiling of financial compensation, the folks trying to sign them have no choice but to play up the benefits. Boudway calls it the "stop negotiating and start seducing" strategy:
Best-selling novelist James Patterson dominates the publishing industry in much the same way James does the NBA. Some titles sell better than his, but no author can compete on volume. Last year Patterson sold 14 million copies while publishing nine new books. He holds the all-time record with more than 50 New York Times best sellers to his name. Patterson is well compensated--Forbes valued his current 17-book deal at $150 million--and money is not terribly important to him. "I'm not particularly interested in squeezing every penny out that I possibly could," he says. Instead, Patterson wants a commitment from his publisher to work hard and make a big deal of everything he does.
Movie studios, naturally, are expert at this kind of pampering. "Tom Cruise has a caterer he's been using since the movie The Firm," says Edward Jay Epstein, author of The Hollywood Economist and expert witness in film contract disputes. "If he complains he has a stomachache, you're delaying the movie at a cost of $300,000 a day, so you're not going to screw around with the caterer. Makeup, trainers, security, all that, the star will get." Studios will go so far as to give bit parts to the members of a star's entourage. "The point of these people is to make the star happy and make the movie work, it's not really a negotiation as much as an accommodation," says Epstein.
If the question is how do you design a contract for somebody who is nearly invaluable? the answer is, you add perks that are nearly invaluable to that person. For Patterson, it's a commitment from an editor. For Cruise, it's the guarantee he won't get food poisoning. For James, it's a championship and the inevitable ad tsunami that comes with it. To read just about the most compelling act of seduction imaginable, check out Boudway and Will Leitch's brilliant paean to Lebron in New York magazine.