LeBron James is almost unanimously the NBA’s best player of the last two decades.
But beyond his skill on the court, James is also credited for ushering in the era of “player empowerment” where players have been able to leverage their services against their employers for better contracts or the opportunities to move teams. While it’s debated as to whether James really started this movement, what’s not up for debate is one of the tactics he used: the one plus one contract.
When James returned to the Cleveland Cavaliers in 2014 after winning two championships with the Miami Heat, he signed a two-year contract worth $42 million. But James had the ability to opt out of his deal after just one year.
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But James and his agent, Rich Paul of Klutch Sports, were circumventing the system with his deal. At the time, Mark Termini was working with Klutch Sports, and he’s credited with being the brains of the deal. Termini spoke on “The Hoop Collective” podcast of ESPN’s Brian Windhorst and explained the logic of his strategy.
“In 2016, the economics of the league were spiking,” Termin said. “With Lebron, with the one-and-one, people said, ‘Wow, what a smart financial decision Termini architected on Klutch’s behalf.’”
The NBA was looking at a new media rights deal that would kick in by 2016, which would cause the salary cap to rise significantly therefore giving James a better deal if he waited.
So James signed two separate one plus one deals at an annual salary of $21 million in 2014, then $23 million in 2015. After the correctly predicted cap spike in 2016, James signed a three-year deal worth nearly $100 million, or what was about a $33.2 million annual salary.
“I was able to construct something that got LeBron $20 million for signing his name three times instead of once,” Termini said.
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The move was risky because the point of locking in more years was to ensure a guaranteed salary that protects players in case of unforeseen circumstances like major injuries. But for a player of James’ caliber, Termini said it’s a “risk worth taking.” And James agreed.
Other than the money, the contract terms also provided James the opportunity to have leverage over their teams in terms of building the roster. The threat of James’ possible free agency as soon as the next offseason put pressure on the team management as well.
This is the reason the one plus one method became so effective that other stars including Dwyane Wade and Kevin Durant took advantage.
While Termini is no longer with Klutch, Paul and James, it’s no surprise why he's is one of the most respected in the business, having negotiated $2 billion worth of contracts throughout his career.
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