How LeBron James Achieved a Net Worth of $400 Million

What is the difference between Ebenezer Scrooge and LeBron James? Scrooge couldn’t dunk. That is, if you ask some of the NBA’s high paid stars who see their own financial lifestyles as wisely managed. As for James himself, he admits to being the cheapest high paid player in the NBA – by far.

So the first question is: Is being frugal the way to amass a net worth that exceeds $400 million?

Well, it helps to have a good start. James was drafted at the ripe young age of 19, when his first NBA contract would pay him just over $19 million for his first three seasons. No four years of college education required. James was one of the few “19 year old projects” (Kobe Bryant being another) that worked out for NBA teams in the long haul.

As his basketball talents were affirmed and he rose to the top as one of the NBA’s biggest fans draws both in the stadium and on television, his NBA salary would grow. At age 33, he is currently in the final year of a 3 year, $100 million contract. Should he choose to retire after fulfilling his contractual obligations, his total NBA earnings would total just under $234 million. But even if he saved the vast majority of that total, he would need to at least double that number to come close to his current $400 million net worth.

James came into the NBA at a time when social media began gaining momentum, so he realized that his marketing brand, including “The Chosen One” and “King James” would open the door for a bevy of future money making opportunities. The many brands of LeBron James were the foundation of a number of corporate product endorsements, including Sprite (Coca Cola), Beats by Dre, Intel, Kia, Verizon, and last but not least, Nike.

The Nike endorsement is interesting in several ways. James had a Nike endorsement since entering the league at 19, which paid him $90 million over a 7 year deal. (This means that his minimum first year total annual salary was about $20 million – before taxes.) After the first contract expired he negotiated another that paid him an estimated $30 million annually. In 2015, he signed a lifetime contract with Nike that has experts estimating he could make $1 billion over his lifetime. That would put his current $400 million net worth at only one-third of its maximum potential.

But that maximum potential is not a guaranteed number because while his Nike brand show sales reached $1 billion in 2016, that is just a little more than one-third of what the Michael Jordan brand Nikes bring in – $2.8 billion. Once his NBA career ends, his brand will be his main moneymaker. But an early 2005 public comment may have hurt his brand in the long run: “In the next 15 or 20 years, I hope I’ll be the richest man in the world. That’s one of my goals. I want to be a billionaire.” He will likely reach that number, and it may be one of the reasons why he agreed to the lifetime contract with Nike.

Having multiple sources of income is a wise financial strategy for anyone, and James has added several business investments to his revenue stream. Reports are that he has at least a 10 percent stake of the Blaze Pizza franchise. A recent valuation of the business has James snagging a piece of the $25 million rise in the company’s value. Then there is SpringHill Entertainment which he co-owns with Maverick Carter. If you have seen or heard of the shows “Survivor’s Remorse” on STARZ, “Cleveland Hustles” on CNBC, “Becoming” on Disney XD, or “The Wall” on NBC network television, you now know who is behind it.

There is a word used when discussing huge corporate conglomerates – diversification. LeBron James has extended his financial reach into multiple areas of sports and business while he can still actively play the game of basketball and continue his NBA career. The fact that he is only 33 years old and will become a free agent player at the end of the season makes it virtual lock for him to get an NBA contract that will pay him $50 million a year, or more. His shoe contract with Nike is locked in.

After all that has been said here, you are asking yourself what any of this has to do with being frugal. Most of us see these dollar numbers and think that someone who makes so much money can’t be frugal. You may have to rethink that idea. In an interview with Rachel Nichols, James said to the ESPN interviewer, “I’m not turning on data roaming, I’m not buying no apps, I still got Pandora with commercials.” Nichols followed up by asking, “You know you’re rich, right?” James replied, “I’m not paying for it.”

Most of us don’t have a $19 million head start on our careers – at any age. But when you step back and think about it, James had to be frugal to get to the $400 million mark if you just look at the numbers. But maybe he took the advice of a former NBA player who wrote in his book, I Might Be Wrong But I Doubt It.

From the chapter on “Being Rich”

“I’ve probably lost between $600,000 and $700,000 lending money to my friends and relatives.”

About contracts with Nike, he says in the same chapter:

“When you’re out, you’re out. We call them ‘owls’ because when they call after they retire the person at the other end of the phone says, ‘Who?’ … You need to have saved and invested.”

The player is Charles Barkley.

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