When LeBron James is talked about, it generally has to do with his greatness on the basketball court. The debate over whether LeBron James vs Michael Jordan is the GOAT, greatest of all time, is covered ad nauseam. However, when I hear LeBron’s name, I think of all the benefits he has brought to the people and communities in the cities he has played in. When he returned to his hometown team, the Cleveland Cavaliers, people besides die hard Cavalier fans profited greatly.
The local media and official TV station of the Cavaliers, Fox Sports Ohio, experienced record viewership. With increased eyes on their product, the TV channel can then charge more for advertisements and increase their revenues. During LeBron James’ first tenure with the Cavaliers, Fox Sports Ohio had “...ratings that were between 45% and 215%...” ahead of their normal viewership during the 2013-2014 season. Those increases provided a huge increase in revenue to the TV station. The Cavaliers also benefited from LeBron James on and off the court. When Fox Sports Ohio signed on again to be the flagship station of the Cavaliers, the Cavaliers brought in an exorbitant amount of money. The most recent TV contract between these two parties just ended this season, and it was worth between $35 million and $38 million per year, one of the highest in the entire NBA. Cleveland is considered a medium sized market if not a small one so these numbers are eye popping. LeBron James brought the city of Cleveland their only NBA title ever as well as a slew of positive externalities along with him. Even though he has moved onto the Lakers, Cleveland is still reaping the benefits of a generational type player like LeBron playing in its city.
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LeBron James was also associated with an increase of bars and restaurants near the arena in Cleveland when he returned. I think it would be difficult to find a Coasian solution to these positive externalities. Assuming that people in Cleveland were going to games more often and, in turn, frequenting bars and restaurants near the arena more because they like LeBron James, the effect could be reversed if he had tried to seek payment from these businesses. I imagine a LeBron James tax would not have been supported by the customers, and that less people would then have chosen to come out to see LeBron James play, thinking that he was already paid enough to play for the Cavaliers. I think that it is better that, instead of trying to find a Coasian solution, Lebron James is remembered for bringing positive externalities to the community.
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