TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Thursday, July 8, 2010

The Impact of Taxes on Lebron James' Decision

Lebron Business & Media Institute, LeBronomics: Could High Taxes Influence James' Team Decision?:

While sports reporters have sought agents and teammates for the inside scoop on where NBA superstar free agent LeBron James will sign, there’s another person who may know The King’s next move: his accountant.

[Here are the projected state and local taxes on a five-year, $96 million contract:

  • $12.34m:  New York Knicks
  • $10.32m:  New Jersey Nets
  • $5.69m:   Cleveland Cavaliers
  • $2.85m:   Chicago Bulls
  • $0:    Miami Heat

Of course, the state and local tax treatment is much more complicated than these purported figures suggest.  For a detailed discussion, see:

(Hat Tip: Len Burman.)

http://taxprof.typepad.com/taxprof_blog/2010/07/lebrons-accountant-sign-with-miami.html

Celebrity Tax Lore, Tax | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341c4eab53ef0133f227006d970b

Listed below are links to weblogs that reference The Impact of Taxes on Lebron James' Decision:

» Did taxes affect LeBron's decision? from Don't Mess With Taxes
Sorry, Cavaliers, fans that the LeBronathon didn't turn out like y'all had hoped. I don't follow hoops, but I am a fan of other sports so I know how awful LeBron James' decision to ditch his hometown Cleveland team for the Miami Heat feels right now. B... [Read More]

Tracked on Jul 8, 2010 10:24:04 PM

Comments

He will pay state tax in each place he plays, so even if he plays for Miami, the state impact will not be zero.

Posted by: john | Jul 8, 2010 3:13:55 PM

John,

Some will charge him for games played there, but half are home games and not all states charge traveling athletes. Plus his endorsement income will be all state-tax free, assuming he moves to FL (and that's a lot more money, anyway).

Posted by: CJS | Jul 8, 2010 7:23:30 PM

As John points out, the initial observation is half right. That is OK because under most law school curves, that would merit a B-. Bigger than his salary should be his endorsement potential. I well recall that in Jordan's early days on the Bulls he passed up salary so they could buid a championship team and in one of those years he earned about $3.5M as a Bulls salary and $37M from endorsements and other sources. That is where the real money is. Ask Tiger. But that is another story.

Posted by: Bill | Jul 9, 2010 5:24:14 AM

I was watching ESPN last night for the no-suprise announcement. James chose the Miami Heat. Of course, the reason was to win a championship...by joining the other good players who moved there for tax reasons, uh, I mean to win a championship, too.

As soon as I earn $20 million a year, I'm moving to Florida...and going to Disney World!

Posted by: Woody | Jul 9, 2010 7:51:10 AM