Breaking down LeBron’s Empire
This might be the best business deal that LeBron James ever made. In April 2011, he bought 2% of Liverpool FC for $6.5 million. Ten years, one Champions League trophy, and a Premier League title later, his stake is worth more than ten times the original amount.
Let’s put that into perspective. LeBron James has made some pretty big deals throughout his career. He is, besides Ronaldo and Jordan, the only athlete who has a lifetime contract with Nike. He owned shares of Beats by Dre and helped build up the brand before it was sold to Apple for a huge profit. His production company, SpringHill Entertainment, is shaking up Hollywood. But even among these very impressive examples, securing a stake in Liverpool still stands out, not only because of the raw numbers but also because of what the deal means for LeBron’s long-term vision.
Here’s the story of how LeBron James took his business acumen to Anfield.
To understand the significance of the deal, it is important to explain its background and the business strategy that LeBron James has developed over the years. There is an anecdote that says a lot about how he conducts business. At the age of 18, he turned down a life-changing check of $10 million to sign with Reebok and returned to high school the next day.
Though only 18, this decision would act as a precedent for his future business ventures: to put long-term legacy over short-term gains. He later signed with Nike for less than the Reebok offer, but in the long run, this turned out to be the right choice.
Besides the strategic thinking that he showed at that moment, what stands out is that he was so involved in his deals at all. It’s not uncommon that young players just let their agents handle the business and simply go for the highest paycheck. But that’s not LeBron’s style. If you had to describe his approach with one word, it would be ownership. He likes to keep control over his business and the way his story is told—at least as much as is possible in today’s media landscape.
But owning a pizza chain or starting a production company is different from owning a sports team. So how did LeBron James end up buying a part of Liverpool FC, one of the biggest football clubs on the planet?
Why the deal is unique in sports business
The Fenway Sports Group, or FSG, was first introduced to LeBron James and his business partner Maverick Carter by financial advisor Paul Wachter. The company has been praised for its emergence as one of the largest and most sophisticated sports empires in the world. But when the parties first sat down in an office in Santa Monica, nobody really knew what to expect.
Maverick Carter was looking for a new company to represent LeBron James in marketing deals. However, FSG did not represent individual athletes; they represented or simply owned whole teams, like the Boston Red Sox. When they met with Team LeBron, FSG had just purchased Liverpool FC for $480 million in a bidding war after the previous owners went bankrupt. So how could LeBron James, a star athlete but not a team, find a home at FSG?
The thing is, they didn’t treat him as simply a star athlete, but as a franchise himself. Instead of doing a traditional agency-athlete arrangement, they came up with one of the most unique sports marketing deals ever: an athlete trading his marketing rights in exchange for ownership rights in a sports team.
The idea was that FSG would get the rights to pitch LeBron James to other companies in marketing deals, get a percentage of the revenue, and put LeBron’s name in their portfolio of assets. In return, LeBron and Carter would receive 2% of the recently acquired Liverpool FC.
Shortly after the partnership was announced, LeBron traveled to Anfield to watch a game of the club he now owned a part of. But if he just wanted to watch their games, he could simply have bought a season ticket!
How LeBron could transform Liverpool
Why did they enter a partnership? If you think about it, the potential is huge. Just look at the collaboration between Michael Jordan and Paris Saint Germain. Twenty years ago, PSG was not nearly as popular outside of France as it is today. Despite not winning a single international trophy since then, they have somehow managed to become one of the most iconic brands in world football. How? Collaborating with Nike and Michael Jordan.
PSG and Jordan was a match made in heaven. Jordan is one of the most relevant brands in the US thanks to its strong roots in basketball culture. PSG, on the other hand, is very well known in Europe, especially in France, one of the countries with the strongest purchasing power. Although both brands are similar in character—both sportive and fashionable—they are well-known and adored by many crowds. Together, they may reach markets that are often inaccessible for them individually by combining these audiences.
It’s safe to assume that PSG benefited from the partnership. Just the first weekend after the launch, the club sold over 80,000 jerseys. The source of the additional sales is evident: shirt sales in the US had increased by an astounding 470% from the previous season. That is precisely the course of action that Liverpool and LeBron may take.
In a recent interview with Boston Globe, Liverpool’s Chairman Tom Werner revealed that a Liverpool x LeBron James football product line is in the works. “I don’t know specifics yet, but they’re going to create seven or eight products that rival the connection that Michael Jordan has with Nike.”
LeBron James has global appeal, and he has a lifetime deal with Liverpool’s kit suppliers. With Liverpool in the Nike camp and getting a 20% royalty kickback from the sale of Nike merchandise, he is able to help the club broaden their appeal beyond just the football fan and closer to mainstream and popular culture.
It’s like making a YouTube video where you talk about a famous football club and a big basketball star at the same time to get the maximum views. To be honest, LeBron James still has to deliver on the promise that he can boost the popularity of Liverpool. There’s been a lot of talk about how the partnership of Nike, LeBron, and Liverpool can do great things, but so far it hasn’t reached anywhere near the potential of the PSG x Jordan collaboration.
But there might be much more in it for LeBron James than just the growing value of his Liverpool shares. In March 2021, he translated his 2% share in Liverpool into a 1% share of FSG. That means he is now a shareholder and partner in one of the most successful sports conglomerates out there. The share is worth around $100 million—remember that he purchased the initial shares in Liverpool for $6.5 million. Trading 2% of Liverpool for 1% of FSG makes sense on many levels. It diversifies the investment and puts LeBron James in a prime position to make another dream come true: owning an NBA team.
Next Stop: Las Vegas?
Because in 2022, the focus of FSG is to acquire an NBA franchise. There is potential that an expansion team in either Las Vegas or Seattle could happen soon. The Vegas option is especially interesting. Vegas is on the rise right now, seeing a property boom like nowhere else in the US. Having had a population of around 1.2 million in 2000, it is set to see that rise to more than 3.3 million by 2035.
It has always been a mecca for entertainment, but that was more Frank Sinatra and Siegfried and Roy than anything remotely associated with sport. However, there are indications that Las Vegas is ready to seriously challenge the dominance of New York and Los Angeles when it comes to sport. FSG is likely to be aware of it. In 2020, the NFL team, The Raiders, moved from California to a new stadium in Las Vegas.
Recently, Formula 1 added a Las Vegas Grand Prix to their race calendar. Vegas is also rumored to be the preferred location for a new MLS team, and there are plans to build a state-of-the-art sports complex.
Just imagine an NBA team in Las Vegas, featuring LeBron James playing together with his son Bronny. Who wouldn’t want to watch that? LeBron James will likely be the man to run an FSG-led NBA franchise when the time comes, and his ability to tap into new markets and demographics is an important tool for FSG when it comes to Liverpool.
His engagement with Liverpool and FSG is more than just show and a little piece of his renowned magic. FSG and Liverpool have tagged along for the ride with this committed businessman who has big intentions to expand his own company.
Time will tell if it makes a difference in terms of investing in long-term performance on the field. However, the agreement embodies what LeBron James stands for in terms of business: taking the long view rather than seizing the moment. The LeBron, Nike, and Liverpool link may be familiar to you from our very first video! “Every 28 seconds, somebody buys a Liverpool kit,” was how it began.
A seasoned software engineer with more than eleven years of experience who writes about news and international topics on the side. Afolabi, who holds a degree in Electrical/Electronics Engineering, combines technical know-how with a sharp awareness of global events to offer a distinctive analytical viewpoint to his work. Afolabi is the one to turn to for perceptive commentary on world affairs.