Winners and Losers of LeBron James’ Move to Florida

16 Jul

LeBron James

LeBron James’ announcement that he was leaving Cleveland for the sunny beaches of South Florida on Thursday sent shockwaves through the basketball world. By teaming up with Dwayne Wade and newly signed Chris Bosh on the Miami Heat, James now joins the only NBA team with three of the league’s top 10 scorers, and anything short of a championship next season will be a major disappointment.

The move means a decent-sized payday for James ($96.1 million over 5 years), but more importantly, the move will have wide ranging implications for a number of teams and companies. Below, Venues Today looks at the winners and losers of “The Decision.”

WINNER – MIAMI HEAT: Within 72 hours after the announcement, the team had sold out all of its available season tickets inventory, with cheap seats moving for $484 annually, all the way up to courtside seats for $125,000, said Michael McCullough, chief marketing officer for the Heat. Premier inventory, including club seats and the team’s 20 suites, are also sold out. The team has sold out its initial run of James’ replica jerseys ($39) at its indoor arena store and mall retail location. Higher-end jerseys will hit the market in the coming weeks.

“We’ve been through something similar in 2004 when we acquired Shaquille O’Neal. We have a great deal of experience from that go around and we’re implementing a lot of that learning,” said McCullough. “One thing we decided was not to implement season tickets on our 400 level, which is a balcony level with 3,400 seats.”

The team is leaving that inventory for group tickets, individual tickets and partial plan tickets once the schedule is released.

LOSER – CAVALIERS: To say Dan Gilbert, owner of the Cavaliers, was unhappy about James’ leaving his team would be a huge understatement.

“If you thought we were motivated before tonight to bring the (NBA Championship) to Cleveland, I can tell you that this shameful display of selfishness and betrayal by one of our very own has shifted our ‘motivation’ to previously unknown and previously never experienced levels,” he wrote in an open letter to James on the team’s website. NBA commissioner David Stern fined Gilbert $100,000 for the emotional missive.

Because of the league’s salary cap rules, the team is restricted on how much it can spend to acquire new players. Since acquiring James in 2002, the team has nearly tripled its value to almost $500 million, according to Forbes.  NBA.com reports that James’ jersey is the number two selling jersey in the league. From 2002 to 2009, attendance averaged 809,551 at the Cavs’ Quicken Loans Arena — up approximately 40 percent from the seven prior years before the signing. Before James, the Cavs rarely had a nationally televised game. Last season, 25 games were broadcast on national cable and broadcast networks.

LOSER – VERITIX: The Cavaliers were often considered the flagship franchise for ticketing provider Veritix, owned by Gilbert and managed by President Jeff Kline.

Kline said he could not comment on James for this article, but he did indicate in past interviews that the star had generated big bucks for the team’s secondary platform. During the Cav’s Jan. 21 home game against the Los Angeles Lakers, Veritix’s Flash Seats program had generated $2 million in secondary ticket sales for the team, resulting in $500,000 worth of service fees.

Making matters worse, 2010 was the first post-season the Cavaliers were allowed to use Flash Seats to move playoff tickets because of a previous agreement with Ticketmaster. Besides the Cavs, Veritix has three other NBA clients but only one other team made it to the playoffs this season — the Utah Jazz. On Tuesday, the Jazz lost its star player Carlos Boozer to the Chicago Bulls.

WINNER — SECONDARY TICKET SITES: Broker listing sites like StubHub and TicketNetwork might see more Miami tickets listed on their site than they did when James played for Cleveland. Veritix’s Flash Seats program provided a paperless ticketing platform that made it simple for fans to buy and resell their tickets on an official marketplace, and paperless adoption rates hit nearly 70 percent during the Cav’s brief playoff run. Miami’s American Airlines Arena is a Ticketmaster building that uses TicketExchange, a secondary listing site that doesn’t offer paperless, and often has much less secondary inventory than StubHub.

WINNER – ORLANDO MAGIC: “There’s a good buzz about a potential rivalry between the Magic and the Heat, which never had that much intensity in the past,” explained Allen Johnson, director of Orlando (Fla.) Venues. “Anything that helps basketball in Florida is great, because we’re considered a football state first,” he said.

Orlando, which has made the Eastern Conference twice in the last two years, is in the same division as the Heat, adding to the intensity of the rivalry.  The two teams first face each other on Oct. 22 for a pre-season game at the St. Pete Times Forum in Tampa Bay, Fla. – Dave Brooks

Interviewed for this article: Michael McCullough, (786) 777-4103; Allen Johnson, (407) 810-3055

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