LeBron James Did Not Make $700 Million Off Beats By Dre

LeBron James: As one of the most successful professional athletes of all time, James Lebron Probably will make a lot more money on product endorsements, license agreements, and various investments than he makes in the field, even as a top athlete. In his career to date, LeBron has made HUNDREDS of millions of dollars. According to our calculations, his career earnings to date amount to $ 600 million. But if you believe that one of LeBron’s former teammates, LeBron would have allegedly earned more than all of his career earnings from an individual investment. Unfortunately, some quick calculations will tell you that these recent rumors are not as accurate as what is reported in some other publications.

Here’s what’s going on:

Larry Perkins recently appeared on the Racing games, a Golden State Warriors podcast. During the podcast, he talked a bit about an investment that he says paid James when they were teammates in Cleveland:

When Dr. Dre got the big contract for the Beats by Dre, when they wrote this check to him, LeBron James took $ 700 million out of it. He was a silent investor in the Beats and no one knows.

Unfortunately for James, although it is true that he has made indescribable sums in his various commercial activities over the years, it is almost impossible that he won $ 700 million with Beats by Dre.

Apple bought the Beats brand in 2014 for $ 3 billion. At the time, it was widely reported that James was indeed one of the investors in the company. But its participation has been widely confirmed as representing only one percent of the business. That would have brought him something like $ 26 million in cash and $ 4 million in Apple stock at the close of the transaction. Fast forward a few years, if LeBron kept this stock, it would be worth about $ 12 million today.

That $ 12 million combined with the $ 26 million in cash combines with $ 38 million – not bad, but quite far from any unconfirmed estimate of $ 700 million.

Theo Wargo / NBC / Getty Images

For James to make nearly $ 700 million in sales, his stake would have had to be considerably higher than the percent announced. It should be closer to 23%, which would make it a significant investor and therefore likely leaked by Apple as a publicly traded company. Given that this did not happen – and that Apple would likely have been eager to publicize a star like LeBron’s association with their brand – we can assume that it did not earn nearly $ 700 million. dollars as a result of his investment in Beats by Dre.

Of course, even if such an investment has not been disclosed or kept secret by all parties involved, it is difficult to make the numbers work given what we know from the main investors in the Beats brand. A few years after the presentation of the Beats brand to the public by Dr. Dre and Jimmy Iovine in 2008, half of the company was sold to electronics company HTC (at the time, the company was valued at $ 610 million). About a year after entering into this agreement, HTC sold half of its share to Dre and Iovine for $ 150 million, leaving HTC with a 25% stake and Dre and Iovine with two tranches of 37.5 each. Then, in 2013, private equity firm Carlyle Group made a major investment in the brand, completely buying out HTC’s share and large chunks of Dre and Iovine’s share – enough for a total stake of 50%, leaving Dre and Iovine each with 25% of the shares. .

This was the configuration of the land when Apple bought the brand in 2014, and the source of the confusion could be that when this agreement was concluded, Dre and Iovine each made about 750 billion dollars before taxes, while the Carlyle group got the remaining $ 1.5. billion dollars in the sale of $ 3 billion, it was all made public in the financial documents. Given this, it’s just not mathematically possible for LeBron James to have a large stake in Beats, and it’s more likely that his small 1% stake in the company earned him a bonus from each of the Dre groups. , Iovine and Carlyle. take.

History always has a certain meaning, even if it is not literally true, because LeBron James has undeniably demonstrated a proven talent to make good profitable business decisions time and time again. As Perkins himself said:

“What is crazy for me about LeBron James is that he is the chosen one of life … I tell him all the time ‘I really hate you. I hate you!’ And he’ll say “What do you mean, Perk ?!” “I hate you because everything you touch turns to gold!”

It’s still true, even if James didn’t make $ 700 million from an investment from Beats by Dre.