Having a player like Lebron drives ticket sales higher, It allows for ticket price increases. He is a major factor for jerseys, clothing, and other paraphrenalia sales increasing. He about guarantees a trip to the Finals and given a team makes about an extra $5-10 million per playoff home game, he is responsible for that extra sales revenue.
His contract is also the best player commodity a franchise can own. Having him under contract could drive up franchise value by hundreds of millions of dollars.
None of this is true for a max player like Horford. Therefore, Lebron is underpaid compared to another max player like Horford because of the extra revenue he creates and extra asset value he provides to the franchise.
I agree with everything that you just said, although is should be worth noting that all of those things that you claim he boosts are already factored into a 40 million dollar deficit for the basketball team.
The part we disagree on is whether or not it's because Horford is paid too much or because LeBron is paid too little.
Another point that I glossed over earlier, the Knicks are #1 profitable team -- with Carmelo and without. The Lakers are #2 -- with Kobe and after he retired. There is only so much a star player can do. While LeBron drives up the Cavaliers franchise, it is much smaller than you realize. The market is the single most driving force for profit, and it is largely unchanged regardless of what kind of roster a team has. For example, in 2016, the Cavs were the 12th most profitable team, behind dumpsters like New York, LA and Chicago (1,2, and 3, respectively).
A player like LeBron can transcend a market by attracting "bandwagon fans" to buy memorabilia, increase ticket sale prices, making him more valuable to own than Horford. He is also not married to the team. He has a contract. No one buying the franchise is going to consider his relatively little worth to a team to be anything more than the contract that he's signed under. https://www.forbes.com/sites/baileybrautigan/2016/03/21/where-all-that-money-comes-from-nba-team-valuations-visualized/#49b76bf444fd
This chart visualizes it much better than I can say.
Some of you also mentioned that the franchises are at an all time high profitability. This is, again, not due to the athletes, but more to do with the expanded TV deals and how these franchises have been able to profit off the internet.
And if they remove the max team cap, LeBron is worth whatever someone is willing to write a check for. It doesn't mean that's his fair market value. If I pay $300 for a piece of bread it doesn't mean that's the going rate for it.
A lot going on here but this is literally what fair market value is.
A component of fair market value implies the individual is doing what's in his best interest. Me buying bread for that price isn't in my best interest. You cannot even begin to discuss "best interest" in terms of an investment until you look at the balance sheet (profits). Writing a blank check is not conducive to a good investment. Now, I've shown you an owner who is 40 mil in the hole each year. You want to double the deficit? Sure, go ahead. The valuation *will* drop. Not even close to the definition of best interest, especially for the league. All of these caps are perfectly calculated to extract the most amount of money for the players that the teams can afford and for all sides to live in harmony. Therefore, LeBron is making exactly the best money that he can make. It's the other guys who are overpaid.
And yet nevertheless, if someone's willing to pay LeBron $100 million per year and he's willing to take it, that's by definition fair market value.
The idea that fair market value involves forbidding parties from deciding what their own best interests are, and that the cap is some perfect harmonization of maximum mutual value is so bizarre that I don't even know where to begin with it, but overall I think you may be conflating the idea of fair market value with a strong bias toward ownership.
I think you're the one confusing a very basic principle.
If I have an item to sell thats worth $50 and one person out of 100 offers me $100 for it and the rest offered me $50, it has a fair market value of $50, even though I made $100.
Just because you rip someone off doesn't mean thats the fair market value.
"To establish FMV, it must be assumed that prospective buyers and sellers are reasonably knowledgeable about the asset, that they are behaving in their own best interests, that they are free of undue pressure to trade and that a reasonable time period is given for completing the transaction.
If we remove large/small cap teams from the discussion and focus strictly on the Cavs, if someone wants to pay LeBron James $100 million to play basketball, the team will be losing $100 million dollars a year. It's a bad investment in which only someone that has no incentive to make a good investment will do... someone with a hobby or infinite amount of cash. It doesn't indicate fair market value because it's not what a completely rational person would pay for the item.
On a large market team, an owner can afford a $100 million salary for LeBron James. A smaller market owner, like Cleveland, cannot. That's a big reason why the league has to establish a salary cap so that the average franchise can be profitable and competitive.