Darren Rovell Breaks Down LeBron James' $300M Insurance Loan

**Craig Carton** (0:00)
Joining me on the hotlines, my main man, Darren Rovell. Darren, how you been, buddy?

**Darren Rovell** (0:03)
I'm good, how are you?

**Craig Carton** (0:05)
You're smarter than me, let me just acknowledge that. So I'm trying to figure out why this LeBron James $300 million loan from the two insurance companies affiliated with Guggenheim isn't a front page huge story today.

**Darren Rovell** (0:20)
Okay, so this is how it works. So LeBron was given, let's say, a billion dollar deal from Nike. And say it's, now some of these deals, I don't know the exact numbers, but let's say it's a 12 year deal for a billion dollars.

**Craig Carton** (0:40)
Okay.

**Darren Rovell** (0:41)
It's guaranteed. Right. It's guaranteed. So, and let's say it's heavy, it might be heavy back loaded. So let's say years eight to 12 is 500 of that billion dollars.

**Craig Carton** (0:55)
Okay.

**Darren Rovell** (0:56)
But he wants the money now. He needs liquid cash today.

**Craig Carton** (0:59)
Okay.

**Darren Rovell** (1:00)
He wants the cash today because he sees the, let's just say he sees the declining dollar and he sees, and he thinks, you know, if he could get, God, if you could get five or 8% off a billion dollars, start the clock now, baby. So that's what it says. So he thinks that. Now, insurance companies love when they see that something is guaranteed. Okay. So the Nike deal, the contract, when they, when they can get the contract and LeBron can present to them, Hey, no, the billion is guaranteed. I just, you, you take some sort of rate. And by the way, if you work it through insurance, it quite possibly could be tax free.
Okay.
So, so they like to take this type of stuff. Now, if Walter was the Lakers owner at the time of the deal, that would have been a little bit different.

**Craig Carton** (1:59)
Okay. So let me stop you there. So he, I don't think he was the owner when this deal was consummated, but once he buys the Lakers and LeBron is still a player on the Lakers, is that something that needs to be disclosed to the NBA?

**Darren Rovell** (2:15)
Yes. However, however, how has the NBA missed what Walter is doing in general?

**Craig Carton** (2:25)
Right, right.

**Darren Rovell** (2:25)
I have tweets from 2012 saying, wait, what's this guy doing? Like war, the people are like, okay, explain it to me simply. Let me, let me, let me do this for you, Craig. Warren Buffett, he has Geico, right? Berkshire Hathaway owns Geico. He gets $30 billion of premiums, okay? And he knows that 20 million is going to go out the door.
He'll have to pay people because they're claiming on their insurance. Right, okay. Well, then he has $10 billion a year, every year. He's been doing this forever, that he knows he can play with. So what does he do? He takes the $10 billion and puts it in treasuries. Okay. And gets 6% to 8% of that every year, and that's fine. Now, the Walter situation gets a little bit tough because he has to, you have to check the boxes whether the loans that you're getting are affiliated or unaffiliated. If they're affiliated, that's when it gets hairy. And so there are these relationships where there's kind of a quid pro quo, you're going to loan me money, and then I'm going to take that money, and then I'm going to use it to buy sports teams, which is a whole lot different than putting it in treasuries. For sure.
And then you have weird things like when Magic Johnson paid for his part of the Dodgers, where did the money come from? It came from an insurance company in which Magic Johnson was the CEO. What?
Magic Johnson was the CEO? Yeah, he actually was of this insurance company.

**Craig Carton** (3:59)
I thought he bought it with his Starbucks money.

**Darren Rovell** (4:03)
Maybe not. I guess not. I guess not.

**Craig Carton** (4:06)
So look.

**Darren Rovell** (4:07)
It's all, it's very, you know, I would say one thing. Someone said something to me today that really hit home. When these sports teams are worth 10 to 12 billion dollars, who the hell could ever afford those? And the cost of it going up and up and up means you're going to have guys who are millionaires and then they're billionaires, and then they're back to millionaires again. Like they're levering and they're moving buckets and it's the P under the cap and where is it and who knows? And the subprime stuff and whatever. And so it's almost like baseball in 96, 97 where you're like, well, we want guys to hit home runs and then all of a sudden you have a drug problem.