LeBron James confirms deal with Cavs, why just two years?

LeBron James

LeBron James' return to the Cleveland Cavaliers is now official.

LeBron has made his commitment to Cleveland official, signing a two year contract worth $42.1M.

At first glance it is surprising that he only signed for two years.

In his letter explaining his decision to return to the Cavs he implied that he wanted to retire as a Cleveland Cavalier, so why commit to only 2 years?

The answer as articulated by Brian Windhorst of ESPN is that he expects the salary cap to increase significantly, enabling him to earn more money signing as a free agent in 2016 then he could get if he committed to a long term contract right now.

This year the cap was set at $63.065M.

LeBron, obviously, has a lot of leverage in negotiations at this point, being the best player on the planet as well the most marketable sportsman in America. Signing for only 2 years is a calculated business decision, in the same way that LaMarcus Aldridge is shrewd for choosing to be a free agent next summer, even though he has no intention to leave Portland. Money talks.

His contract allows him to opt out next summer and become a free agent in 2015, according to sources. Again, this condition is included simply to keep his options open, but not with a view to leaving Cleveland.

LeBron is not shy in expressing his dismay at a salary cap system that severely underpays him as the best player of this era. No one can blame him for going to meticulous lengths to get every dollar he deserves.

The great Michael Jordan set a precedent in this regard. He signed an eight year deal in 1988 worth just over $3M per year, a figure that is laughably small, especially because the salaries of his peers exploded soon afterwards.

He was extremely diligent in subsequent contract negotiations with the Bulls to make up for it, just like LeBron is now.