James informed the Cavaliers on Tuesday night that he will not pick up his $24 million player option for next season. This move, which was expected, potentially paves the way for James to sign the largest total value contract in league history next year.
James has the option to sign a one-year deal with the Cavs for $27.5 million for next season, which is about $3.3 million less than he could get were he to sign a multiyear deal in which the first year would be worth $30.8 million. Under league rules, the Cavs aren't able to give him the full max next season on a one-year contract.
There is a reason why James and his representatives might be willing to make this investment. Next July, the Cavs would gain James' full rights, putting Cleveland in a position to offer James a five-year deal that currently is projected to be worth between $201 million and $205 million, depending on various models NBA teams are using for revenue growth.
Under such parameters, James would become the highest-paid player in league history for the 2017-18 season by earning $35 million, passing Michael Jordan's record of $33 million in 1997-98. James would also become the league's first $40 million per season player in the 2019-20 season.
Nothing at this point is fully assured. A new collective bargaining agreement that might be in place by next summer could alter the projections, though it is unlikely they would go lower. Also, James might not elect to sign a full five-year deal with the Cavs next year.
But this is part of the plan James had when he came back to Cleveland in 2014 -- to sign a series of short-term deals with an eye toward the changing salary cap dynamics with the motivation to maximize his career earnings if he wanted to take that option.
So far, the plan, including winning a championship with the Cavs, has unfolded perfectly.