Ever since I read Dangerous Dreamers last year and learned about the insight that led to Michael Milken creating a high-yield bond market, I’ve been curious about bonds. Wanting to understand this asset class better, I’ve bought several books, including a biography of Bill Gross by Mary Childs, The Bond King.

Today I learned more about bonds from an unexpected person: LeBron James. Bloomberg reported that James used a sophisticated strategy to borrow several hundred million dollars. LeBron has made almost $600 million in NBA salary (source), and he also has other revenue streams, including sponsorships by Nike and other companies.

James’s income from those non-NBA sources runs through his company, King James Funding LLC. In 2018, to get cash up front, King James LLC issued ~31-year bonds. Those bonds paid an interest rate of 4.8% and aren’t due until 2049. The total bond purchase by investors was reported to be almost $300 million; it isn’t clear whether that was the total amount sold over several years or the initial amount sold in 2018.

So why did this catch my eye? LeBron James basically borrowed several hundred million dollars backed by his future non-basketball earnings (and likely some assets too). He accomplished this by having his personal company issue bonds that were bought by insurance companies.

I think it’s an interesting case of a private company using future revenue streams to raise immediate capital. I’ve been thinking about bonds in relation to public companies, but this has me thinking about them in relation to private companies too. I definitely want to learn more about LeBron’s deal structure. Hopefully I can find public filings that shed more light on the bonds he issued.