Saturday, July 19, 2014

King James Gets an Assist From Shale

By Holman Jenkins

As luck would have it, LeBron James and the shale revolution will be landing in Northeast Ohio at the same time.

Sports bloggers caused themselves hernias this week stretching for superlatives to match the import of King James's decision to return to play NBA basketball on his native turf after leaving four years ago to pursue championships with the Miami heat. Already his boosters are giving him credit as a one-man urban renaissance. Cuyahoga County Executive Ed FitzGerald, who is running for governor this year as a Democrat against incumbent John Kasich, giddily predicts Mr. James's impact on the local economy will be at least $50 million a year—a figure that is not fanciful on close inspection.

His new-old boss Dan Gilbert, who once complained about Mr. James's "cowardly betrayal," is happily paying the returning superstar the NBA maximum of $42 million over the next two years—then will let him renegotiate to make sure Mr. James gets his share of what promises to be a lucrative new national NBA TV contract.

Then there's Mr. James's personal endorsement income, some of which will also trickle into the local economy. Forbes puts his annual earnings at $42 million from the likes of Nike, Samsung and McDonald's.

Four years ago, in the middle of a national depression, the Cavs sold out every game when Mr. James played for the team. With his return, the Cavaliers will likely sell out every game but at significantly higher ticket prices.

Yet another impact will be from Mr. James's personal management company picking up its second client (after Mr. James himself) in Johnny Manziel, " Johnny Football, " who will begin his rookie season with the Browns. ESPN's Darren Rovell envisions Cleveland's airport soon jamming up with private jets as Hollywood moguls and corporate bigwigs fly in to watch both stars play on the same weekend.

And Mr. Gilbert, a founder and chairman of Detroit's Quicken Loans, has placed his own secondary bet on a Cleveland turnaround, opening Ohio's first casino in 2012, the Horseshoe, which has been slow to pay off. Look for Mr. James to fix that by putting Cleveland on the map for the world's high rollers.

All of the above, including Mr. James himself, are undoubtedly right when they suggest his personal presence and sports magnetism can play a role in the region's revival. But even King James is no match for a global energy revolution.

The Utica shale stretches under virtually all of Mr. James's old stomping ground, including Cleveland, where he played and will play again for the Cavaliers, his hometown of Akron, and even Youngstown where some of his legendary high-school rivalries (in football as well as basketball) played out.

Utica is the next Marcellus, the next Bakken, according to those who know. Ohio, with 51,000 conventional wells, already had an energy industry before horizontal drilling and hydraulic fracturing opened up new reserves of hard-to-reach oil and gas. But fracking now accounts for half the state's output, growing 500% last year. And the boom is just getting started: 50 new drilling permits are being issued every month.

Read the rest here.

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