With its March 2010 extension of LeBron James’ original 7 year $100 million contract on the books, Nike (NYSE:NKE) was hopeful that LeBron James would replace Michael Jordan as the greatest shoe salesman of all time. That summer, we were all mistreated to a spectacle of pomp, flair and egomania, as free agent King James toyed with the hearts of Cleveland, Chicago, New York and Miami fans.

When the smoke cleared, we were left to contemplate “The Decision” and a Miami Sound Machine nightclub atmosphere, where James proclaimed that he and his two new partners in crime would dominate the League and win “not two, not three, not four, not five, not six, and not seven” NBA championships. In one day, LeBron James had miscast himself away from a fun loving Akron kid and into a despised Wrestle Mania villain, on par with the worst of any Bad Boy Piston.

Despite the slew of public relations gaffes from its leading pitchman, Nike stock continued to deliver solid returns. Between the summers of 2010 and 2012, Nike shares made the trek up from $70 to $110, which more than tripled benchmark S 500 returns. In 2011, Nike reported 12 percent year over year net income growth alongside obscene 45 percent gross profit margins. All numbers indicate that the Nike brand has cornered the market for “cool,” irrespective of LeBron air jordan 12 James’ performance both on and off the floor. For Nike, the beat goes on.

At this point, LeBron James’ career in relation to Nike stock is effectively a cheap, and deeply out of the money call option. If King James makes good on his promises and begins winning multiple championships now, then he will rehabilitate his “global icon” image, and set off yet another leg of supreme prosperity for Phil Knight and his running mates at Beaverton.

Michael Jordan’s ShadowTo Larry Bird, Michael Jordan was “God in disguise.” Upon his 2003 retirement at age 40, Michael had closed out his career with 30 / 6 / 5 averages in points, rebounds, and assists per game. Most importantly, he won six championships as the unquestioned leader of the Chicago Bulls. For Nike, it was a match made in heaven, as its marketing machine helped polish the image of a skinny, balding kid from Wilmington, North Carolina, into that of an All American winner.

In 1985, Nike awarded a 5 year $2.5 million endorsement contract to this Michael Jordan rookie, which effectively transformed the shoe business forever. In nominal terms, Jordan’s first shoe deal translated $130 million in earnings for Nike. From there, CNBC reports that the Jordan Brand first topped $1 billion in annual revenue in 2009. In terms of the halo effect and goodwill, however, the argument could be made that Michael Jordan retired as a man who was bigger than both Nike and the game of basketball. Behind Air Jordan, Nike stock has literally taken flight from the foul line, from (split adjusted) pennies a share in 1984 to today’s $110 price and $40 billion market capitalization.

LeBron’s Time for NikeAfter Kobe Bryant, King James is the latest heir apparent to Michael Jordan. For LeBron James, at 27, winning time was yesterday. King James is in a precarious position, as he purposefully chose to share the load with fellow all stars Chris Bosh and Dwyane Wade in Miami, instead of showcasing his talents as The Leading Man over a supporting cast in hard luck Cleveland.

For Nike shareholders, the LeBron Revolution would set off another halo effect wave of Jordan like mania over the long term. We are at a critical junction, because Kobe is getting long in the tooth, and it is only a matter of time before sneaker aficionados identify less with 23 Air Jordan, the incomparable basketball player, and more so with Michael Jordan, Charlotte Bobcats executive. With James leading the way as heir apparent, Nike will continue to significantly outperform the benchmark S 500 Index (SPX) for years to come.

As the Heat battle through these 2012 NBA Playoffs, the team is developing even more chemistry that proves it will compete at a high level for years to come. LeBron James often shows flashes of invincibility, as he combines the size of Karl Malone, alongside the agility and court vision of Michael Jordan and Magic Johnson. The self anointed King James, of course, is desperately aware that only multiple titles will fill holes within his already impressive resume. Maybe then, we can finally move on from wanting to be like Mike as Nike’s stock resumes flight.

The Bottom LineIn June, the 2012 NBA Finals should present trading opportunities for short term investors in Nike’s stock, while LeBron James and his Heat advance toward the Larry O’Brien trophy. As a stock market indicator, we may compare LeBron’s game to that of Jeremy Lin and his New York Knicks.

Immediately after Lin’s first start, on February 4, Madison Square Garden (NASDAQ:MSG), shares gapped up to $32 from $29. After one jordan 6 week as a starter, Jeremy Lin had slapped together 27 / 5 / 8 in points, rebounds, and assists per game averages. Linsanity ensued, as his Knicks ran off seven straight wins, Garden seats and Knick merchandise became must have items, and MSG stock began its ascent. Amid the hype, Q1 2012 revenues for the MSG Sports division climbed to $216 million, up from $158 million year over year. The overnight celebrity play of Jeremy Lin kicked off a furious rally in Madison Square Garden Corporation air jordan 9 shares from $29 to $39 between February and May.

A title for King James would have a similar effect on Nike shares. As front man for the Heat, an MVP performance on the Big Stage should translate into a quick, two to three percent move up in Nike shares over the next trading session. From there, Team LeBron, Nike, and their shoes will be more marketable in the critical Chinese athletic apparel market that demands winning from its endorsers. According to The Wall Street Journal, Kobe Bryant remains wildly popular in China, in large part due to his five championships that help “remind everyone of Michael Jordan.”

In its latest 2011 fiscal year, ending on May 31, Nike reported $2 billion in revenue from Greater China, which accounts for roughly 10 percent of Nike’s $21 billion in total consolidated revenues. Broken down further, Nike collected $777 million in earnings before interest and taxes from China during 2011. Taken together, these figures signal 20 percent year over year growth. For Q3 2012, Nike tallied $273 million in Chinese EBIT, which is a 28 percent increase above Q3 2011. Year to date, Nike is reporting $664 million EBIT from China.

I project that a LeBron James championship and heightened demand for his shoes would easily drive Nike’s Greater China EBIT past the $1 billion mark, annually. With a 25 percent tax rate, we can expect China to account for $750 million, or nearly half of Nike’s total net income. Over time, profits from China will exceed Nike’s North American business, and push total annual net income above $3 billion. At 20 times earnings, Nike would carry a $60 billion market capitalization, or trade at $175 per share. With LeBron James at the helm stacking up championships, this day will come sooner, rather than later.