Game after the game
In 2015 the sports industry was estimated to value over $500 billion globally. As all the projections foresee both short and long-term growth, the business side of sports has never been so important. The commercialization of athletes at the highest level is part of their careers as much as their performance on the field. Having said that, one of the more significant trends related to this is an increasing number of athletes becoming investors/entrepreneurs.
Even though I knew about many successful athletes running their own business, it wasn’t until I saw Lebron James’ new TV show that really made me think: What would I do if I was paid a 7 or 8 digit salary with endorsements more than twice as much?
“You can’t just retire at the age 40 years old and play golf every day. I tried it for one year and you quickly find out it’s nice to be active.”
Wayne Gretzky, former NHL star
Most people instantly think of spending the rest of life vacationing, partying, and not worrying about finances anymore but reality is much different. A research by Sports Illustrated from early recession period showed that:
of NFL players goes bankrupt or under serious financial trouble within 2 years of retiring
of NBA players go broke after 5 years of retirement
Divorce rate for retired athletes
Retired NFL players with depression
Doesn’t it seem unrealistic that these numbers are correct? On top of that, consider the fact that these are the few of most profitable leagues to play in, and athletes are now paid more than ever before. So what exactly happens with all that money?
One of the main causes is being unprepared. Just like being a great player on the field will be of no good to you if you’re out of shape or constantly injured, the same thing goes for the money. Most of these athletes sign million dollar deals in their early 20s. Majority of them come from poor or working class families and have never been in this situation before. Even the college educated athletes come into this group. Everyone thinks that once you get a large amount of money, you have nothing to worry about. Well – think twice.
5 THINGS TO DO DURING CAREER TO PREPARE FOR RETIREMENT:
1. Sustainable Living (Expenses < post-career income)
3. Diversify investments
4. Educate Yourself
5. Avoid divorce
More money – more problems
Things that come over night, disappear even quicker. Even though years of training and sacrifice are invested in a career before the first pro contract is ever signed, every single athlete needs to know that the same preparation needs to be enforced off the field just to save some of the money earned for the retirement.
If you ever hear an athlete say “I’ve made it” at his contract signing, better hope that he is just too excited to play for your team at that level. That’s just like getting onto highway after driving first half of the trip on a curvy gravel road and thinking you’re done. Now your conditions are better but you still need to stay awake, drive carefully at high speed, get gas, etc.
Now I want to go back to Lebron James example, the man who is ranked the #3 athlete and #11 celebrity according to Forbes earnings list. Even though he is a great basketball player, the main reason Nike signed a lifelong contract with him for the first time in the history of their company is because of what he does off the field.
Anyone that has seen him play will agree he’s probably the most competitive guy in the league. He has set himself a goal of becoming the best player ever and he’s doing everything in his power to get there. The goal that he’s set to himself off the field is to become a billionaire. It’s an easy thing to say but the deal he’s signed with Nike will get him there.
Other than that, he decided not to renew his deal with McDonald’s but to be a spokesman for Blaze Pizza which started as his founding investment. James also owns “a piece” of Liverpool, which might be seen as him investing into a club he likes but in reality is just another great business move as it popularizes him abroad. The only 2 athletes that are paid more than him are both football (soccer) players, and Lebron wants to relate himself to the most popular sport in the world.
His multimedia venture Uninterrupted that started early in 2015 just received a $16 million investment in 2016 from Warner Bros. The company creates digital content such as videos about athletes, real-time shows and original digital series.
Finally, his TV show Cleveland Hustles is a great example of how to turn giving back to the community into a business. By revitalizing underprivileged neighborhoods in Cleveland through reality television, not only is he getting a national TV coverage of him helping people but also making the show much more attractive just because his name is listed as an executive producer.
For any athletes reading this, picture it this way. If playing well in multiple positions on the field makes you a better player, imagine understanding the business world and managing your finances as something that will make you a more complete human. Unless you’re in the very top of most paid athletes in the world, don’t expect to be able to live off of savings because expenses grow exponentially with all the fame surrounding.
We don’t think for being 35, 40 years old, because we’re 18, 19, 20 years old, and we think we’re going to make money forever.
Antoine Walker, former NBA All-Star
Million $ in earnings in 2016 - $23 in salary, $54 in endorsements
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