In his capacity as a Columnist for California Sports Lawyer®, Founder Jeremy Evans has written a column about the three keys to reaching athlete billionaire status in professional sports.
You can read the full column below.
When thinking about becoming an athlete billionaire, there are three keys to reaching such a status. They are: staying healthy, a positive team environment, with great investment and risk-taking strategy. There have been few athletes that have reached billionaire status. Those athletes are Michael Jordan, Tiger Woods, LeBron James, and Magic Johnson, and if Kobe Bryant had lived but for his tragic death, would likely have joined the billionaire club as well.
If you think about an athlete's projection it always comes down to the athlete's health. An athlete can only play long if healthy enough to play. Some athletes are blessed with bodies that can sustain more pressure, some athletes are better at taking care of their health, while some athletes are blessed with both. The specific sport may also have an effect on how long the athlete plays.
For example, in the National Football League, an athletes career may only last three and half to four years. In the National Hockey League, a little bit longer. Health permitting, in Major League Baseball, Major League Soccer, and the National Basketball Association, careers may last anywhere from fifteen to twenty years. However, not every athletes career is guaranteed time, but every athlete, as every human, definitely has a time clock set to expire on Earth. So if an athlete is to make a significant amount of money while playing sports, the health of the athlete is essential to staying on the court, course, or field of play to continue to get paid by the team, sponsors, or other revenue. This is why athletes like Michael Jordan, Tiger Woods, LeBron James, and Magic Johnson, who all played for a relatively long period of time and were/are very good at their craft, all made significant money either from the teams that they played for and or in sponsorship dollars. Arguably, each of these athletes were at their height of their sports in talent and output at some point during their careers, which cannot be over-emphasized in terms of reaching the billionaire athlete club. Advertisers will certainly look for opportunities to promote the billionaire club through a product or service.
As we have written about in this column and spoken about before on the California Sports Lawyer® Podcast, there are generally four tenants to a successful sports franchise. Those being a great venue, a great market, great lease, and great personnel. All four of those things are also essential to an athlete's success on the court, course, or in the field of play over an extended period of time. This means that for an athlete to have sustained success they generally need to be playing for a team that supports their health, is surrounded by talent, and the league or franchise pays them enough to stay for an extended period of time.
However, in individual sports where the athlete is not playing with a team, the principles above generally still matter except that the athlete’s team is more focused on health professionals, a quality agent, quality attorney(s), and in general people around him or her that support the goal of an extended playing career with a high level of success. As an example, often experts point to former quarterback for the New England Patriots in the Tampa Bay Buccaneers, as a player who benefited from a system of play. However, it is also true that a player like Tom Brady who has yet to reach billionaire status, but may soon reach that status, also demonstrated the ability to manufacture success despite obstacles and stay healthy!
Investment and Risk-Taking
Lastly, it used to be that players did not focus so much on financial investment and professional advice. This may also have been because in the past athletes were not paid as much as they are today. The players associations and unions have helped to increase salaries as has the increase in television broadcast, endorsement, and sponsorship dollars. Social media has also turned athletes into private broadcast centers that has created additional revenue opportunities. As athletes have made more money, particularly guaranteed money through contract, and as athletes have become even stronger brand ambassadors, the financial windfall has been significant.
There has also been a concerted administrative effort in high schools, colleges, and at the professional level to educate athletes on proper financial investment and management. This can be seen in athletes becoming producers in Hollywood, athletes buying into ownership of teams, and in creating their own businesses, while playing and beyond their playing careers. In many ways, athletes have realized that their future in a professional sports League is limited and therefore finding ways to continue to monetize their brand or name image and likeness has become a priority.
Investment and risk-taking opportunities are often seen with the most successful athletes. However, there are exceptions to the rule where athletes who maybe not be as successful on the court, course, or in the field of play have still gone on to successful careers as broadcasters, on-air talent, or business owners, and sometimes all three. The advancement of athletes, financial incentives, and increase in pay have led to more opportunities and need for athletes to seek financial advice to help understand the importance of financial wealth management and investment.
Athletes and their attorneys often refer clients to certified financial wealth management experts, but not every investment is going to be successful based on their advice. However, like with most investments, diversifying investments is often encouraged by financial experts. When looking at the most successful athletes, namely Michael Jordan, Magic Johnson, Tiger Woods, and LeBron James, all of these gentlemen have several things in common. First, each of them stayed healthy long enough to get paid for their performance on the course or on the court. Secondly, each of them, for long periods of their careers, have had well organized team environments creating opportunities for success. Lastly, each of these athletes, particularly with Michael Jordan as a great example and one of the first to do it, has shown the ability to invest in franchises, real estate, new and exciting businesses, and also the ability to exit from those endeavors when proper.
It is also interesting that three of the players on this billionaire list are basketball players. This may have something to do with the fact that basketball players are generally paid the most over longer periods of time compared to other professional sports (at least in the current market). It may also have to do with the fact that the National Basketball Association has focused on financial management and success and revenue splits with the players. This is not to say that the other professional sports leagues have not done the same thing, but the results show that the NBA is having some significant success when it comes to these athletes reaching billionaire status. There is also something to say about the fact that basketball has always been better at marketing its players and particularly starting with Michael Jordan. Basketball also benefits from the fact that its players are more visible. Meaning, basketball players do not wear helmets or hats and are not covered with equipment. This makes basketball players generally more marketable and is proven by the fact that their endorsement deals are often a lot larger for individual athletes than it is for the other sports.
In the end, professional athletes will continue to benefit from the obvious point of staying healthy, being in a great team environment, and taking calculated risk or at the least, investing to start. Being an all-time great in your sport does not hurt and to this point is mandatory to enter the athlete billionaire club.
About Jeremy M. Evans:
Jeremy M. Evans is the Chief Entrepreneur Officer, Founder & Managing Attorney at California Sports Lawyer®, representing entertainment, media, and sports clients in contractual, intellectual property, and dealmaking matters. Evans is an award-winning attorney and industry leader based in Los Angeles and Newport Beach, California. He can be reached at Jeremy@CSLlegal.com. www.CSLlegal.com.
Copyright © 2023. California Sports Lawyer®. All Rights Reserved.