When Athletes Switch to Moguls | Kaufman & Canoles

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Over the past few weeks, there have been a handful of stories regarding the off-court business interests of active and retired athletes, each of which showed a good example of athletes transitioning to moguls in turning their marks built on the ground into off-court empires.

This week, Forbes magazine reported that LeBron James is now the NBA’s first active billionaire player due, in large part, to his off-court business dealings increasing his on-court earnings. LeBron earned $385 million from his NBA contracts over his 19-year career. Meanwhile, most of his wealth lies in his off-the-pitch value which largely consists of:

  • Endorsement agreements with Nike, AT&T, PepsiCo, Crypto.com, Walmart, among others;
  • Over $500 million in revenue and investments in SpringHill (James’ production company that produced ‘Space Jam: A New Legacy’, ‘The Shop’ and a docuseries with tennis player Naomi Osaka) , the sale to Apple of a stake in Beats by Dre in 2014, and a percentage ownership of Beachbody;
  • About $80 million in real estate in Ohio and California;
  • Worth $90 million for its minority stake in Fenway Sports Group, which owns Liverpool FC, Fenway Park, the Boston Red Sox, part of Roush Fenway Racing, and which recently agreed to buy the Pittsburgh Penguins for $900 million; and
  • $30 million for his 10% stake in Blaze Pizza, which he bought for less than $1 million in 2012.

In the past year alone (May 2021 to May 2022), James is reported to have earned a total of $121.2 million in on- and off-court earnings, second only to Lionel’s $130 million. Messi. Messi himself has major off-court endorsement deals with Adidas, Lay’s, PepsiCo and a $20 million deal with digital fan token company Socios.com, among a number of other business deals. Furthermore, it was recently reported that when his current playing contract with Paris Saint-Germain FC expires in the summer of 2023, Messi could acquire a 35% stake in the Major’s Inter Miami CF. League Soccer, joining the club as player-owner.

The latest potential investment Messi flagged highlights the old adage ‘invest in what you know’. Although James and Messi are two of the biggest sports brands in the world, other athletes have taken similar paths by investing in the ownership of a sports club or franchise, or in a sports-related business. A number of athletes have been able to invest through a ‘capital payment’ arrangement as part of endorsement deals – often with smaller companies or start-ups who want a big brand to endorse their product or service in exchange for issuing a minority stake in the business rather than cash compensation. This allows athletes to benefit from business growth through the use of athlete endorsement and does not require cash investment from the athlete or cash compensation from a small business growing who may not have the resources to pay the fees of such an athlete. normal “grip”.

When it comes to the compensation aspect of commercial and athlete endorsement agreements, agreements can often become complex and require a number of areas of proper planning. It’s important for an athlete to have the right advisors to help advise on tax, financial planning, and legal issues so that the athlete’s off-court empire grows while avoiding the pitfalls.

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