A Financial Wake Up Call For Professional Athletes
It’s time for professional athletes to wake up. It’s time for them to come together and recognize the power and influence that they wield as a collective entity. Professional athletes are the key component of an industry that with $213 billion in business is collectively twice the size of the U.S. auto industry and seven times the size of the move industry (According to the Sports Business Journal). And the crazy thing is that it’s continuing to grow. Yet professional athletes are only seeing about $8 Billion out of that pot (Salaries of athletes plus endorsements given to athletes).
Professional athletes should be pooling their money together in some sort of fund and investing in the various businesses that are growing all throughout the sports industry. Instead of just getting paid endorsement deals, athletes should be looking to gain stock or some sort of equity stake in the companies that they align themselves with. They should be investing in firms that sell sports based advertising.
Professional athletes should be investing in firms that construct and manage the stadiums that they cause millions of people to congregate to each year. I’ve mentioned this before, but Kobe Bryant and Shaquille O’neal are probably the main reasons that AEG has been able to re-develop downtown L.A. with the Staples Center, L.A. Live, and the Nokia Theatre. Those two should have been allowed to invest their money in such a project.
Professional athletes should be investing in or creating their own firms that produce multimedia sports content. I believe that Kobe Bryant is already following this with his investment in Zambezi, but other than him, I can’t really recall any athletes stepping in that direction. The internet, is the area for the most room for growth in the sports industry. Ad spending, subscriber fees, content production fees, etc. have no where to go but up, and athletes need to jump on board before it’s too late by investing in firms that are carving a niche for themselves in the online sports sector.
Athletes should also be trying to take ownership of the firms that represent them in financial, marketing, and legal transactions.
I know how much economic waste is out there within the professional athlete community. I worked for a business that sold high-end automobiles to professional athletes. I used to have clients that would have fleets of anywhere from 10 to 20 cars, just because they could. I would have clients that were rookies making $500K to $1M that would have two $100K cars. A lot of these guys spend their money before it has a chance to work for them. And as I’ve outlined above, just within the sports industry, there are plenty of opportunities for athletes invest in and get a nice return on investment.
I didn’t grow up in a wealthy home or come from a family of professionals for that matter. But I did get an opportunity to go to middle school and high school in Beverly Hills and college at USC. At these schools, I had a few friends that came from wealthy backgrounds (not rich, but wealthy). Despite having more money than the average athlete, most of these families didn’t spend at the level that some of my athlete clients did. Most of them would own luxury cars, but not more than two or three (one for the husband, one for the wife, and maybe a spare car that they only drove once in a while). For the most part these people invested their money in businesses with good returns and in prime real estate around Los Angeles. I personally watched one of my best friends parents take their profits from a business with decent returns and invest them in better businesses and in Los Angeles real estate and become very wealthy because of it. That’s the blue print that athletes should be following. Yet for some reason, we have to deal with statistics like this. Seriously guys, sixty percent of the guys in the NBA are broke five years after they finish playing? That’s just ridiculous. And that’s why I say it’s time for a wake up call.
It’s time to stop wasting money on excess luxury items. You can have your Mercedes-Benz, or even you Bentley, but you don’t need 14 of them. You can have your Cartier or Rolex, but you only need one, not ten! If you’ve ever hung out in an arena after a basketball game (at least in L.A.), you know that there are all kind of hangers on that get access to the games just because the players give them access. I’m talking about guys that are all constantly trying to sell the players stuff. Stop giving access to these people! You don’t constantly need to be surrounded by jewelers, auto brokers, club promoters, and tailors every time you step out of the locker room. These guys are only trying to get your money. So keep them as far away as possible.
In sum, athletes need to put themselves on a budget, pool their collective resources and start investing in some of the businesses that are created directly and indirectly through their own talents. That’s the only way those horrible financial statistics like the one I mentioned above will ever become a thing of the past.
6 comments:
Elton Brand owns his own production company, Gibraltar Films. They produced a fairly successful film made by Werner Herzog that starred Christian Bale (Batman) called Rescue Dawn. Other than that though they seem to be interested in the horror genre with nothing to show for it. They did produce a Richard Geer film (went direct to dvd) called the flock that is apparently awful.
EB is one of the guys that gets it. But still, why isn't he investing back into the sports industry itself? There are so many investment opportunities within the sports industry that athletes are missing out on.
Nate, an athlete may have interest that exceed sports. It's a positive, as long as that athlete is placing his resources in something that will build long-term wealth. The fact that Elton Brand has a movie production company speaks volumes about him. Every athlete has access to industries that support that region (here in Atlanta such athletes like Hank Aaron, Dale Murphy, Doc Rivers, and even Dominique Wilkins - after his career - have become major investors in local companies. Dine at any of the many Jock's and Jill's sports bars and you will see a young Doc Rivers everywhere). Investment opportunities extend far beyond sports. We all heard about the off the court businesses of former NBA stars John Stockton and Karl Malone in the mid-to-late 1990s. Your point is well taken as the majority of athletes fail to embrace their opportunities and access. However, the financial and personal access of professional athletes extends the $200+B sports industry that you mentioned. The question is how many athletes have the confidence (off of the court or field) to step outside of their comfort zone, use that access, and grow their wealth. It is no surprise that this list is limited to the Kobe Bryant's and Elton Brand's of the world. There are others (Grant Hill, Chris Webber, etc.), but the list is small.
Hey Nate, I found your post on TrueHoop. There's no disputing any of it.
I'd like to add to it by making this point: instead of your theme word "should" you may as well replace it with the operative word "could." This immediately implies that the person involved has a choice.
Meanwhile, no one talks about the reasons why these statistics happen. So, people waste a lot of time talking about proper financial planning and budgets and excess and what's reasonable ... when really the problem lies somewhere else. In psychology.
When you doubt your self worth, you must compensate. When you doubt your self worth, it means you can't grow big enough on the inside to keep up with what you have (i.e., millions of new $$'s) on the outside. To reconcile this, you must give your money away or spend it ... until what you have on the outside is back down again to the level that your inner self reflects based on how you feel about your own self worth.
In other words, you can't be broke on the inside and rich on the outside. It don't work!
This is the well known Lottery Syndrome.
Successful people, like your friends and neighbors in Beverly Hills, don't waste their money because they have a solid sense of inner self worth. They're wealthy on the inside. So, in contrast, they think about and focus on creating money, making money, rather than on spending money.
Poor-thinking people focus on spending; wealthy-thinking people focus on creating.
Which leads to the concept of vision and mission. One way to become bigger on the inside is to increase the size of your vision and your mission. What do you want to do through basketball? How do you want to affect the world? Your world? What's your purpose here?
When you have a big enough vision and a meaningful mission you automatically attract great people around you because your energy and enthusiasm and heart and passion vibrate at a certain frequency that attracts others who are that way too. When you're that way, you can't hide it. When you're not that way, you gotta hide behind some bling.
Truly successful people know that the best thing about being successful isn't the bling at all; it's the feeling inside they get about having a passionate and purposeful mission in life ... this is the joy they have. Not the toys. (Repeat after me "It's the joy, not the toy!")
When you attract new, higher purpose people around you, then by nature you tend to outgrow some of the people you used to hang around, or you gradually realize and become aware of who in your life is a negative influence, and you begin to detect these people much more easily ... and avoid them.
Most people don't wanna grow on the inside. "That takes effort, man, why I gotta do that?" It's easier for your friends to just keep you down, pull you down, keep you from growing. Because, what if you outgrow them?
But the man that seeks growth on the inside can account for this with his big heart, and his desire to create, even for his old friends, while at the same time realizing that the only way to create for them is to encourage them to grow too. Those who are not willing, and won't, they're not prepared to receive that which they say they really want. You can't do nuthin' for that person. 'Til they're ready to seek and receive growth.
Giving them stuff, and money, beyond a certain amount that's given with the intention of an unconditional gift, that's not gonna do any good for anybody.
But guess what? Why should a financial planner, an agent, a commissioner, a player's association president ... why should they tell you this?
If you knew this, you'd be dangerous come the next collective bargaining session.
Instead, if you have a hole in your pocket, all they gotta do is follow you around.
Think of pouring a million dollars worth of change into a coffee cup. How do you fix that? Either 1) pour less change, 2) be left with a coffee cup full of change, which is about where you started, or 3) get a bigger coffee cup.
Have you seen this piece:
Why So Many Black Athletes Self-Destruct (And How To Avoid It)
It's been fun! I'm out.
Nate, you and I know this world VERY well. We have a passion for it. We have an affinity for the athletes that fuel it. For me, it's akin to watching someone you love ruin their good fortune when money is wasted on frivolous things. But, its part of the allure, the lifestyle. A lot of times, they are competing with each other for show.
I admire Grant and Tamia Hill's investements in the art world. I admire Baron Davis for tapping into Hollywood and his hometown connects to build his own entertainment empire, and there are plenty of guys who are not in the spotlight who are doing very admirable and wise things with their earnings. But I know that these are not the guys you are referring to in your post. It's easy to point out the good. Your concern is for those that don't know any better. How can we enlighten them? I have a few ideas, but we'll discuss that another time.
From: L.A.
Nate, your views are critical to say the least but very interesting I must admit. I am student over at Howard Law, can you shoot me an email at Ladams@law.howard.edu, got some suggestions for you- I also work for one of the top Agents in the country.
Post a Comment