Tech investments — How the next billionaire athlete will emerge

Arthur
4 min readJul 6, 2020

Long retired, Michael Jordan, #1 on the athletes’ rich list, became a billionaire thanks to his record Nike endorsement and successful investment in the Charlotte Hornets. As sports earnings and endorsement deals plateau, athletes invest more and earlier in their careers to diversify their revenues. In the past they sunk millions into sports franchises and property. Now they are turning to tech, an asset class where they can add greater value.

Michael Jordan ranks #1 on the athletes’ rich list, with an estimated net worth of $2.2bn. On the NBA courts he made “only” $93m. Most of his wealth comes from his sponsorship deals, which include the biggest endorsement contract of all times, with Nike. Since their first deal in 1984, Nike has paid MJ $1.3bn. He still gets over $100m a year in royalties from the apparel firm. The rest of his wealth mostly comes from his investment in the Charlotte Hornets.

Only two other athletes worldwide are billionaires: Ion Tiriac, a former tennis player turned business tycoon, and Vince McMahon, a former professional wrestler, now owner of WWE. None of them are familiar to anyone under 50.

Among the active superstars — Leo Messi, Cristiano Ronaldo, Roger Federer, Lebron James, Tiger Woods and Floyd Maywheather, to name a few — none is on the waiting list to enter the athlete-billionaire club. After Woods, estimated to be worth $800m, the rest of the crew is just short of $500m.

Their “traditional” income — sports earnings and endorsements — has grown at a breakneck pace over the past decades. But it is reaching a plateau. Woods was earning $105m in 2010. Ten years later Federer topped the list with $106m, and only three athletes now make more than $100m a year, two of them approaching retirement. A few mammoth endorsement deals could trick one to believe that the billion dollar mark is within their reach. But that is unlikely to happen soon: Ronaldo and James’s recent partnerships with Nike, said to be worth $1bn, are in fact lifetime deals.

In the post-Covid era both sports earnings and endorsements could stall for a while. This should push athletes to diversify their sources of revenue by investing more and earlier in their careers. For Messi, Federer and friends to enter the athlete-billionaire club they must be successful investors, like Michael Jordan, Roger Staubach or Magic Johnson in their days. Yet unlike their predecessors, athletes now have options that go well beyond buying a franchise, building their own business or growing a property portfolio.

One asset class is gaining growing traction among active athletes: venture capital. Over the past decade, a fair few athletes have started investing in startups. Some are just doing one-off investments. Others are much more committed, like Kevin Durant, who changed franchises — from Oklahoma Thunder to Golden State Warriors — to get closer to the startup scene and grow his portfolio of now 30+ investments. Or professional in their approach, like the late Kobe Bryant, who set up Bryant Stibel, a $100m venture capital fund, with Jeff Stibel, an entrepreneur and investor. Outside of the NBA, Serena Williams set up her own investment house, dubbed Serena Ventures, in 2014.

When it comes to becoming successful tech investors, athletes have a serious edge. They have wads of cash to invest and privileged access to investment opportunities through their political and business networks. As digital natives, they often get it — and like it a lot. Post-investment, they also have an incredible audience that they can leverage to help their portfolio companies take off. Beyond financial returns, startup investments come with added benefits, allowing athletes to build their personal brand by showing them as smart and socially engaged. Most often they also pick up contacts and skills they can leverage after the sporting career, much like they would by doing an MBA.

Outside the sports industry, actors and other celebrities have taken that route, too. The most successful celebrity investor is perhaps Ashton Kutcher, who returned $250m from the first $30m he invested and who now manages $100m through Sound Ventures.

Kobe Bryant made his first investment in BodyArmor in 2013, acquiring his 10% stake for $5m. Four years later, when Coca-Cola invested in the company, it was valued at $200m. His acrobatics on the pitch and charisma outside it helped build the fledgling upstart into a thriving business that plays into the top league. The next billionaire athletes may not come from the ranks of similar superstars — instead they might just be those who got the flair to invest in tomorrow’s Google, Uber or Facebook before the crowds.

--

--

Arthur

Deeply passionate about media and technology, and the evolution of content distribution and audience monetization.