POV 21 - From the court to the cap table
Beyond competitions, another longer-term game is being played in which athletes must innovate to fund their careers or secure their financial futures.
A growing number of athletes take the skills learned in this game of influence and strategic thinking outside the courts and become successful investors.
Take Simone Biles' recent leap into a mental healthtech venture or Quebec-born and two-time Olympic gold medalist freestyle skier Alexandre Bilodeau’s growth fund as recent evidence of athletes shining beyond their sports.
Here is how elite sports can breed successful entrepreneurs and investors.
THE BUSINESS OF SPORTS
Two sides of the same coin - Despite a significant gap in average career earnings, both amateur and professional athletes face similar challenges. Athletes of all levels now navigate in highly competitive & stressful environments, and need to innovate to insure their longevity - in and around sports.
The game can be fierce, but rewards those who will dare and make the winning move early.
Short careers, full of opportunities - The average value of professional bank-breaking deals has soared in recent years with rising broadcasting rights, salary caps and endorsement deals. These high-profile deals however hide a majority of athletes coping with far less guaranteed long-term financial success.
Add to the mix compressed & busier seasons, increased travel times and increased injury rates, all contributing to shorten effective career length - now averaging 2.5 to 4.5 years in major US leagues.
NIL - Outside their contracts and endorsement deals, athletes can now take their financial fate in their hands by taking profit from their Name, Image, and Likeness on social media and streaming platforms, for instance.
This novel revenue stream is especially attractive to athletes on the cusp of breaking out such as college athletes or athletes competing in less popular sports who see NIL deals as an opportunity to extend their reach beyond their sports as a majority won’t reach the professional ranks or sign lucrative contracts.
Ambassadorship - Athletes can also become brand ambassadors for products they use and enjoy in exchange for some equity or royalties. In doing so, they maximize their networks and drive investments & sales in cost-efficient ways no traditional fundraising or marketing campaigns could beat. Many brands have reaped the reward of having athlete ambassadors and investors onboard, namely Hyperice, Whoop or Pickleball for whom initial growth was fueled by long lists of athlete ambassadors.
Life after sports - Altogether, these elements combine in encouraging ever-younger retired athletes to use their income and influence earned in the world of sports to the worlds of entrepreneurship or venture investing.
Whether it's about spending their newfound free time on a meaningful passion or securing their financial future, athletes transition to the venture game to satisfy their need for being challenged in the first place.
ATHLETES x INVESTORS
Michael Jordan was one of the first but certainly most prominent athlete to successfully set foot - and shoe - in the worlds of ambassadorship and angel investing to quickly become the first billionaire athlete. Since, fellow basketball players and athletes of all sports and levels have followed in his footsteps and trained their business minds.
Examples abound - Nowadays, it seems not a week passes without an active or former athlete making sports and financial headlines for their entrepreneurial endeavors.
The most visible are inevitably among the wealthiest, but over 500 athletes of all ranks are currently listed as investors. Here are a few noteworthy names and their main investments:
Lance Armstrong’s Next Ventures - Oura, Juno health, and Terra API
Kevin Durant’s 35 Ventures - AI, health and wellness tech, media, and leagues
Roger Federer’s participation in On shoes
LeBron James’ Springhill company and Fenway Sports Group - Media and leagues
Lionel Messi’s Playtime - eSports
Aaron Rodgers’ Rx3 Growth Partners - Therabody and Hydrow
Nico Rosberg Ventures
Serena Williams’ Serena Ventures - Supporting Female and under-represented founders
TMRW sports an athlete and celebrity backed VC fund
Athletes as valuable assets - Whether they are getting involved as angels, VC-backed investors or co-founders, athletes sitting at a business’ cap table is a valuable asset. After all, emerging athletes and entrepreneurs are not so different, as both must benefit from love money in their beginnings and have to build and sustain their brands throughout their careers.
The qualities defining successful athletes are akin to those of seasoned entrepreneurs & investors, as both need to be :
determined, goal oriented & motivated by challenges,
risk-takers and strategic thinkers,
find motivation and enjoyment in the process; whether it is in incremental physical improvements or technological innovations,
leaders and team players,
motivated by being the underdogs and convinced they can beat the odds.
A win-win For athletes, having a vested interest in promoting a brand can potentially earn them more return than endorsement or ambassador deals. For companies, having access to high-level athlete's feedback and audience brings validation, accelerates testing and lowers customer acquisition costs. The key to a lasting athlete-brand alliance is to choose a partner whose values align.
Invest in what you know - As can be appreciated in the examples above, athletes-turned-investors are building their portfolio around ventures in areas they got to understand and profit from during their sporting careers.
Major or emerging sport leagues and teams are among popular investment vehicles due to their recently skyrocketing values. American pro sport leagues have more than tripled the growth of the S&P 500 in the last 20 years, while over 50 sports teams are worth billions in valuation globally.
Many athletes are also getting involved with Sports and Wellness Tech or Nutritional supplements they have used during their careers or from which they would have benefited to elevate their performances, health or wellbeing.
Investing in sports is no longer a passion investment, but rather a very profitable venture.
INVESTING in ATHLETES
At LangLeven, we do not invest in sports leagues or teams but recognize their potential as controlled testing grounds for the technologies eventually trickling to the masses.
Rather, we look for passionate founders who have played the game. Alongside market size and technological innovation, driven founders who display qualities acquired while playing elite sports are major determinants of our investment decisions.
At LangLeven, we pledge to support athletes in their entrepreneurial endeavors.
We have joined forces with Jennifer Heil - two-time Olympic medalist freestyle skier - in helping her build RYA health, a digital health platform dedicated to improving women’s health and with former national team rugby and hockey players at the heart of Bearmind, a brain trauma detection tool.
Reach out if you recognize yourself and put as much effort into your business now, than you did when you were competing.
Here's to supporting athletes and facilitating their success on and off the court.
Bons Jeux !
