Why top athletes are turning to investing

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Over recent weeks, I’ve spent time talking to top athletes about how they manage their finances. The consequences of those decisions are huge when investing millions, compounded by the pressure to maximise earnings during a short career that can be cut shorter still by unexpected injury or being replaced by the next young star.

That has led to resourcefulness by some, such as former National Football League player Adewale Ogunleye, who retrained and now works as a financial adviser at Swiss bank UBS. It’s to his advantage to be proficient at finance and sport, so better able to make gains on and off the pitch.

We explore that theme in this week’s Scoreboard, followed by an interview with Roham Gharegozlou, the chief executive of Dapper Labs, the makers of “non-fungible tokens”, who insists sports groups can make a killing if they invest in this new digital trend. Do read on — Samuel Agini, Sports business reporter

How top athletes invest millions — and avoid becoming fraud victims

LeBron James: slam dunk investments © Ashley Landis/AP

At the highest level, professional athletes are becoming savvy investors.

Basketball star LeBron James is a shareholder in Fenway Sports Group, the owner of English Premier League football club Liverpool and the Boston Red Sox baseball team.

David Beckham negotiated an option to buy a Major League Soccer franchise while he was still a footballer.

Television money is fuelling multimillion-dollar salaries across the world’s top sports leagues, giving athletes the financial might to make money not just by lending their names to endorsing products, but also through investing.

But it’s hard enough to protect your capital, never mind grow it. Athletes alleged more than $600m in fraud-related losses between 2004 and 2018, according to EY, the consultancy. They are targets in an industry rife with horror stories about unscrupulous financial advisers, scams and surprise tax bills.

Little wonder former England footballer Sol Campbell told the FT’s Claer Barrett, host of the Money Clinic podcast, that property is his favoured investment, as the asset is real and can more or less always generate rental income. Listen to part one and part two of the podcast.

Sol Campbell: keeping it real estate © Tom Pilston/FT

The main problem is one of trust. Athletes can earn millions before they’re out of their teens and seldom have the experience to manage their newfound wealth.

They are only as smart as the people around them. Thomas Hal Robson-Kanu, the Welsh footballer, says he can count on Babatunde Soyoye, the co-founder of private equity firm Helios Investment Partners, for advice.

The goal should be to create wealth that endures for generations according to Jason Katz, managing director and private wealth adviser at UBS. “What I’ve witnessed more in the last year than I ever have in my whole career is that athletes are building these teams of financial professionals around them,” said Katz.

Even as athletes become more financially sophisticated, there’s no substitute for a second opinion from a scrupulous relative who can bring some real world perspective: is this investment proposal too good to be true?

“You always need second eyes . . . separate, independent eyes on it,” says Campbell.

Sports NFTs: how long will the party last?

Dapper Labs’ Roham Gharegozlou: NFT vanguard © Michael Nagle/Bloomberg

Thousands of cryptocurrency enthusiasts, sports merchandise collectors and venture capitalists descended on New York last week to attend NFT. NYC, an annual conference to discuss “non-fungible tokens.” These are digital items, encrypted on the blockchain, making them unique and tradable.

Film-maker Quentin Tarantino announced to an overflow crowd at Neuehouse that he would mint a handful of “secret” scenes from Pulp Fiction into NFTs. Later at Cipriani 25, comedian Hannibal Buress proffered an NFT of his own — a half-minute clip of himself singing off-key — raising $20,000.

The latter event was co-sponsored by Dapper Labs, the NFT start-up now worth $7.6bn on the back of its tie-ups with the National Basketball Association and La Liga, Spain’s top football league, to provide licensed encrypted sport memorabilia.

Dapper Labs founder and chief executive Roham Gharegozlou told Scoreboard that watching products like NBA Top Shot take off, years after launching other niche NFT collectibles “just feels like this year is when the race started”.

Sports helped to launch NFTs into social discourse. But NFTs are also redefining athletes’ stakes in merchandise sales. “For the players, it’s about creating a new revenue line. That’s not just money today, but it’s securing their legacy forever”, Gharegozlou said.

“Each time a Top Shot changes hands, there’s a royalty back to the athlete — even after a player passes away, their likeness will create value for their estate . . . which is something they don’t necessarily get every time a physical trading card gets resold”.

That component explains in part why some athletes like Kevin Durant and Andy Murray have launched individual NFT deals of their own.

Beyond sports, Gharegozlou said NFTs have shown blockchain technology can go mainstream, potentially hastening a shift away from “traditional” social media, such as Facebook and Twitter, with their regard to privacy protections.

“The whole point of blockchain is it gives you, the owner of the information, the ability to control who sees it, what they do with it. And then you can revoke that permission at any time”.

Kevin Durant: ballin’ on the blockchain © Jonathan Daniel/Getty Images

Still, many involved in NFTs simply spot a new gold rush and want to get rich.

Revellers at the Dapper Labs party nibbled on risotto as Patrice Rushen‘s “Forget Me Nots” thumped over the sound system, eager for a piece of the new internet landscape.

One attendee identified himself as the chief technology officer of a stealth-mode NFT start-up, before revealing his day job as an engineer at Facebook. Is the idea to ride the NFT wave, and leave the social networking company behind?

“Absolutely”, he said. “That’s the dream”. 

Highlights

Daniel Kretinsky: Irons in the fire © Thomas Samson/AFP/Getty Images
  • Czech billionaire Daniel Kretinsky acquired a 27 per cent stake in West Ham United, valuing the English Premier League team at £700m. He becomes the latest wealthy investor to buy into the world’s most valuable domestic football contest. British entrepreneurs David Sullivan and David Gold remain West Ham’s largest shareholders.

  • Sponsors of the Beijing Winter Olympics, including Visa, Coca-Cola, Airbnb and Omega, are under growing pressure from campaigners to use their leverage to address human rights abuses in China. Human Rights Watch said this week that letters sent to each of the top corporate sponsors questioning their involvement in next year’s Games drew no responses from the companies.

  • India’s early exit from the Twenty20 cricket world cup, including a defeat to arch-rivals Pakistan, exposed a religious divide in the country. The team’s only Muslim player, Mohammed Shami, was vilified by Hindu supporters in the latest sign of growing social tensions in India.

  • A racism scandal at Yorkshire County Cricket Club rumbled on. Chief executive Mark Arthur resigned following criticism that the English team had failed to properly respond to allegations from former player Azeem Rafiq that he faced repeated instances of racist behaviour from teammates and colleagues.

Transfer Market

Sean Bratches: charting a new course © Alex Griffiths/Formula One
  • LIV Golf Investments, the investment vehicle backed by Saudi Arabia’s Public Investment Fund and led by former golfer Greg Norman, has been on a hiring spree. Will Staeger, who managed original production at entertainment group Endeavor, joins as chief media officer. Sean Bratches, who was commercial boss at Formula One, the racing series controlled by Liberty Media, will become chief commercial officer.

Final Whistle

The world’s largest marathon returned to the streets of New York last weekend, with more than 30,000 runners taking on the five-borough race a year after cancellation. That’s down from its typical field of over 50,000 participants, due to ongoing Covid-19 restrictions, though the race did have one unexpected new entrant: this cute and speedy duck. We didn’t check the finish time, but hope it set a personal best.

NYC Marathon: ducking awesome © @DannyDeraney

Scoreboard is written by Samuel Agini, Murad Ahmed and Arash Massoudi in London, Sara Germano, James Fontanella-Khan, and Anna Nicolaou in New York, with contributions from the team that produce the Due Diligence newsletter, the FT’s global network of correspondents and data visualisation team

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