Common Trait of The Highest-Paid Athletes in the World
Common Trait of The Highest-Paid Athletes in the World
Breaking down the 100 highest-paid athletes 2022
A few weeks ago, a report came out featuring the highest-paid athletes in the world.
It’s a hefty one — so I combed through it for you.
There are three things I aim to accomplish:
Compare the 2021 vs 2022 numbers
Recap the common traits of the highest-paid athletes
Touch briefly on how NIL in college sports impacts this (if at all)
Let’s dive in:
2021 vs 2022 Highest-Paid Athletes
For context, Forbes came out with the 2021 report and 2022 was done by Sportico.
Upon opening the reports I immediately noticed something….
Playing a team sport positively impacts your earning potential.
87/100 highest-paid athletes have teammates.
Interestingly, no hockey players made the cut.
The top 100 athletes play 10 different sports and collectively earned an estimated $4.5 billion in salary, prize money, and endorsements over the last 12 months.
There was a 14% increase from 2020 to 2021 for the highest-paid athletes and a 6% increase from 2021 to 2022.
$4.5B seems like a lot, but hold that thought for a second…
The combined fortune of the 43 Forbes 400 members who own controlling stakes in major sports teams is up a staggering 41%, to $389.2B, over the past year.
The leagues’ highest-paid players enjoyed a modest ~ 6% raise while the team owners enjoyed 41% (mostly illiquid as it was in the form of valuation).
A few other observations:
Naomi Osaka only made a few million from winnings, but $50M from endorsements.
Canelo Alverez only made a few million from endorsements, but $70M from winnings.
Right at the cream of the crop are international sports stars like Ronaldo, Messi, Steph Curry, and Kevin Durant.
Sports such as basketball and soccer have a low barrier to entry and are watched worldwide. Perfect for high salaries and lucrative endorsements.
It’s no coincidence the highest-paid athletes are rising with off-field earnings.
Athletes are some of the most valuable “influencers” in the world.
Common Trait of The Highest-Paid Athletes
Leveraging a personal brand.
Social media has turned out to be the greatest marketing advantage for athletes.
Just one picture on Instagram or a short ten second clip on Tik Tok could result in thousands of dollars worth of sales.
Athletes are realizing this and leveraging it wisely.
Beyond just signing endorsement deals…the smart ones are saying “if a company is willing to pay me $10M to promote their product…how much are they making?”
And that’s why we see athletes like Tom Brady and Naomi Osaka launching their own companies (with the help of successful business partners).
It’s why we see Kevin Durant and Steph Curry leveraging their silicon valley ties to gain access to the best technology investments.
It’s why we see college athletes like Haley and Hanna Cavinder accepting 25% equity in a company over a traditional marketing deal.
Athletes know their worth….
They’re starting to play the long-term game and it’s beautiful to see.
I expect the 2023 list of the highest-paid athletes in the world to be even higher…and then again in 2024, 2025, and beyond.
Leveraging a Brand
Athletes have such strong personal brands they can carry a company on their back.
Name a company Lebron James is involved with that has failed or isn’t doing well?
It’s pretty hard.
Nike literally paid Lebron a $1B lifetime deal. Do you realize how valuable he is to the swoosh team in Oregon!?
It’s estimated they make nearly $600M/year off of Lebron shoes, apparel, and accessories.
If Lebron switched to Puma tomorrow, I’m confident he could take their sales through the roof.
Nike built whole facilities under his name to show their loyalty.
The estimated $30M/yr Lebron makes from Nike is great, but it’s only 5% of the total revenue they bring in from his brand.
Imagine if Lebron earned a 1% equity stake when he joined Nike back in 2003…
The market cap of Nike is up 1500% since.
Athletes finally understand how valuable they are to the brands they promote.
It use to be about who has the bigger home or flashier car in the locker room, now athletes talk about who has the better stock portfolio.
Fun times are ahead.
NIL’s Implications
Name, image, and likeness have been around for a long time.
You’re only hearing about it now because of its legalization across college sports (and probably because of the pay-to-play loophole billionaire boosters discovered).
The bottom line is that college athletes have a lot of influence.
Their “name, image, and likeness” is worth a high price.
Think about Reggie Bush, Johnny Manziel, and Zion Williamson.
All three were bigger stars in college than they were/are in the pros.
But they weren’t allowed to legally make a penny — all 3 of them have hinted at the fact that they got paid under the table.
Here’s the thing though…
Being paid $100k illegally from a booster might have been nice, but it cost Reggie Bush his Heisman trophy.
And can you imagine how much money companies would have paid him to promote their products and services?!
It’s estimated Bush would have made $4-6 million a year while at USC.
And while that wouldn’t land him on the highest-paid athlete’s list…it’s more than the average NFL salary and 4x more than Reggie Bush was making at the end of his NFL career.
Athletes have a lot more money (and opportunities) coming their way. Those that have the right team around them will build generational wealth.
Have a great Wednesday.
Peace,
AP