First $1B Contract in Sports: When Will We See This?
Using historical data and a forecasting tool to determine when we'll see the first $1B contract.
It looks like Kylian Mbappe is about to turn down $776M from the Saudis at the age of 24.
Right decision? Wrong move?
Either way, it got me thinking…when will we see the first $1B contract in sports?
Let’s Dive In 👇
Athletes Are Worth X, Y, or Z?
The simple answer…
Athletes are worth whatever someone is willing to pay.
Ok. But that doesn’t really get us anywhere.
Let’s head to the data.
Contracts Are Growing Exponentially
Nowadays, contracts are bigger than ever, and it's a trend seen in every league.
2021 saw record-shattering numbers…
MLB: Mike Trout 12-years, $426.5M
NBA: Giannis Antetokounmpo 5-years $228.2M
NFL: Patrick Mahomes 10-years $450M
But just two years later these 2021 deals feel like bargains.
2023 is off the charts:
MLB: Aaron Judge 9-years, $360M
NBA: Jaylen Brown 5-years $304M
NFL: Justin Herbert 5-years $262.5M
Soccer: Messi (MLS), Ronaldo (Saudis)
Golf: Mickelson, Johnson, Koepka w/ LIV
This gives a good scope for growth over the years…
I came across a fascinating case study by Seven Yards Back on how long it will take to reach the first $1B contract in baseball.
Check this out 👀
First $1B MLB Contract
First, it’s important to understand how we’re going to predict this using Facebook's forecasting tool called Prophet.
Here’s the data we’ll input:
dataset made up of two columns
values associated with those dates (y).
linear or logarithmic growth
how many periods (days, months, years) to have predictions for
With these in mind, I gave Prophet the signing years and values for all 667 MLB contracts and asked it to show me the predicted average contract value over the next 100 years.
I set the growth to logarithmic — with the assumption that there is not endless possible growth to the maximum amount of money an athlete will be awarded at one time.
The result is incredible:
What is all this saying?
The black dots are each of the 667 contracts
the x-axis is the future year
the y-axis is the future predicted contract average (as a proportion of one billion)
the dark blue line is the predicted average for a given year
the light blue shading is room for variance over the same years
1️⃣ At no point in the next 100 years does the predicted average for contract value eclipse $800M, much less $1B.
2️⃣ Divide $1B by 3.4469 (our CAA) to get $290,115,528.35.
When the predicted average contract value equals ~$290M (given the historical multiplier given to the top contract) that's when a $1B contract will be feasible.
3️⃣ 2067 is, according to this estimate, the year in which the MLB is most likely to award the first-ever sports contract worth $1B.
That’s just what the data says…
Personally, I think we could see $1B before that in baseball (and his name is Shohei Ohtani).
In terms of other sports leagues — unless the Saudis offer $1B to an athlete I think 2067 is a reasonable estimate as well.
And we’re just talking about payments for an athlete’s day job…
Off the field how much are these athletes worth?
Athletes True Value
Today’s podcast episode was very interesting (as you’ll see below)…
In summary, Playmaker HQ got acquired for $15M with considerations of up to $54M should they hit their milestones.
Playmaker’s media arm has:
20M social media followers
500M monthly impressions
This got me thinking…
How much would the rights for an athlete sell for?
There are multiple NBA players with ~20 million social media followers and hundreds of millions of impressions per month.
If 20 million followers and 500 million impressions are worth ~54 million, how much would the rights to an NBA player of equal stats go for?
Makes you think 💭 (and also makes you realize why Ronaldo charges nearly $2M for an IG post and why Lebron has a $1B lifetime deal with Nike).
Today’s guest is Brandon Harris, founder & CEO of Playmaker HQ.
Playmaker HQ is a sports media and talent agency that was recently acquired for up to $54 million by Bettor Collective.
You’ll enjoy this episode as we discuss:
Taking Playmaker from idea to acquisition
How he scaled the company to 70+ employees
Sports and creator economy trends to keep an eye on
Check out the podcast episode here.
𝘉𝘳𝘢𝘯𝘥𝘰𝘯 𝘣𝘳𝘪𝘯𝘨𝘴 𝘢 𝘶𝘯𝘪𝘲𝘶𝘦 𝘱𝘦𝘳𝘴𝘱𝘦𝘤𝘵𝘪𝘷𝘦 𝘰𝘯 𝘵𝘩𝘦 𝘤𝘩𝘢𝘭𝘭𝘦𝘯𝘨𝘦𝘴 𝘰𝘧 𝘣𝘶𝘪𝘭𝘥𝘪𝘯𝘨 𝘢 𝘤𝘰𝘮𝘱𝘢𝘯𝘺 𝘢𝘯𝘥 𝘩𝘰𝘸 𝘵𝘩𝘦𝘺 𝘧𝘰𝘶𝘯𝘥 𝘴𝘶𝘤𝘤𝘦𝘴𝘴 𝘪𝘯 𝘴𝘱𝘰𝘳𝘵𝘴/𝘮𝘦𝘥𝘪𝘢.
Thanks for reading (and listening) today.
Have an awesome weekend.