The business of basketball is very profitable, and athletes who could tribute the most aren’t in the top 5 in terms of benefits. These entities benefit the most:
1) Businesses in cities who have teams
2) Sportswear companies
3) The teams themselves
4) TV/ Media companies
5) Sports betting / Fantasy sports
It’s only natural for athletes to invest in or gain equity in these other entities that make most of basketball revenue. They can do it indirectly, directly or after they retire if bylaws prevent them from doing so while playing. They could set up SPV and use group economics, partner with PE firms like Magic did, or investors like MJ did. The key is to get started while your influence and capital are at their peak; negotiate it with your next collective bargaining agreement!
Basketball is a gold mine, and billions of dollars are generated annually on many levels. Here are some of the most notable bags grabbed off basketball that don’t get a lot of attention:
* If Michael Jordan were a corporation, he would be in the Fortune 500,” said John Skorburg, chief economist for the Chicagoland Chamber of Commerce. “He is the $1B man. That’s was his estimated worth to the Chicagoland economy: $1 Billion.” This was in the 90s!
* Kobe’s contribution to the Buss family, which owns 70% of the Lakers. The Lakers signed a 20-year TV deal with Time Warner in 2011 worth $4B, pushing annual operating profits north of $100 million for the team. The franchise was worth around $200M when Bryant was drafted in 1996 and was valued at $2.6 billion in Forbes’ latest look at the business of the NBA.
* Lebron: in the summer of 2010 when Lebron left, the franchise value, according to Forbes, dropped from $476M to $355M in a single year. The Greater Cleveland Partnership has never attempted to put a number on LeBron’s true value to the community, they said confidently that it’s in the “hundreds of millions of dollars.” LeBron’s presence and the effect he had on attendance increased the business of eating and drinking establishments by 13 % and employment by 24% in Cleveland.
So when you negotiate keep these tips in mind. Ownership is key!