By Stefanos Gregoriou, The Sports Financial Literacy Academy
With numerous cases of professional athletes making a transition into the entrepreneurial world, it seems like elite athletes are becoming more and more conscious of their potential as business leaders. Some may argue that athletes find it much easier to thrive as entrepreneurs since their popularity allows them to attract public interest when starting a new business. Professional athletes who are widely-recognized in their sport and are considered celebrities should be able to capitalize on that reputation and use their public exposure to flourish on a business level. There are two common ways athletes can become entrepreneurs; by starting their own businesses or forming partnerships to promote other firms’ products and services utilizing their Name, Image and Likeness (NIL).
Traditional business options considered by athletes, mainly consist of restaurant franchises and real estate development, while others turn their reputation into their own businesses, launching product lines in sports equipment, cosmetics, and fashion. A known example, includes that of former NFL player Vernon Davis, who owns multiple Jamba Juice franchises.
In recent years, it has also been noticed that some athletes are entering the area of venture capital, forming advisory teams to screen prospective firms for investment in industries that they are enthusiastic about. Alex Rodriguez, former baseball star, founded his widely-known investment firm, A-Rod Corp, which backs businesses with internal and external capital. Another option many athletes turn to, is the acquisition of a majority or minority ownership in a professional sports team, with famous examples being those of Michael Jordan with The Charlotte Hornets and Shaquille O’Neal with the Sacramento Kings. Whatever commercial activity they choose, athletes utilize their brand to promote and build their business, largely through their network and social media, where they already have a large following and hence an established market. This is vital for a company’s entry into the market as well as for its growth and viability over time.
On the other hand, successful and well-known athletes may be seen as a business on their own. Their brand image- what they are selling- is actually themselves, their appearance and their lifestyle. Athletes use social media to establish their personal brand, get acknowledged, and develop brand equity. Social media is used not just to promote one’s self, but also to promote the products and services of a sponsor. Athletes create rich revenue prospects through sponsorships and endorsements by having a strong social media presence. Such endorsement deals can provide an athlete with a significant income stream that may even exceed that of playing sports. LeBron James is one of many examples, earning $90 million in endorsements but just $36 million in sporting wage.
However, when an athlete utilizes their brand to build a business they should do so with great caution. Having a marketable story may help but their personality, values and what they stand for also play a significant role when it comes to being liked by the general public. Since their selling points as an individual are based on perceptions, it is important that they act in a way that portrays them in a good light when it comes to their public life, since this can have an impact on their business. A negative narrative can damage their business.
Building a brand and creating a fan base will help with the growth of any business. The most important tool that helps professional athletes build their brand and promote their business, as mentioned above, is the use of social media platforms. However, you should keep in mind that, while social media is unlocking unprecedented opportunities for athletes towards entrepreneurship, much more is necessary to thrive. Hard work, dedication, continuous research and development, as well as adjustments based on trends and target client preferences play a significant role in sustaining a business over time.
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