By Stefanos Gregoriou, The Sports Financial Literacy Academy
Athletes need to create multiple revenue streams, diversifying their sources of income beyond their athletic contracts. The type of diversification can help athletes to optimize their earning potential, as part of their long-term financial strategy. As a result, athletes today tend to get involved in numerous off-field arrangements. This can include endorsements and sponsorships, which often provide them with as much or even more money than their sports contracts.
Commercial Collaborations
In fact, some athletes make far more money selling their celebrity image off the field than they make from their professional salaries. Famous and recognized athletes land lucrative contracts, through commercial collaborations with companies that want the public to associate their brands with the celebrity athlete’s image. Name recognition is a significant parameter. High-profile athletes with great media influence and many followers are excellent candidates for endorsements and sponsorships, thus increasing their overall earnings to a great extent.
LeBron James
LeBron James, the basketball legend and entrepreneur, is undoubtedly a great example. He has the NBA’s largest athletic shoe contract among current players, as well as a long list of endorsement partners such as Rimowa, Walmart, GMC, AT&T, PepsiCo, and, most recently, Crypto.com. In contrast to his $41.2 million sports salary, his off-court earnings are expected to surpass $80 million in 2022. This is an outstanding paycheck from endorsement and sponsorship deals that many professional athletes would be jealous of.
Tiger Woods
Another extraordinary example, is Tiger Woods. Many consider Woods to be the greatest golfer the world has ever seen. Bridgestone, Discovery Communications, Inc., Hero Motocorp, Monster Energy, Nike, and Rolex are among a few of Woods’ commercial partners. Woods’ golf earnings for 2022 are only $40,000, yet he earns $68 million off the field. His income off the field accounts for about 99.9% of his overall earnings, making his main job- golf- seem like a side job.
Having only a few endorsement and sponsorship deals
Despite the aforementioned extraordinary examples, it is important to note that most athletes make more modest salaries and deals. Not every athlete is expected to receive the same compensation, whether through professional contracts or commercial arrangements. It is worth noting that there are also a number of extraneous factors that affect professional athletes’ compensation.
One factor is the nature of the athlete’s sport, such as basketball being immensely popular in the United States. Famous basketball athletes may earn large amounts, in contrast to soccer, which is less popular in some regions. Soccer may be more popular in other locations like Europe, compensating outstanding athletes with relatively larger sums on and off the field. Despite the existence of extraneous factors though, it is really up to athletes how they will develop their brand. Athletes must make a name for themselves within their athletic sphere and beyond to maximize earning potential. Given the high level of commercial revenues athletes earn today, it is important to build their personal brand. Doing so can make their NIL a valuable asset, contributing to long-term financial sustainability in their careers.
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