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Money Smart Athlete Blog

Are commercial deals more financially rewarding than professional sports contracts?

Oct 12, 2022 | NIL

By Stefanos Gregoriou, The Sports Financial Literacy Academy    

As emphasized in our last Money Smart Athlete article, due to their relatively short careers, athletes need to create multiple revenue streams, diversifying their sources of income beyond their athletic contracts. This 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, including endorsements and sponsorships, which often provide them with as much or even more money than their sports contracts.

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, the basketball legend and entrepreneur, is undoubtedly a great example. LeBron 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.

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.

Despite the aforementioned extraordinary examples, it is important to note that most athletes make much more modest salaries and have zero or only a few endorsement and sponsorship deals. Not every athlete is expected to receive the same compensation, whether through a professional contract or commercial arrangements.  It is worth noting that there are also a number of extraneous factors that affect a professional athletes’ compensation; one such factor is the nature of the athlete’s sport.  Basketball, for example, is immensely popular in the United States, and famous professional athletes in this specific sport may earn large amounts, in contrast to soccer, which is less popular. Sports such as soccer, may be more popular in other locations like Europe, compensating outstanding athletes with relatively larger sums both on and off the field.  Despite the existence of extraneous factors though, it is really up to the athletes how they will go about developing their brand and making a name for themselves within their own athletic sphere and beyond.

Given the high level of commercial revenues that athletes earn these days, it is important that they invest time and effort in building their personal brand thus making their NIL a valuable asset; the payoff can be quite substantial and it can definitely contribute to the athlete’s long-term financial sustainability.

The Money Smart Athlete® Blog is established and run by the Sports Financial Literacy Academy® (SFLA).  Through its education programs, the SFLA has the vision to financially educate and empower athletes of all ages to become better people, not just better athletes.  For more information on our courses, our SFLA Approved Trainer Program®, and how they can benefit you and your clients, please get in touch with us at info@moneysmartathlete.com.

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