Barely a day goes by without another high-profile athlete being announced as an investor in a special purpose acquisition company (SPAC), a tech start-up or launching their own non-fungible tokens (NFTs).
While the Covid-19 pandemic has created major cash-flow problems for many elite teams and leagues, there is certainly no shortage of liquidity being channelled into professional sport.
Given recent valuations and the financial returns sport can offer, alongside the desperation for some clubs and competitions to stay afloat or stay ahead, that is not a coincidence.
What is perhaps more surprising is that athletes are leading the explosion in investment activity. The sheer volume and profile of the sports stars being signed up to front SPACs and investment rounds, and the sums of money being raised, are colossal.
SPACs, often called “blank cheque companies” because they raise a blind pool of capital through an equity offering, have become increasingly fashionable.
They aren’t new, but the pace of current investment is unprecedented. US sport business outlet Sportico reports that 53 sport-focused SPACs raised $20.5bn last year. So far in 2021, 35 sport SPACs have been formed and hope to raise a total of $9.1bn.
Why SPACs like athletes
For SPACs, athletes are a highly desirable income source. Their involvement is hugely attractive to potential acquisition targets, in light of their personal brand, reputation, reach and ability to contribute to the long-term success of the organisation.
They also provide significant and immediate consumer engagement and are motivated to fulfil the role of brand ambassadors due to the personal rewards for success.
We’ve now entered an era where some athletes have become more marketable than the teams and competitions they represent.
Ownership is the new priority and that’s driving partnerships with the best entrepreneurs and investment professionals to create businesses where they have large percentage ownership stakes.
It is also motivating stars to generate their own investment assets.
The red-hot sports collectibles market has gone into digital overdrive in the form of NFTs – blockchain tokens that are used to represent ownership of unique items.
NFL star Rob Gronkowski recently sold $1.75m worth of NFT trading cards and Patrick Mahomes’ digital artwork banked $3.4m.
European stars yet to join bandwagon
These investment trends are spiking stateside but are yet to entice European-based athletes en masse.
Bayern Munich star Robert Lewandowski was recently named alongside Mahomes and Naomi Osaka as a SPAC sponsor and we’ve also seen Premier League footballers, including Marcus Rashford, Trent Alexander-Arnold and Kevin De Bruyne, join a collective of over 100 celebrities and athletes to invest in wellness tech firm Therabody.
These examples are isolated compared to the volume of current and former US professional sportspeople who are at the forefront of activity.
It remains to be seen if more high-profile athletes from the UK and Europe look to jump on the bandwagon. The likes of David Beckham, Gary Neville, Lewis Hamilton and Andy Murray have been pioneers in developing diverse post-career investment portfolios.
What is clear is that at the top level athletes have never had so much wealth or so many investment options. And, in a world where agents, financial advisors and businessmen target young and impressionable talent with significant riches, seeking the right guidance is key.
As recently as 2018, an investigation by Four Four Two magazine estimated that 40 per cent of professional footballers encounter financial problems during their careers or in retirement.
It’s one thing earning the money but it’s a very different ball game knowing where, when and how to invest it.
Simon Oliveira is the founder and CEO of KIN Partners. He has worked with David Beckham, Usain Bolt, Neymar Jr, Lewis Hamilton, Andy Murray and Liam Payne, was a founding partner in content studio OTRO, and has co-produced documentaries, such as I Am Bolt and Class of ’92.