Investment in the NBA (Blog)
‘Patience, Dedication, and Determination. Success in the League and Beyond.’
Professional athletes are among the highest paid people in the world and as a result, many of them live lavish lifestyles their fans could only dream about. But a new trend has emerged. Athletes are becoming exploratory with their earnings by diversifying their income, often taking risks in startups and investments that may not find funding elsewhere. A couple decades ago, the range of options was limited to real estate, restaurant franchises, and car dealerships. Now, with the help of technology and globalization, investing has become anyone’s ball game.
VC All-Stars
The investments made by professional ball players vary from sports drinks and pizza chains, often being a product that the individual is familiar with; however, athletes like Shaquille O’Neal and Kevin Durant have seen tremendous success in investing outside their wheelhouse. O’Neal takes a hands-on approach and likes to meet those pitching the idea directly, which has been beneficial for him after having invested early in Google, Uber, and Lyft. Durant, a partner in the Durant Company venture capital firm, placed winning bets in apps like Postmates and Acorns, both of which experienced substantial growth since his investments in 2016.
For some players, starting or contributing to a venture capital or private equity fund has proven to be a lucrative decision, for others going solo and trusting their gut has worked out fine. Kobe Bryant is one exception after he invested in roughly 15 businesses, one being the sports drink Body Armor, and then formed a $100 million VC fund in 2016. Since his 2014 investment for 10% stake in Body Armor he has accumulated a return of roughly 3,200%, or $200 million, a considerable ROI for a product in a saturated market.
The King’s Gold
LeBron James is another prime example. James works with Maverick Carter, his business partner, and Paul Wachter, his financial advisor, to select projects that he is passionate about and companies that he personally believes in. He dedicates himself to each investment regardless of the outcome, in part, due to having masterminds like Warren Buffett as an advisor as well. LeBron has seen success in the entertainment companies SpringHill and Uninterrupted, restaurant chain Blaze Pizza, and headphone company Beats, all of which have brought in a rewarding return for him. But for him the question is not always, “what am I investing in?”, rather it is, “why am I investing?”.
Tech for the Warriors
Technology companies have been a hotspot for many pro athletes. With the Golden State Warriors located in the Bay Area, it’s no wonder they have three of the biggest investors currently playing in the NBA. Along with Durant, Steph Curry and Andre Iguodala are two big investors in Silicon Valley, going as far as debuting The Players Technology Summit to integrate professional sports and venture capital. Curry has a stake in Pinterest, a gaming organization called Team SoloMid, and he co-founded a marketing startup called Slyce, which has already reeled in big names like Under Armor.
Iguodala, on the other hand, has really embraced the energy in the Bay Area and beyond. After meeting his business partner, Rudy Cline-Thomas, he became quickly immersed in the startup community with stakes in roughly 25 businesses. From sitting through hours of pitches to attending tech conferences (and even speaking at them), Iguodala has experienced VC opportunities incomprehensible a decade ago.
Professional athletes may be a more viable option than many young companies think. Not only do these players bring financing, but they can contribute immensely to brand recognition on numerous mediums.
Sources:
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Badenhausen, K. (2014). Kobe Bryant Invests Millions in Sports Drink BodyArmor. [online] Forbes.com.
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