From the Hardwood to the Boardroom
By Adam Grossman
It is no secret that many athletes that earn millions playing professional sports end up going into bankruptcy soon after their athletic careers are over. One of the most common ways athletes lose their fortunes is through poor investment decisions. In fact, there is no shortage of articles highlighting the “worst investments pro athletes ever made” on a variety of deals. In particular, athletes have lost a significant amount of money making bets on technology or working with financial services companies.
This is one reason that the recent announcement of the Players Technology Summit co-hosted by Golden State Warriors Stephen Curry and Andre Iguodala along with Bloomberg Media is particularly interesting. Rather than running away from technology or investing in companies, athletes are running towards these opportunities. This technology summit will bring together NBA players for a networking event to “share secrets on how [NBA Players are] disrupting Silicon Valley.”
That the last phrase in the previous paragraph sounds like something you would hear from a venture capital (VC) fund, rather than an NBA player, is no accident. Many athletes have become much more savvy investors and function more like general partners at venture capital firms. Iguodala states that athletes can take advantage of their wealth and fame to be in a position, "to learn from some of the best in the tech and venture capital business and put those learnings to work."
Proactively seeking out advice from industry leaders is a significant change in wealth management strategy. In exchange, investors from Silicon Valley gain valuable insights into the rapidly growing sports technology space. Image tracking, geo-location, and wearable technologies are some of the areas that are attracting significant VC dollars. Gaining insight from the athletes who use these technologies at the highest level will better enable these funds to identify promising companies for investment.
These interactions have been an impetus for athletes to start their own VC funds. More specifically, athletes can evaluate early-stage investments for potential growth and make investments in exchange for equity in those companies. In particular, athletes can leverage their own personal experience on and off the court to help find the companies that can “disrupt”, or fundamentally change, entire industries. In fact, current and former NBA players such as Carmelo Anthony, Kobe Bryant, Steve Nash, and Jamal Mashburn have started their own VC funds with industry veterans to invest their personal and outside capital.
It is not clear that NBA players are going to receive the outsized investment returns that VC funds strive to achieve by making bets on growth companies. However, the Players Technology Summit puts the players in a better position off the court to be successful in managing their personal wealth earned on the court.