There’s a major problem with individual sports…
They leave a few athletes extremely wealthy (and many struggling to make ends meet).
We all know Serena Williams, but what about the 50th-best women’s tennis player?
Unless you’re the best of the best, individual sports can be a tough profession.
We’re seeing the model of individual sports shift right from under our feet.
Let’s Dive In 👇
Everything is becoming a team sport
Why?
More guaranteed money, a tribe, coordination, sponsorship money, etc.
But the biggest reason…
The ability to “own” a team — hence creating another investment vehicle.
Pickleball is the perfect example.
It could be set up the same as tennis, but both the MLP and PPA decided on a team format.
Mark Cuban bought a PPA pickleball team last week.
The first round of MLP teams cost $1M.
Several pro athletes bought teams:
Lebron James Kevin Love Draymond Green Tom Brady Kim Clijsters Drew Brees I’m a big fan of the team concept…
Looking back to the business of boxing article, the disparity between the top fighters and the bottom is insane.
Only 22% of boxers make over $10,000/year and only 4% make over $200,000.
You can see why “real" boxers get pissed when a YouTuber like Jake Paul comes along and is pulling $5-10M a fight (and uses the opportunity to promote his sports betting company Betr).
But don’t hate the player, hate the game. Jake Paul is a genius marketer, businessman, and apparently a decent fighter.
If you look at the difference between the top NBA players and their teammates — it’s not as wide.
Miami Heat 2022-2023 Salaries:
View All NBA Team Salaries Here
And what’s wild…
Most teams’ rosters look like this — a few high-end players, a handful of key contributors, and a sprinkle of role players.
Read More From Andrew Petcash Here
So where are we headed?
The team model is in.
The individual model is out.
And it’s quite ironic if you think about…
From the tech side of the equation, it’s become all about taking care of the athlete and the creator, not the team or the brand.
Yet sports are shifting to a team model, which is actually more beneficial for individual athletes:
Increase in money for athletes (guaranteed contracts, sponsorship money, and the ability to monetize themselves through an app or platform) More investment opportunities for retail/institutions (ability to buy teams in a sport like golf that never had teams before, or to even buy an athlete’s potential) Let’s take a sneak peek at LIV Golf’s team format.
LIV Golf is Banking on The Team Format
Sports Illustrated came out with a piece that said LIV Golf spent $784M during their first season with almost no revenue to show for it.
For reference, the NBA did over $10B in revenue with a couple of billion dollars in profit after expenses.
And it’s looking like next year is going to cost LIV Golf over $1 billion.
They NEED to get a major broadcast deal (or risk some serious problems).
According to LIV, they have a saving grace…
The team format.
LIV Golf has pointed to the use of a team format as its way to profitability, with the plan being to sell off the teams as franchises.
Team captains have equity stakes in their teams and the players also share the profits.
Makes sense…
But what does this look like?
Teams earn a small amount of the tournament prize purse, with just $5M of the $25M pots going to the teams.
The economics are shaky, but one thing is true nonetheless…
LIV Golf has put a massive strain on the current market leader: The PGA Tour.
A New Way To Do Things
LIV Golf is challenging the traditional notion that:
1. players can only earn through performance
2. that the league owns all of the media rights
Greg Norman is saying players on the PGA Tour are independent contractors — which is why they are using the team model we see in traditional sports as the basis for locking players into contracts.
It’s also exposing a major flaw in the current system…
The top players are massively undervalued.
No matter how it all plays out, the extra media attention is great for the game and companies building in the space.
Just like any other league, 20% of athletes will carry 80% of the league’s success.
In today’s age, fans are becoming less localized and more on the side of players. This is in large part to social media.
Before social media, you had to actually go see players in person (practice, training camp, games, events, etc).
But nowadays, you can personally interact with athletes on social media or watch HBO’s Hard Knocks and become a fan of a player (no matter what team they play on).
Whether they admit it or not, people for the most part go to watch players.
Why do you think the Golden State Warriors always sell out?
Because of Steph Curry.
She drives the league, tournament, and game of tennis so much revenue — none of which she is entitled to unless she wins tournaments. And yes her endorsements are massive, but she could lose all of those overnight.
The team model is in and I’m ALL for it.
Athletes are worth a lot more than you think.
How high?
We’ll see.