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Athletes and Franchising

Professional athletes can be entrepreneurs and some invest in franchises.

By Nick Powills1851 Franchise Publisher
SPONSOREDUpdated 9:09AM 01/15/16
Becoming a professional athlete was the ultimate dream for so many of us who woke up early or stayed late at practice as kids. Even as adults, we live vicariously through our sports icons each time we adjust our fantasy lineup or step onto the field with the office softball team. Daydreaming about hitting that walk-off home run or running back a kickoff for a touchdown makes anyone smile, but there are some harsh financial realities when it comes to being a pro athlete.

Most professional athletes believe they will play forever, but the average career of an NFL, NBA and MLB player is 3.5 years, 4.8 years and 5.6 years, respectively. According to a working paper from the National Bureau of Economic Research, 15.7 percent of NFL players have filed for bankruptcy 12 years after they retire. Sports Illustrated in a 2009 report estimated that 60 percent of NBA players go bankrupt within 5 years after leaving the sport.

It’s hard to believe that professional athletes, who earn so much at a young age, could possibly end up bankrupt, especially with the size of salaries and the guaranteed money in today’s sports business climate. You don’t even have to be a top tier player in order to make a very significant income. For example, the average MLB salary is $4.25 million and while those aren’t Zack Greinke numbers, it is way more than the average person earns in a lifetime. Unfortunately, too many athletes see their money disappear quicker than hearing “Strike Three” because of poor financial literacy, bad investments and sometimes, outright fraud.

There are a number of business opportunities that professional athletes can take on to supplement their income, including sponsorships. Sponsorship deals are one of the most common streams of revenue we see in professional sports. LeBron James reps Nike, James Harden works with Adidas, and Bryce Harper partners with Under Armour.

Athletic gear isn’t the only business investment that athletes look at. Many pros will connect with a company that is not directly linked to their prospective sport, but something that can help them better their craft.

Carli Lloyd, who was just recently named a captain for U.S. Women’s National Soccer Team, has electrified the world since she started playing for the National Soccer Team in 2005.

Her legend grew more last summer after she scored three goals, two within the first five minutes, during the 2015 FIFA Women’s World Cup Championship and tied for the most goals throughout the 2015 competition. She most recently earned the distinction of being named the 2015 FIFA player of the year. Her rocket ride to success is still going, but that doesn’t mean she isn’t thinking about what to do after her career is over. Lloyd recently signed a sponsorship deal with professional massage franchise Hand & Stone Massage and Facial Spa.

Lloyd said she knows it’s important to build relationships in the business world and working with Hand & Stone was a win-win situation for her.

“I look at my career as a business and always want to find ways of making it successful,” Lloyd said. “Working with Hand & Stone is a perfect fit since I had already been a member with the brand and know that massages are a very important piece to my success and the health of my body.”

She went on to say that working as an investor with Hand & Stone can be something she sees in her future and urges athletes to get involved with something they love.

“I think if it’s the right situation, and I feel passionate about the franchise, it could be a great investment,” she said. “Working with businesses is entirely up to the athlete. But that is something that is always in the back of my mind.”

While there is no secret formula to solving the pro sports bankruptcy problem, franchising can provide former athletes an easy transition into their post-sports life. Michael Stone, a former NFL safety for seven years, believes this to be the case and that is why he formed the Professional Athletes Franchising Initiative to educate pro athletes on the business of franchising and to help them connect with franchisors.

Stone believes franchising and sports are a good fit because the business model parallels sports in so many ways. You follow the prescribed systems of a coach or franchisor and like an athlete, an operator has to come in and execute the game plan.

There are no official numbers on how many athletes own and operate franchises, but a growing number of big name stars are investing in franchise brands in order to diversify their business interests. For example, Venus Williams has partnered with Jamba Juice, Drew Brees owns Jimmy John’s, Phil Mickelson has invested in Five Guys Burgers and Fries, and of course you’ve probably seen Peyton Manning doing Papa John’s Pizza commercials during the past few football seasons.

George Tinsley, who was drafted by the Chicago Bulls in 1969 and played for several ABA teams, was a franchisee with Kentucky Fried Chicken and T.G.I. Fridays and said one of the most important things for an athlete to keep in mind in order to achieve success is to remain steadfast in making sure the work gets done and the business grows. In the limelight, you may have people pulling at you from every direction and keeping track of investments can be tough, but it’s imperative to keep a laser-focus on running the business.

“You’re buying into a brand with a track record, but you have to do the due diligence to sustain it,” Tinsley said. “You have to be committed and can’t be an absentee owner or turn ownership over to family and friends. You have to stick with it and commit to the work.”

Zelly Wesson, a franchisee with WORKOUT ANYTIME*, who has played for several European basketball teams, echoed Tinsley’s statement that athletes need to understand the business model while finding an industry that is best suited to their skill set.

“A franchise owner is like an athlete in a lot of ways. You are a part of a team that wants to win. You are part of an organization that has established a playbook or systems that must be followed,” Wesson said. “You must practice and get better every day. Experience is your greatest teacher. There's competition that you have to go up against regularly. You also may have critics as well as raving fans.”

Athletes are put through the physical and mental ringer during their playing days and being a franchisee can still challenge them in so many ways. They may not sweat as much, but they’re going to work just as hard.

*This brand is a paid partner of 1851 Franchise. For more information on paid partnerships please click here.