“A shoe is just a shoe until somebody steps into it. Then it has meaning.” .........Nike marketer Sonny Vaccaro
In business school, corporate finance professors teach three well-established principles about value:
1. The value of a business is equal to the present value of its expected future cash flow (CF).
2. Revenue growth and return on capital (ROC) drive CF.
3. For growth to create value, ROC must exceed the cost of capital.
In the 40 years “Jordan Brand” has grown into a global franchise, with Nike’s 2023 annual report attributing $6.6 billion in gross revenue to the sub-division.
In many respects, the brand has extended beyond basketball into other sports and public consciousness. Around the world, “Jumpman,” the brand’s iconic logo, will outlive Jordan.
The rise of social media and software allows individuals to monetize directly, cut out intermediaries, and build extraordinary wealth. Rather than relying on executives like Sonny Vaccaro and Nike founder Phil Knight, today’s Air Jordan could run on Shopify, collect payments through Stripe, and advertise over Instagram and TikTok with 100% ownership.
A few athletes building wealth beyond their careers.
LeBron James, $1 billion. One of the challengers to Jordan’s title as the NBA’s greatest ever has reached $1 billion in net worth while still competing for championships. In addition to banking high salaries, James has taken equity in brands like Beats by Dre and Blaze Pizza. He has also spearheaded a holding company of his own, SpringHill Entertainment. That vehicle has spawned movies, game shows, and talk shows and is about to launch a men’s grooming line called “The Shop.”
Serena Williams, $290 million. The GOAT of women’s tennis is a prolific venture investor. As an angel, Williams backed Zipline, Masterclass, Daily Harvest, and many others. A dedicated $111 million fund, Serena Ventures, debuted in 2022 and has started capitalizing a host of other startups. Alongside her venture activities, Williams has launched two fashion brands and taken minority positions in the Miami Dolphins and UFC. Forbes estimated her 2023 net worth at $290 million.
Maria Sharapova, $220 million. The retired tennis star has grown her confectionary brand, Sugarpova, into a viable business, earning a reported $20 million annual revenue. Sharapova capitalized the business herself and still owns 100% of it. She has also invested in Public.com, Supergoop, and MoonPay. Her net worth is pegged at $220 million.
By investing savvily, especially in sports franchises or mass-market consumer brands, athletes can earn far more in retirement than they ever did as athletes.
Social media has eaten traditional media and changed the equation, allowing talent to talk to an audience intimately, repeatedly, and on a global scale. Traditional gatekeepers no longer have the same leverage – people have greater control than ever over their story and its distribution.
Technology has reduced startup costs, removed complexity, and increased upside. It is cheaper than ever to start a company. It is also, easier, to launch an e-commerce brand, you can use a platform like Shopify. If you want to test out a new media property, you can use tools like Anchor to launch a podcast and YouTube to distribute videos.
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