Director of Sport and Fitness at The PHA Group Tom Inskip shares his thoughts on the rise of athlete investments, and what brands can do to maximise their exposure.
“One day I will retire from tennis, but I will not retire from life”, said tennis legend Roger Federer after he ended a 20-year association with sporting label giants Nike, in favour of building long-term commitments and investments with other brands, such as Uniqlo and On Running. Athletes are often subject to comments from green-eyed members of the public who claim that these sporting stars have ‘more money than sense’. However, in challenging that stereotype, we’ve started to see a real shift towards sporting athletes making business-savvy investments, with sponsorship deals becoming increasingly less attractive.
So, what’s the reasoning behind this trend in athlete investment? Firstly, investments allow brands to engage more deeply with athletes and their audiences. Unlike conventional sponsorships, investments mean brands are also acquiring a stake into the athlete’s successes and failures – both professionally and personally. Rather than a mere endorsement, a successful investment partnership will largely depend on fostering a trustworthy, collaborative working relationship.
Sharing a vision and brand values are also pivotal behind an athlete investment. For the sake of a large pay cheque, there’s been plenty of cases before where athletes might be sponsored by a brand whose values don’t align at all. Any time an athlete invests into a brand, they must also invest into their ethos too – it creates an authenticity that resonates with consumers who perceive the brand’s association with an athlete to be more genuine. A good example of this is Harry Kane’s recent investment with golfing sustainable performance wear brand, Reflo. Kane wore the apparel whilst playing golf in the Icons Series, with the comfort and sustainability element appealing to him. Resulting conversations ultimately led the England captain to deciding to invest in the brand, as part of wanting to make a more sustainable future for his children.
Rory McIlroy’s investment in wearable technology company WHOOP, is another example of a very successful partnership, both for the athlete and the brand. Whether its ball speed, club head speed or distance, professional golfers are obsessed with metrics to try and improve on every fine margin within their game. In WHOOP, Rory now invests in a brand that provides endless metrics on his health too, trying to gain any form of advantage that enhances his sleep, his recovery and his heart rate, harnessing benefits that will maximise his physical and mental side of his game. Whereas for WHOOP, having an athlete like Rory McIlroy on side can pay huge dividends too. When Rory invested in 2020, it was valued at $1.2 billion, before a separate funding round saw the company’s valuation grow to $3.6 billion just a year later.
Having said that, it goes without saying that athlete investments can come at huge reputational risks. Sporting athletes are subject to an enormous amount of media attention, with scrutiny put on them with every move, word or performance. Sponsorships enable brands to drop athletes quickly and without any remorse – Tiger Woods is a good example of that, who lost millions of dollars of endorsement earnings after a number of his sponsors fell by the wayside following his sex scandal in 2009. Investments, however, can have huge financial implications to both a brand and athlete with any wrongdoing. Where sponsors often mitigate risks by endorsing a number of athletes across a range of sports, investments are often made with a sole athlete which exposes a much higher risk than a diversified approach.
I expect to see brands capitalise on this trend of athlete investments, particularly this year which boasts such a busy sporting calendar with the likes of the Olympics Games, the European Championships, the ICC T20 Cricket World Cup taking place, in addition to the annual major competitions such as the Golfing and Tennis Majors, the Six Nations and the F1 season. The strategic alignment of brands with athletes becomes even more significant during such active periods. By investing in athletes participating in major events that are getting worldwide coverage, brands can leverage the heightened attention surrounding these competitions, increasing their exposure and engagement.
Added to that and ensuring that brands maximise their exposure, it’s critical that they leverage their athletes’ channels effectively. This includes optimising their social media platforms where the athletes often have a substantial following. Collaborative campaigns with athletes on Instagram, Twitter and other platforms can significantly amplify the brand’s reach and audience. Furthermore, brands can tap into the athletes’ networks and establish connections to pave the way for potential additional investment opportunities.
To conclude, and looking at the landscape of this calendar year, I expect athlete investment will only become more popular. It presents opportunities and benefits to both brand and athlete that far outweigh the risks, and from a consumer looking on, it resonates more authentically than a sponsorship deal. In the current day, there’s a sense that athletes are much more pragmatic and autonomous when it comes to their business decisions, most likely as the investment into an agent or advisor may not be quite as fruitful, however, when putting trust into a brand that they believe in, the return on investment is much clearer to see from both parties.