The Pomp Podcast - #964 Joe Pompliano On The World’s Highest Paid Athletes

Episode Date: May 16, 2022

In this episode, my brother Joe Pompliano breaks down Sportico's list of the highest paid athletes in the world. We discuss the differences of salaries in each major sport and the varied endorsement deals that are presented to each these athletes off the court. ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= Imagine coinmarketcap - decentralized. 3X in valuation is 15 billion dollars from the current price. Cryptotoday.com starts at zero, at fair launch on 7th of March. No VC. No pre-sale. Team tokens locked.  For the people, by the people. For decentralized crypto. Visit http://cryptotoday.com and read the whitepaper for the details.

what's up everyone this is anthony pompliano most of you know me as pomp you're listening to the pomp podcast simply the best podcast out there now let's kick this thing off joe pompliano is the big brain behind huddle up he also happens to be my brother in this conversation we talk about the world's highest paid athletes we break down exactly where they make their money how exactly sustainable that revenue ends up being and who's making more money on the field or off the field. I really enjoyed this conversation with Joe, and I hope you guys enjoy it as well. Before we get into this episode, though, I first want to talk about our sponsors. This episode is brought to you by BlockFi. BlockFi provides financial products for crypto

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I hope you guys enjoyed this one. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion.

This podcast is for informational purposes only. We're talking about the highest paid athletes in the world. Conor McGregor? Big list. He's on there. He's not in the top 10, though. We have the top 10. Let's pull up the top 10.

All right, let's go. Oh, we got a list. We got a list. Yeah, we got a few charts, a few charts today. So all of this data is from Sportico. So Forbes and Sportico, they do these lists every year. Sportico does this. This guy, Kurt, he's very good at it, outlays everything.

This is the top 10 from this year, from 2022, the last 12 months. LeBron James, highest paid athlete in the world, $127 million. Then you got a few soccer players, Messi, Ronaldo, Neymar. I love how Neymar, just his name. One name, Neymar. then you got canelo stephen curry kevin durant roger fetter james harden and tiger woods so there's a few different things about this list that i think is interesting one

it's dominated so he does the top 100 it's dominated by basketball players and then if you look on each individual sport so matt i think we have the chart of the highest paid athlete in each sport let's run through that and then i can i can talk about a few takeaways right so lebron james highest paid basketball player he's also number one in the world So it has their overall rank to the left one through 61 and then the sport, their winnings, their endorsements, and then the total. So LeBron makes $90 million. He made $90 million last year from endorsements. So the majority of his income comes from endorsements. He's at first. Messi's

the highest paid soccer player in the world. Alvarez, boxer, the list goes on. A few things that are interesting here. Look at Roger Federer, right? He made $700,000 last year, actually playing tennis versus 85 million dollars not playing tennis jesus right so literally the smallest amount of his income possible comes from tennis is it why like what is going on it's just a massive brand so he gets paid 30 million dollars a year by uniclo which is pretty substantial right he used to have a 10-year deal this is actually pretty fascinating he had a 10-year deal with uniclo uh or with nike nike didn't want to pay him more because they have this roster of athletes and the margins he's just one of he's one of and if you pay one person too much their business

wasn't big enough to justify that basically so he and also they use it as comps it's kind of like wide receivers then if i want to be the highest paid receiver what's the last guy got paid so long story short he left he goes to unique low he got a 10-year 300 million dollar deal 30 million a year doesn't have a retirement clause he hasn't really played right he's been hurt and so forth he's getting older so even at the age of 46 when the contract the last year of the contract still He'll still get $30 million a year even if he retired when he was 40. What is it, Bobby Bonilla? Yeah, well, that was Bonilla.

Yeah, it was a different circumstance, but that's his deal, right? Yeah, yeah, yeah. And it doesn't include a lot of that money too. It doesn't include shoes. Uniqlo doesn't have a shoe deal. So he partnered with Uniqlo, got equity, owns 3% of the business. They went public at a $10 billion valuation. He owns $300 million of equity.

I don't know when that actually is liquidated, but he's getting paid from that too. Okay. So I think there's a few other things, right? Look at Conor McGregor. He's still pretty high on the list. He's the highest paid, I don't know if that's just MMA or fighter or wrestling, whatever it is. But yeah, mixed martial arts, he is on there. He made $52 million last year, $32 million in winnings, and $20 million in endorsements.

And I don't even know if he won a fight last year, right? So when you think about it in that context, he's still getting paid pretty well. But I think there's some other takeaways here that I wrote down that I think are pretty interesting. let me see if i can pull them up so body armor remember body armor showed to coca-cola for eight billion dollars yes this includes some of the athlete payouts uh naomi osaka got a seven-figure check highest paid female athlete in the world for the third year in a row 24 years old no big deal pretty uh pretty substantial right she got a seven-figure check uh james harden 20 million dollars from the body armor deal that's crazy pretty good right 20 million you got 20 million

when they sold to so he was an early ambassador for the you know relatively early ambassador for the company and the thing that body armor always did really well was they offered all these athletes equity like not not substantial amounts right yeah but enough but enough to enough right so like some of them are getting seven figure checks when the brand sells which is pretty substantial and if you're deciding between gatorade or body armor or powerade or any of these other businesses like usually the equity is probably what gets you over the line so they were notorious for doing that james harden was one of the earlier ones that got it at a lower evaluation obviously he walked away with 20 million dollars uh mike trout got a payout as

well several other people so back to the tennis thing another takeaway was roger fetter naomi osaka and serena williams earned just one percent of their pay from on-court earnings what yeah so so tennis players uh are earning the majority of their income call it 90 to 99 percent for the largest people in the world uh off of the court through endorsements and so forth because the tennis winnings aren't as lucrative and then on boxing side alvarez tyson fury jake paul all earned 90 or more of their income inside the ring right so if you look at the two sports tennis players earning all their income outside of the court boxing is the complete opposite where they're earning all their money inside of it can i push back on that idea for a second go ahead

canelo earned majority of it inside the ring yes i thought that he and maybe it's just rumors on the internet i thought he had some massive businesses like he owns a bunch of like gas stations in mexico he owns a bunch of uh companies and brands and all that is it just he owns that stuff and he basically took the winnings from inside the ring converted it and it just it doesn't produce enough return to like uh eclipse what he earned in the ring yeah so if you think about uh the businesses obviously this list is uh is difficult to of course to determine how much income is coming off of businesses that you own and operate and all of this. Right. So to your point, he owns gas stations, he owns a bunch of real estate and he's getting quarterly. He's

talked about it previously. He's getting quarterly, uh, uh, uh, dividends from that stuff. Right. But he earned $84 million in the ring last year. So it's hard. So it's hard to balance that out because they have them at $5 million outside the ring. Still a lot of money, right? Maybe it's 10 million, maybe it's 15, maybe, you know, whatever that'd be triple. Uh, but even if it's that he's still earning the majority of it inside the ring because boxers are paid so well right so this chart explains it really well which is below the line means you're earning the majority of your money outside of your sport okay via endorsements above the line means you're you're earning the majority of it in your sport through salary and winning even like a cristiano ronaldo which

obviously is close to the line but still he's getting paid more from playing the sport than from endorsements difference in europe especially with soccer those those players uh get paid absurd amounts of money right and in the nfl in the nba and all of this there's a salary cap so if you think about like this is what we talked about with tom brady the other day the highest or the best players in in north american sports with salary caps are generally underpaid relative to other people because of the amount of money they can generate outside of the sport for the sport etc so lebron's a good example of that right like he's making 90 million dollars a year in endorsements that's insane what also is interesting to me here is like Messi uh Ronaldo Neymar they all make

like what a third more in salary almost uh double in salary than LeBron James yeah like those are big numbers that's my point though right like obviously soccer is the most popular sport in the world so there's a lot of money in it especially for the big name people but there's a salary cap right and there's max contracts and like lebron you could argue just from an economic perspective what did the championship in cleveland have to do with the valuation of the franchise what did it have to do for the local economy and all this stuff right and i don't even know if he was the highest paid player on the team that year i think some of the big players end up getting less so that their teammates they get the right of course of course but miami think about the same

thing right people are they're capped because of the salary constraints of the league relative to the amount of money. Like if you think about Giannis Antetokounmpo, he deserves two, three, four times you could argue his salary. So if you look at the highest paid per sport, this is also interesting, right? Because they took the top 100 highest paid athletes in the world and they broke it down by individual sports. So cricket only had one MMA was Conor McGregor. He was the only one on there. Racing has two, which I believe was Lewis Hamilton and Max Verstappen. Tennis had a few, boxing had a few, et cetera, and the list goes on. But basketball still dominates the list, right it's 36 out of the 100 and then if you include football uh north american sports are

are over half of the list right so outside of soccer it's really dominated by uh sports here in the united states yeah i guess the other part is uh when you think about these athletes they've all gotten much smarter about how do they make money outside of the ring the field the court whatever uh but i do wonder how much of lebron's net worth let's take him as an example comes from building companies versus endorsement deals like i'm assuming those endorsement numbers don't include spring hill or other companies that he's built from scratch i don't know how much if he took any equity off the table when they raised money yeah so uh spring hill raised at a 750 million dollar valuation he's a founder of that business so i'm assuming he owns a somewhat

meaningful portion of it still nine figures probably yeah right yeah but my point just being like so if he gets paid i'm gonna use just round no they only do it if there's an exit yeah so well just 40 million in salary 90 million in endorsements but if he sold spring let's say he owned 100 if he sold for 750 million dollars that my guess would be it wouldn't show up as an endorsement deal no i i think that like they have they include separate categories they just called endorsements i think for the for the thing but like conor mcgregor was the highest paid athlete in the world a year or two ago whatever year it was when he sold uh his his liquor company right so they count they do count the exits as part of this but but right they have to be like we don't

know what necessarily happened with the equity in the cap table when it came to spring hill so i don't know if they know that either obviously this isn't uh it's more of an art than a science and you can't determine it down to the dollars and cents but you can get some direction on it based on kind of what they're saying so maybe it's you know 90 accurate maybe it's less than that. Maybe it's more than that, but I think it's relatively directional accurate. The one thing I think is interesting too, is like some of the young people on the list, right? If you think about Naomi Osaka, she made over $50 million last year, highest paid female athlete in the world for three years in a row. Uh, but she's only 24 years old, right? So she announced today too, that she

is going to be, uh, starting her own agency. She's leaving IMG and doing what some of these other people like Roger Federer and others have done, which is partners with her agent at IMG goes and starts a new business they both own equity in it and they try to go recruit other people so we'll see if that works out but that could be another way that she can increase her value and her brand and her equity uh and then another young person was max for stopping he's 24 years old also he made 43 million dollars last year and the thing people don't realize about some of these other people are uh the formula one drivers in particular they all relatively own businesses outside of this so like max for example he owns his all of his memorabilia and stuff like that

every single race you see him posting about it aggressively uh go buy this helmet go buy this shirt whatever and they're able to generate new items for each race right it's like mini drops or mini collections so those are going to be big businesses eventually just based on the amount of money and they're going to be able to generate and then he's only 24 years old right if you're making 43 million dollars a year in your low 20s like the ability to just compound that over time is going to be uh super interesting to see where guys like that end up if you had to guess one over the next 10 years that's not on people's radar but you think will be one of the highest earners,

who do you pick? Well, like the caveat of not on people's radar is tough because, you know, like I would say Patrick Mahomes if you left that line out, right? Because he's making $45 million a year every year for the next 10 years just on his salary alone. Okay, but can he be a big enough star off the field on endorsements?

He already is, right? Football's the biggest game. football is the most lucrative sports organization sports franchise in the world but but if you go back to the chart with the line tom brady and getting paid anywhere near what lebron james is getting paid well to be fair tom brady uh has like naomi osaka brady has placed a premium on building his own businesses which if you just take autograph for example autograph for example is a i think they raised money last time at like a three or four billion dollar valuation yeah but my point just being like isn't that included in here i i don't know right but my

point is that football is the biggest sport in the world the from a purely money standpoint right from the amount of money that surrounds the nfl purely money it's the biggest sport he's obviously got an opportunity to do that uh for stopping again i i think what you do is you have to pick like a younger athlete who is guaranteed to make a certain amount of money who's going to be famous and has this large audience that can monetize that correctly so he's one for shopping's another There's a bunch of others probably underneath that. But yeah, it's tough to say like who you would bet on necessarily. It'd have to be, you know, someone who's young

that's going to dominate their sport for the next decade. Yeah. All right. My only last question for you is when you start to think about these athletes, how much of their revenue or earnings is going to come from investing versus building over the next decade? Well, more would come from building if they built good stuff. yeah but they're not really building it like none of these athletes are actually the ceos what you

do is what tom brady did right and he's had some businesses before that haven't been met like tb12 the the performance company it's not a massive business i wouldn't say that's like a huge win right he's still building and maybe it becomes something big later on but it relative to what he could have made from partnering with a bunch of other brands i don't know the economics but i'm assuming it's either kind of even or something around there right like he could have made a lot of money from endorsements. But if you look at Autograph, what he essentially did was, I don't know how it worked out, whether he went to someone else or they came to him, but he partnered with good entrepreneurs who knew how to build this business. He got equity in it because of his name,

image, likeness, audience, all of that stuff. And now it's a multi-billion dollar business. And even if he got 5%, 10%, so, you know, something relatively small for a co-founder off the, off the bat, it's hundreds of millions of dollars at this point, right? In equity that he owns in that business. And that's really what I think we're going to see is like these athletes, the smartest ones are going to become co-founders, right? They're going to be founders of these businesses and just find people that they know already are good operators, are good builders and start these businesses together. I agree. Where can we find, uh, where can we find you on the internet or send people? Newsletters, read huddle up.com podcast, Joe pomp show.

You see, I dropped, I dropped one a day with Matt liner. I said, how much money would you have been making at usc in 2004 he said a lot he said me and reggie bush would have been making a lot of money in 2000 yeah y'all been securing the bag by the way john john says uh you you take it too long you late oh he didn't say that yeah uh he actually hit me with a second day in a row john uh and me are cool yeah yeah the bazooka boys the union the union thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered.

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