by Mike Ozanian | via Forbes |
There are four lessons athletes can learn from Michael Jordan’s journey to becoming a billionaire. The teachings of MJ may not make any of the highest-earning athletes–many of whom are powerful brands–a billionaire, but they will help maximize their wealth.
One: Get a percentage. MJ’s licensing deal with Nike for the Air Jordan earns him a fortune in large part because in effect the former NBA great gets percentage of each of his branded basketball shoes Nike sells. The original five-year deal was worth $500,000 annually, plus royalties. The royalties now generate more than $60 million annually for MJ.
Two: Buy distressed businesses in great industries. When Jordan became controlling owner of the Charlotte Hornets (then called the Bobcats) in 2010 the franchise was in bad financial shape and was reeling under the ownership of Robert Johnson. But MJ knew the NBA was prosperous and growing (he was an executive in the Washington Wizards in 2000 and a minority owner of the Hornets in 2006) and thus correctly calculated that paying $175 million for a team that its current owner had paid $300 million for as an expansion team was a great, long-term deal.
Three: Use your brand as leverage to strike a favorable deal. There were other investors to pay as much or slightly more than MJ for the Hornets in 2010. But the league wanted Jordan. As part of the deal MJ was able to get terms that would have him increase his stake in the team at a price that was much less than market value. Although the Milwaukee Bucks recently sold for $550 million, MJ paid $25 million to increase his percentage in the Hornets from 80% to 89.5%. In other words, although the Hornets are worth between $600 million and $625 million, MJ’s grossed up price for boosting his stake in the team was about $250 million.
Four: Use social media to keep your brand relevant. MJ hasn’t been on the court since the 2002-03 season. But he has 27 million Facebook fans, and although he does not use Twitter, Nike’s Jordan Twitter account has 1.7 million followers. Jordan’s Q score, which gauges awareness and popularity, has been tops among sports fans every year since 1991.
One athlete moving in a direction similar to MJ is LeBron James. The Miami Heat superstar became a small investor in Liverpool in 2011 when the iconic English soccer was struggling. Now, under the ownership of John Henry, Liverpool is once again among the elite teams in the English Premier League and its value has swelled to$691 million, more than $200 more than what Henry paid for the team in 2010. James also is mulling an investment in a new Major League Soccer team owned by David Beckham.
King James also scores big on social media with 19 million Facebook fans and 13 million followers on Twitter.
Success Principles from Michael Jordan
[embedplusvideo height=”400″ width=”600″ editlink=”http://bit.ly/1psOSus” standard=”http://www.youtube.com/v/gfvuF5qf9v0?fs=1″ vars=”ytid=gfvuF5qf9v0&width=600&height=400&start=&stop=&rs=w&hd=0&autoplay=0&react=1&chapters=¬es=” id=”ep4997″ /]