Where the pressure lands when sports changes hands

There's a lot of money moving through sports right now, and it's changing hands in ways we've never seen before.

You can see it at every level. Minority stakes trading in teams that used to be family businesses. Control ownership groups selling out of their positions. Emerging leagues taking on new investment and reaching new heights. College sports becoming a fully commercial business, with revenue sharing going to the athletes and letting them build wealth.

Most of the conversation is about the deals. I think what most people are misreading is what sits underneath them. This is a transfer of influence and wealth inside sports, and it's putting pressure on pieces of the system that have never had to carry it.

Think about who's feeling that this month. The college athlete whose job used to be to go play, who now has new income to manage and brand deals, investments and equity offers to vet. The professional athlete being pushed by the creator economy to become a full-blown business. The athletic director whose job has taken a 180-degree turn in a handful of years, from allocating dollars and balancing a budget to meeting a payroll on the athlete side and going out to find new revenue to cover it. The leader of an emerging league, or of a college conference.

What they share is the newness. Most of the people in these positions have never had to deal with what they're dealing with now. The realities of their position are changing in real time, and they're not going back to the way they used to be.

That's also what makes this moment different. Somebody set the terms each of these seats has been operating under, and most of those terms were set for a version of sports that's going away. In a transitional time like this one, the people leading through it have a chance to reset them.

I've sat in four of the seats this is landing on: the player being priced, the operator trying to make the numbers work, the advisor in the client's corner, and the investor across the table. This isn't a piece about me. Each seat looks different from the inside, and what moves through one of them ripples into the other three.

The player

As a player, you're priced long before you sign anything.

It starts in high school, trying to get recruited. You're compared to your peers and to the players who came before you. Every coach finds the player you remind them of and uses him to frame your ceiling and your floor. Leaving college, it's the same thing. They're scouting you and looking for comparables, whether it's measurables, production or character, trying to frame you in a way that's familiar to them. They see it as objective. Ultimately it's based on perception, and that perception decides where you get drafted, which decides your short-term financial future.

I came into the league as a seventh-round pick and exceeded every expectation set for me from day one. I was a day-one starter and had a thousand-yard season as a rookie. Year two, I did the same thing and set team records, and I finished my second season with the most catches in a player's first two years of anybody in NFL history at the time. When it was time to get back to the negotiating table before my third year, I wasn't offered what a first- or second-round pick producing at that level would have been offered. I was offered a bridge contract, nowhere near market value. It was almost as if they wanted to make up for two years of being underpaid without paying me at market rate.

That contract was the culmination of something that had been happening my whole career. Perception equals pricing, and it shows up in dollars and cents. You can control all of the objective inputs you want and perform at the highest level, on par with your peers or above them. There's still a subjective layer of your value you have no control over, and it enters the equation and dictates where you can go.

The player's role has changed since then. There's so much more business around the game now, and so much more access to it. The subjective layer is still underneath all of it.

The operator

As an operator in a league without a media-rights deal to anchor the finances, the hardest lesson is that every dollar has to be earned.

It's a balancing act. How do you control expenses at a level that lets you invest in growth, while bringing in enough revenue that you're not running a deficit you can't overcome? That's the equation. New revenue, whether it's more ticket sales, more sponsorship sales or getting more creative with partnership inventory, takes investment. And the staff you have, especially a holdover staff, is probably already at capacity. So you either turn over talent to bring in a different skill set, or you add headcount and hope it brings in more than it costs. It has to bring in a multiple. Otherwise you never get out of the dollars-in, dollars-out loop.

That's the mindset shift I think athletic directors are facing right now, if it hasn't already happened. Every dollar that comes into the institution has to be earned, even donor dollars. How do you put the institution in position to raise those dollars in a way that feels justified, and that feels like there's some return on the investment?

The other piece is the win. A lot of operators get caught chasing external wins. In this climate everyone has a different set of resources and a different set of constraints, and a lot of programs chasing what looks like a win from the outside are burning resources they don't have, toward destinations they're very unlikely to reach. The first thing I'd do walking into a program today is define the win from the institution's own standpoint, get every stakeholder aligned with it, and then go attack it.

The advisor

As an advisor, I had firsthand knowledge of what players were going through and where the gaps in the athlete ecosystem were. My role kept me from giving the holistic support I knew was necessary.

Financial advisors are highly regulated, and most of the compliance you work under is there to protect the firm. What the athlete client really needs is a more holistic approach. Most athletes aren't yet at an age or a business maturity where they can be the go-between and fill the gaps between all the vendors they use. When you can see those gaps and can't service them, you can do your own job at a high level and still watch the jobs that aren't getting done affect your client, and the results your own job can drive. That's what drove me out.

What needs to exist is an integrator in the athlete ecosystem: someone who stitches the roles together against a shared vision, a North Star, so the financial advisor, the financial planner, the tax advisor and the contract agent are all working toward it. Otherwise the athlete gets serviced pillar by pillar. Each advisor takes his win, and the client never gets to build the enterprise he wants, needs or deserves.

The investor

As an investor, it took me a long time to figure out what my advantage was. It was less about knowing it myself and more about the rest of the world seeing it for what it was.

Perception dictates reality, and it dictates opportunity. Most people saw the former athlete before they saw the investor, so to them my value was capital, or introductions to more capital through more athletes. What my advantage ultimately became was something I'd learned as an operator: there's tactical value you can add that makes capital more valuable. Intellectual capital alongside financial capital. Experience as a form of capital.

Once I figured out that was what I could bring, the conversations shifted. It sharpened my discernment about the platforms that only wanted the relationship and the check, and it let me sort out the surface-level influencer and mascot deals early. You become a better investor by evaluating less. You stop taking flyers on opportunities that are misaligned from the beginning, and you spend your time on the ones that want what you can actually add. It's addition by subtraction.

What you see from all four

Sitting in all four seats gives you a way to put them together. You understand the asset being priced, and how to move that lever from the asset's side. You understand what that price means to an owner's balance sheet and budget. You understand what the client is really looking for and doesn't have access to. And you can recognise the capital that actually fits his situation.

What it really lets you do is see how one decision, one ruling or one opportunity ripples through the ecosystem, and how the cause and effect lands in each of those four positions. That makes it possible to game out situations before they land, and to set expectations, not only around your own responsibilities and aspirations but around how your decisions affect the people around you.

Where it goes

Over the next three to five years, I think sports keeps expanding. The businesses inside the ecosystem keep converging, and at the same time the business of sports keeps moving into markets where the repricing hasn't happened yet.

Most of the conversation lives at the very top of the food chain, and I don't think that changes. The big four leagues aren't going anywhere. But my read is that capital starts finding its way downstream, into emerging professional leagues, Group of Five schools and FCS schools. A lot of that has to do with where each one sits in its lifecycle. The big four are mature businesses, and they don't have the same headroom. A smaller league earlier in its life can grow at a different order of magnitude. That means more competition beneath the surface, more parity, and more opportunity for people who are positioned the right way and understand how their resources, their knowledge and their assets can contribute. The leaders in those places are setting terms for the first time, and they get to decide what they look like.

How to read what comes next

Approach this with an open mind. It won't have every specific answer. What it can be is a place where someone sitting in any one of these seats starts to see how the rest of the ecosystem thinks and moves, and what drives the other people in it.

Every one of these decisions is nuanced, and every one has a domino effect tied to it. The more perspectives you can gather on what that fallout could look like, the more discernment you bring to the decision. More perspectives lead to clarity. Clarity leads to decisions you can support wholeheartedly, and that builds confidence. Over time, that confidence becomes conviction.

—MC