Nightclubs, leisure clubs, gyms, works of art, wineries, horses,… are among the investments of many of the athletes who venture into more or less successful businesses.
Sports Illustrated magazine collected a few years ago in an article that 78% of National Football League (NFL) players filed for bankruptcy or financial stress within two years of retirement and approximately 60% of NBA players are ruined within five years of retirement. In order not to repeat mistakes like these, the advisors of the great stars of the sport advise them to invest in simple and easy-to-understand products.
“First of all, athletes should invest based on their real economic capacity,” says Julio Senn, partner responsible for Garrigues’ Sports & Entertainment area and advisor to big football stars.
In early 2020, the Association of Spanish Footballers (AFE) signed with Tressis, a company that manages assets, an agreement to advise players so that they can carry out an appropriate and successful planning of their finances, both when they are active and when they have retired.
“In Spain, there is usually little financial culture, and footballers are no exception. Players soon begin their sporting career and are not thinking about their future. It’s very difficult to manage money you make for 14 years to be rented the next 50 years that can be left alive,” explains Ignacio Chinarro, CHIEF Financial Officer of AFE.
A professional first division footballer earns on average a gross annual salary of 1.2 million euros, excluding the players of Real Madrid, Barcelona and Atlético de Madrid (whose payrolls are much more bulging), while the average salary of second division players is around 200,000 euros gross per year. They are juicy stipends but, as Chinarro recalls, are subject to 45% levies.
“It’s not true that football players pay little tax. Arguably, the 1,050 first-division players pay 1% of everything raised in Spain,” Chinarro says. “In the world of investment there are no magic recipes. It’s not easy to say invest here or there, but you do have to invest the money you don’t need. Although there is no general rule, prudence must prevail and not invest in what is unknown, not commit follies. Nor should the money be put in the same basket, we have to diversify, and analyze the types of baskets,” Chinarro says.
Successes and stumbles
Real Madrid captain Sergio Ramos and Barcelona player Leo Messi have succeeded in their businesses, but also some who have stumbled. In 2008 Ramos lost three million euros with the bankruptcy of Lehman Brothers, was only 22 years old, and a year ago avoided the embargo initiated by Banco Santander for the non-payment of a loan of 35 million euros linked to the purchase of land on the outskirts of Madrid, acquired through the real estate development company Los Berrocales S. L of which Ramos has 49.99% of the capital.
Eventually the Blackstone fund acquired those land to change from res canceling the debt. However, it has turned one of his afitions, horses, into a profitable business. So much so that of its heritage is part ‘Yeguada SR4’ and can boast of having in its blocks the new world champion of Pura Raza Española: Yucatan de Ramos. Sergio Ramos has already publicly stated on more than one occasion that it is the most buoyant business he owns.
Although his entrepreneurial side comes from afar. As early as 2004, before signing for the Real Madrid, Ramos had created the company Sermos 32 SL, even today head of its companies and treasures assets that rub back 100 million euros. Art is Sergio Ramos’ other great dislike and investment. Together with his wife the presenter and model Pilar Rubio, he has embarked on the purchase of masterpieces. Amansa already an impressive collection under the name “Sergio Ramos Collection”. The last known acquisition of the Andalusian footballer is a work by Phil Frost, a painter born in New York in 1973, whose paintings reach 40,000 euros.
In recent years, Leo Messi has invested in hotels, real estate and clothing. He not only has business in Spain, but also in his native Argentina. The striker owns Torre Aqualina, a building of 125 meters high and 40 floors, located in the city of Rosario and whose value is estimated at 127 million euros. Among his fruitless businesses was the real estate company the Rincón del Rosario S.L, the only company in which he was an administrator with his brother Rodrigo Messi in our country and which he had to close. Dedicated to the rental of real estate on his own account, he dumped losses of 355,386.09 euros in the 2018 financial year (the last one filed in the Commercial Register).
Javier Arizmendi, former professional footballer and now financial adviser to Tressis, explains that athletes’ investments “are often quite scorned towards the real estate sector”, which, as seen, has given more than one headache to players.
“While mistakes continue to occur, fewer and fewer are being made. Athletes have become more aware of the importance of advising the better,” explains Arizmendi. “The life of a professional football player is not the most conducive to managing and controlling large flows of money. You spend 100% of your time winning matches, so it’s important to take good advice and invest money rightly, with a sense and, based on a financial study or diagnosis. The young footballer has money and a long time horizon, so he can be exposed to his investments having curves in exchange for a higher return.”
The life of a professional player is not the most conducive to managing and controlling large flows of money,” says Javier Arizmendi
Pedro Riesco, a former rallo Vallecano player, works at the footballers’ agency of René Ramos (brother of Sergio Ramos), explains that athletes usually allow themselves to be advised.
“There is a lot of opportunistic, footballers attract all kinds of investors.” Julio Senn adds, they invest less than one can think. “The investments of the vast majority of footballers are banking, financial in nature, investing in photovoltaic, wind, small but diversified energy. Although some have stakes in the real estate sector, but they are always minority.”
Others such as Frenchman Mathieu Flamini have invested in the energy sector. Since 2008 it has been an investor in GF Biochemicals, a pioneer in the production of levulinic acid, a molecule that can be a substitute for oil and which is an alternative revolution within the energy sector worldwide.
Investing more than you can
Mistakes that can be made is investing more than you can. Rafa Pascual, former volleyball player and wealth client manager at Intermoney Patrimonios, notes that “the important thing is to have liquidity when the race as an athlete is over”. Spanish sailor from the 80s and 90s Theresa Zabell, double Olympic champion and former vice president of the Spanish Olympic Committee (COE), says that when you stop sailing, manyend up in red numbers. “You have to know how to manage yourself”.
Investing in catering is also a dish of good taste. A sector for which tennis world champion Rafa Nadal and basketball player Pau Gasol have bowed with their restaurants Tatel, an adventure that Cristiano Ronaldo and singer Julio Iglesias have joined. They’ll soon open their fourth Tatel in Los Angeles.
The opening will take place on Canon Drive, very close to Rodeo Drive, the Golden Mile of Los Angeles where “Pretty Woman” Julia Roberts was shopping. But beyond the restoration, Rafa Nadal’s other big investment is his tennis academy in Manacor, perhaps the best academy in the world and also has a hotel and a residence. Through his company Monemvasia, Rafa Nadal manages stakes in the hotel sector and has bought a building in front of the Supreme Court.
Less absurd and more conservative
Diversify, that’s the most repeated word by the financial advisors of sports stars. “I currently find that investments are less absurd, and more conservative. Athletes try not to invest in restaurants or nightclubs, where the entrepreneur has to be in charge. They do it more in brick, that is, in passive income,” says Inigo Abrego, tax lawyer at PKF Attest.
A clear example of diversification is Cristiano Ronaldo. The Juventus footballer’s latest adventure has been an open hair transplant clinic in Madrid. A project that, in addition to other businesses based in Portugal, such as its alliance with the hotel group Luso Pestana where it holds 50% with its teaching CR7, a ‘lifestyle’ brand with which it is present for now in its native Madeira and Lisbon, and in the future in Madrid, New York, Marraquech and Paris.
Investing in other businesses is one of the paths chosen by sports stars and technology startups are their new bet. If the business idea is good it can give you a lot of money. The initial investment in this type of business is small compared to the benefits it brings to them.
According to SportsAdda magazine, the famous Australian basketball player Steven Smith invested $100,000 in a startup, and four years later generated $12 million in profits. In the Spanish field, Gerard Piqué, Andrés Iniesta or Cristiano Ronaldo, launched themselves into the new wave of investment in technology companies.
In the case of Piqué he founded in 2011 together with other partners the video game startup called “Kerad Games”, although two years ago he had to liquidate it for recording losses exceeding two million euros. However this is only a small stain on azulgrana’s successful business career. Portuguese Ronaldo opted for the “Mobitto” app. A startup that offers users discounts and information about shops and restaurants with the best deals.
Andrés Iniesta, a former FC Barcelona player, and one of the highest paid footballers in the world according to Forbes magazine, decided to enter the capital of the Catalan startup FirstVision Technologies in 2015, which sells T-shirts with integrated cameras for high competition. ESports have also become one of the most lucrative businesses in the present and chosen by athletes such as Fernando Alonso with investments amounting to 5 million dollars.
Female athletes also succeed in the business world, especially tennis players. This is the case of Hispanic-Venezuelan Garbiñe Muguruza. According to the magazineForbes, just 26, has become the sixth highest-paid female athlete in the world in 2020 with a profit of $6.6 million, $2.1 million in awards and $4.5 million that bring her contracts to companies like Adidas, Beats or Rolex.
Also the swimmer and four-time gold medalist, Gemma Mengual, has started various businesses ranging from design to restoration. In 2010 she founded the company Mengui La Mar de Sushi in 2010, of which she is a unique administrator and for which she manages various restaurants of that type of food in San Cugat del Vallés and Barcelona. He also launched another personal project, a jewellery collection.
Gérard Piqué’s business empire
Gérard Piqué has not only become a world-renowned center, but also a magnificent entrepreneur. Its crown jewel is Kosmos Global Holding SL, founded in 2017, became a business benchmark in the world of sport and backed by Hiroshi Mikitani, the fifth Japanese fortune and CEO of Rakuten.
Piqué’s business conglomerate has almost 10 million euros in assets and manages sporting events as powerful as the Davis Cup, the great competition between 18 tennis countries for the next 25 years. The company has ramifications in sectors as diverse as eSports (managed by Esports Media Rights) and the creation of audiovisual content (managed by Kosmos Studios).
Such is the business relevance of the player that Mark Zuckerberg, the genius creator of the social network Facebook was passing through Barcelona and ate with the football star and his wife Shakira to talk business.
Those who know the Azulgrana say that “he could be making more money outside than within football.” It could be true, if, as he claims, his heritage is greater than that of the football club Espanyol.
He said it in the program The Broncan Resistance: “No, it’s not 57 million euros, it’s a lot more,” he confessed with laughter. His business network, which he manages with his father, Joan Piqué, and his brother, Marc, also includes a dozen brands. Beyond image rights, the footballer markets sunglasses, isotonic drinks, food products and is in the capital of hotels and other companies.