For my very first blog entry, I thought I’d start off with some hard truths of working within the sports business. As I pull from both my experience, developing the Sports & Entertainment division at Berenfeld LLP, and my industry specific knowledge in tax and business advisory, below are some of the hard truths I’ve encountered along the way.

The Hard Truth: “Resources, Toys, and Contacts”
The saying “Perception is Reality” is so cliché because so often it is NOT true. Not to say you can’t pick up your client in a Saturn Vue (as I often did this summer at the NBA Summer League), but rest assured your competition is in the Range, The Bentley, and/or Quattroporte. Does that mean that the competition was providing better services?  Not necessarily.  But, it is extremely difficult to get ahead in the sports game without these three key components:

(1) Resources = Money — Whether helping an agent recruit, flying across the country to have dinner with a client or showing a prospective client/athlete a good time on South Beach—it takes resources. Improper allocation of resources is one of the top reasons businesses fail. Purchasing bottles at the club may be a good look for the night, but making sure your client is well-rested with a solid meal before the first day of training camp will yield better results in the long-run.

(2) Toys = Private Jets, Yachts, and Fancy Hotels — The same toys that often drain an athlete’s bank account are the ones used to recruit by top professionals. I recall one conversation with a high profile agent. I was inquiring about building a relationship with the agency to do the tax work for their new rookie clients. I was asked, “Do you have a private jet? The firm I currently use has a jet that we use to transport clients to and from workouts. What can you bring to the table?”

(3) Contacts = People — More important than money and private jets are the people in your phonebook. Developing relationships with industry professionals, players, agents and the like is priceless. The sports business, like most, is in the business of people. Deals, engagement letters, and contracts are completed over dinners and handshakes—signed over golf games and fishing trips. In reality, this is the only thing that matters! It’s not the money, bottles, private jets or fancy hotels, but the quality professionals in which an athlete surrounds oneself. 

The Hard Truth: “Decisions are NOT based on competence.”
Many athletes come from humble backgrounds and never earn a collegiate degree due to the allure of big money and a grandiose lifestyle. As much as the NCAA and regulating authorities have tried to crack down on the lavish gifts and brown paper bags full of cash, it still exists. And for this reason many rising stars are not making decisions based on competence. In hindsight, the quick money is never cheap and “Easy Street” is a façade. There is no substitute for doing things the right way.

Some basic advice for athletes:

(1) Research — Do your research on the professionals and firms recruiting you. What certifications do they hold? What’s their reputation? How long have they been in business?

(2) Don’t Rush — Take your time in making professional decisions. You should not feel obligated to your agent, financial advisor or business advisor—they work for YOU! Don’t let your agent handle your money, separate responsibilities, and avoid putting friends and family in business positions. Hire professionals!

(3) Education — The uninformed athlete is the most vulnerable. Athletes, due to their high earning potential, are targets. They are targets of not just unscrupulous managers and investment advisors, but also of the IRS and taxing authorities. Communicate with your advisors and inform yourself on the basics of taxes and proper money management.

Finding success in professional sports doesn’t happen overnight. Whether you’re climbing the corporate ladder, athlete, agent or an entrepreneur (like myself), the game requires patience, perseverance and passion… on and off the court.

Noah Sheer
Managing Director
Berenfeld Legacy Group
Twitter: @NoahMatheu