How These Two Industries are So Closely Related
When Creative Planning started building specialty practices to serve our growing base of athletes and entertainers, we had envisioned two separate teams to serve these two industries. However, through the insight of our knowledgeable professionals, we quickly realized how closely related professional athletes and entertainers are, which is why we launched a single specialty practice to serve these groups.
We see the intersection of sports and entertainment all the time as the careers of athletes and entertainers unfold. A few examples include:
- Athlete turned actor – Countless professional athletes have turned into actors. Consider Dwayne Johnson, most famously known as The Rock. Prior to his incredibly successful career as an actor, Johnson was a professional wrestler and played college football at Miami.
LeBron James, arguably the greatest basketball player of his time, stole the show in the movie “Trainwreck,” and recently filmed “Space Jam: A New Legacy,” in which he stars alongside Bugs Bunny. (The movie is slated for release in July 2021.)1 Now he is an executive producer on NBC’s game show, The Wall.
- Entertainer turned sports team owner – On the flip side, professional entertainers have frequently sought to invest in sports team franchises. Justin Timberlake owns a minority stake in the Memphis Grizzlies, his hometown team. Jay-Z purchased and sold an ownership interest in the New Jersey Nets, and Will Ferrell’s love of soccer prompted him to purchase a stake in Los Angeles, FC, a professional soccer franchise whose owners also include Magic Johnson and Mia Hamm.2
- Athlete-entertainer partnerships – Not only do athletes and entertainers move fluidly between the two industries, they also often join forces to support one another. Consider the fact that musicians perform at the Super Bowl Halftime Show for free. This might be surprising considering the caliber of performers who have agreed to this no-pay arrangement in recent years, such as Katy Perry, Beyonce, Bruno Mars, Maroon 5, Jennifer Lopez, Cold Play and most recently, The Weeknd. These performers typically command millions of dollars for their performances, yet gladly jump on stage for free knowing that the increased value to their brand and record sales will justify the missed performance fees. In return, the NFL is able to direct its entire halftime budget toward production costs.
Why are these two industries so closely intertwined? We can only speak about what we know, which is financial planning. From a financial perspective, sports and entertainment professionals have a lot in common, including the following challenges.
- Uncertain careers – Professional actors, musicians and athletes face all kinds of uncertainties in their careers.
- Athletes put their health and fitness on the line every day to compete at the highest possible level, which makes them susceptible to unexpected, and potentially career-ending, injuries.
- Actors often face long periods of unemployment due to the intense competition for roles and frequent rejections. In fact, the Actor’s Equity Association has historically quoted weekly unemployment rates among actors of as high at 87 percent.3
- Musicians are increasingly crunched by the low pay associated with streaming and online music services. And, with concerts and tours being cancelled country-wide due to COVID-19, they are finding it nearly impossible to make money from live in-person performances.
- Early retirement – The career span of professional athletes and entertainers is typically significantly shorter than that of other professionals. Players have, on average, 3.3 years in the NFL, 4.6 years in the NBA and 5.6 years in the MLB.4 Even with a multi-million-dollar salary, that’s not a lot of time to save enough to last a lifetime.
- Expectations – After signing on with a big movie or professional sports team, athletes and entertainers are often expected to “live large.” The pressure to showcase a certain lifestyle comes from co-workers, family members, friends and the public. When you combine these expectations with the fact that many of these professionals have little experience managing their finances, it can be a deadly combination of big spending and little restraint.
- Unsuitable investments – The moment the ink is dry on deal to perform or compete, athletes and entertainers are often bombarded by friends, distant family members, neighbors and former teammates with “can’t lose” investments. Often not properly vetted, most of these opportunities will not pan out, and going “all in” on a questionable investment can be financially devastating.
Perhaps the most important need athletes and entertainment professionals have in common is personalized and customized, holistic financial advice that is focused on helping them achieve their long-term goals. That is exactly what Creative Planning Sports and Entertainment provides.
The benefit of working with us is that we are fiduciaries. That means we are legally obligated to serve the best interests of our clients in all we do. We do not sell our own investment products, nor are we incentivized to recommend one particular investment over another. We make customized recommendations to help you achieve your goals because we take the time to understand what those goals are and where you stand on the path toward achieving them. We deliver a depth and breadth of services and capabilities that most independent investment advisors are simply unable to provide. Our services include, financial planning, tax, trust and estate, bill pay, insurance, retirement, investment management and more. We offer all of these services while providing a personalized experience for each and every client.
Are you ready to take the next step in planning your financial future? Contact us today to get started.
Creative Planning Sports and Entertainment is a specialty practice that works with athletes and entertainment professionals. Each of our teams includes an attorney, a CPA and a CERTIFIED FINANCIAL PLANNER™ practitioner. These experienced professionals work with clients to develop personalized financial plans that take into consideration a wide range of factors, including their current financial situation, goals for the future and any challenges they may face. If you’d like to begin the process of building your financial plan, please schedule a call.