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SUPERSTAR ATHELTES PLAN FOR LIFE AFTER PLAYING DAYS
Published December 6, 1994
With the headline "Compounded Interest Are Our Favorite Words," FORBES looks at sports stars who "favor equity instead of cash for endorsement deals." Using such well-known personalities as Isiah Thomas, the cover story documents the investments trends of some of today's biggest stars. "You can become truly rich in the (sports) business now, but your playing life is over. The wise athlete treats his cash not as spending money, but as capital to secure his future." Curtis Polk, Exec VP of Falk Associates Management Enterprises, says "athletes are a lot more sophisticated than they are given credit for." If athletes go it alone and don't "run a business," they must turn to "passive investments" of managing firms. Of the top agencies: IMG runs "portfolios worth $150 million and claims to advise on more than $1 billion worldwide"; Falk manages $80M. Their charge? At IMG, "$6,000 for the first $1 million and $5,000 for each additional $1 million for money management." Falk "charges a flat $12,000 fee to $75,000 for its services." Even NationsBank and Brown Brothers Harriman are "trying to muscle their way into the business," setting up management units for athletes (Machan & Contavespi, FORBES, 12/19). GOLF WARS: FORBES also looks at golf legends Jack Nickalus and Arnold Palmer and their business "competition." Nickalus' Golden Bear International will earn $25M pretax this year and Arnold Palmer Enterpirses' will earn $20M. The two cashed in big when "they figured out how to convert themselves from mere athletes into brand franchises." Their international licensing agreements are detailed, as well as their many lucrative endorsement deals. Alastair Johnston, who handles Palmer's licensing and endorsements: "Lots of people in Asia buy Arnold Palmer mercandise who don't know who Arnold Palmer is" (Randall Lane, FORBES, 12/19 issue). JERRY COLANGELO: Calling Suns Owner Jerry Colangelo a "rarity in professional sports management," FORBES' Neil Weinberg notes that NBA Commissioner David Stern credits Colangelo with a "meticulous attention to every aspect of a franchise operation, venue and a place in the community." Stern: "If you take all the aspects of the Suns' operations together with the arena, stadium- building and team ownership in baseball, they are in the 99th- plus percentile in diversification into sports." After lining up $278M for a retractable-roof stadium and $150M in capital, Colangelo expects to gain an expansion baseball franchise once that sport's labor troubles are resolved (FORBES, 12/19 issue).