How Athletes and Entertainers Can Invest Like Jordan, Rihanna, and Ryan Reynolds

I’m not a businessman. I’m a business, man.

-       Jay Z

With substantial followings and their own brand halos, athletes and entertainers have the power to elevate brands. But how can they ensure they reap the rewards of their influence over the long run? The key lies in smart sponsorships and savvy financial strategies. By partnering strategically and structuring equity or cash compensation astutely, these high-profile performers can monetize the value they bring to a brand.

Take the legendary Michael Jordan and Charles Barkley. Both players were Nike icons, but when Barkley was set to receive $3 million in cash, Jordan offered some game-changing advice: opt for stock options instead. Barkley took his suggestion, structuring the deal as one-third in cash and the other two-thirds in stock options. As Nike’s stock soared, so did his earnings—transforming a $3 million deal into a $50 million windfall. This story isn’t just about basketball; it’s a masterclass in leveraging your brand for long-term success.

More recently, Ryan Reynolds has parlayed his Hollywood hits into a number of impressive business ventures, including Wrexham FC, Mint Mobile, and Aviation Gin. His knack for spotting potential is part of the story, but the real magic lies in how he uses his personal brand to broaden these companies’ reach and appeal.

On an even grander scale, Rihanna has shown her entrepreneurial flair by launching Savage X Fenty, a lingerie brand in collaboration with TechStyle Fashion Group, which is now valued at over $1 billion. She also co-founded Fenty, a cosmetics line, with LVMH, where she holds half of the equity in the business.

Finding the Right Celebrity-Brand Connection

Companies have sought celebrities for sponsorship and endorsement deals for ages. And some partnerships seem like a natural fit, for instance, athletes often gravitate toward brands like Nike or Under Armour. Similarly, consumer and luxury brands—from fragrances to fashion and beverages—eagerly seek out celebrity collaborations.

Ultimately, when it comes to choosing the right brand partnerships, it’s essential for athletes, entertainers, and their business managers to weigh their options carefully. The most important element is alignment between the corporate brand and your personal brand. What are you known for? What do you aspire to represent? Does the company reflect or clash with your values, principles, and the image you wish to project? Think about how your personal brand can enhance the corporate brand’s value, creating a mutually beneficial relationship.

Many athletes and entertainers tend to gravitate toward the most obvious partners or businesses. Yet there’s untapped potential in exploring less conventional paths. Consider Ryan Reynolds, who ventured into the US cellular industry and found remarkable synergies in the UK football scene. Likewise, George Clooney’s long-running partnership with Nespresso showcases the power of a unique partnership. By seeking out differentiated opportunities, you might discover more lucrative long-term benefits, whether through partnerships or ownership stakes.

Setting the Terms

Once you’ve spotted a promising opportunity, how do you decide on the best way to structure the deal? Start by looking at your overall financial picture. How substantial—and steady—is your income from your primary role? What are your spending needs? How many other deals do you have, and what do those income streams look like? If you’re thinking about injecting your own capital into a business instead of just earning cash or equity as compensation, consider the magnitude of the investment relative to your overall portfolio and what else is in that portfolio. Also think about how much time you’d need to dedicate to the brand or company and how that fits into your schedule.

The more stable your financial circumstances and the more your basic needs are covered, the more risk you can afford to take with other investments or partnerships.

What’s a Biz Worth with Your Involvement?

Consider the value that you bring to the brand/company compared to its standalone value. What upside can you offer them, and what seems like a fair way to share in that success?

For those with a more sophisticated approach, you may want to assess the value of the business both on its own and with your potential involvement. If you’re investing fresh capital or are being paid with stock or stock options, those valuations can help you determine if you’re getting a good deal. Consider what influences that value: How strong are sales? How quickly are they growing? How much of those sales turn into actual profits? And how are similar businesses valued in the market?

Remember, these opportunities are not without risk. While success stories are easy to find, there’s always a chance that the equity won’t perform as expected. For less mature businesses or those with overpriced stocks, the value could decrease significantly or even disappear. For example, a number of celebrity endorsers—including Tom Brady, Shohei Ohtani, and Naomi Osaka—currently face class-action lawsuits following the collapse of cryptocurrency exchange FTX in November 2022. All those risks must be weighed, too.

Your financial advisors can help you evaluate these factors: how strong the fundamentals are, how attractive the opportunity is, and how it can fit into (and be appropriately sized) for your portfolio.

From Businessman to Business, Man

Leveraging and monetizing your personal brand means wearing multiple hats—marketing strategist, investor, and entrepreneur all at once. Athletes and entertainers who can identify the right opportunities and structure smart deals have an edge when it comes to earning a big payday, as well as creating generational wealth.

At the same time, such partnerships and ventures need to be viewed through the lens of your overall financial situation and portfolio. Success in (or on) one field doesn’t necessarily translate to success in another. That’s why having the right partners and counselors is key. Working with your trusted advisors can ensure these opportunities are sized and structured effectively for your circumstances. Done well, and with a little luck, the results can be game-changing.