More than a century ago, Teddy Roosevelt Jr's injury during an amateur football game resulted in two of the most significant decisions in sports history that shaped sports today:
The forward pass was implemented into football, to avoid the rugby-style scrums that caused the most severe injuries.
The creation of a governing body to oversee amateur sports, called the NCAA.
The decisions made in the past laid the foundation for football to evolve from an amateur sport to the world's most valuable professional sport, generating almost $20 billion annually. Unfortunately, the NCAA became primarily responsible for diverting the value generated in sports away from the athletes over the past 100 years.
The Game-Changing Shift in Sports Value
In the past, the sports industry generated most of its value from live events; primary revenue came from ticket sales. Sponsors began purchasing physical signage and advertising in stadiums to access fans.
During the rise of television in the 60s, 70s, and 80s, the sports industry underwent rapid change in the number of eyeballs it could reach and the revenue it could generate. The NFL notably led the charge in pro sports shifting from a primary focus on ticket sales to a media and entertainment model. This even involved political influence to change laws around blackout days and the ability to create monopolies that benefited owners and sponsors.
As a result, the number of people interested in sports has grown exponentially over the past 75 years, leading to unprecedented media value and the birth of enormous business markets, including sports apparel and media properties like ESPN.
The Sports Value Formula
The sports industry is an entertainment industry, with three key stakeholders: athletes, organizations, and brands. These stakeholders exist throughout the entire sports landscape, from youth sports to the pros, and together they create all the value in sports
The formula: ATHLETES + ORGANIZATION + BRAND = VALUE
Take Patrick Mahomes for example. A month ago, he was raising his second Lombardi Trophy after leading the Kansas City to a Super Bowl victory. His value as an athlete could seemingly not be any larger.
But, just six years ago, as an exciting NFL prospect at Texas Tech, Mahomes wasn't a marketable name. And as an athlete before NIL opportunities became available, Mahomes value was in the hands of his Red Raider coaches, school administrators and marketing staff.
Throughout this time, sponsors have typically dealt with sports organizations and teams directly, bypassing the most valuable stakeholder, the athlete.
The sponsorship of collegiate teams is an example of this, where coaches have been paid more, and athletes have remained amateurs until 2021.
Example: The best coach in college football, Paul “Bear” Bryant’s salary in 1958 was $40,000. 24 years later that salary was multiplied by more than 10 to +$450,000 in 1982. Today, the highest-paid coach, Dabo Swinney, makes $10,000,000 each year - a 250X increase since 1958) The total value of his contract is over $90,000,000.
On the other hand, athletes' compensation has taken the form of scholarships, which help them avoid the skyrocketing costs of attending a university, only to receive the deflating value of a four-year degree. The NCAA's shortcomings are only a small part of the overall picture, as the growth of digital distribution will bring significant changes to the sports industry.
Athlete Creator Economy
As the Internet and social media platforms continue to grow, we are witnessing the rise of the content creator. These creators are the ones at the center of the entertainment value that fans pay to see or tune in for. It's not the coaches or sponsors, but the athletes who wear the logo of the organization that provides them with the opportunity to perform at their highest level.
To illustrate this point, look at the recent success of the “New Heights” sports podcast that skyrocketed to the top of the charts in just six months. This podcast is hosted by two NFL players, Travis and Jason Kelce, who respectively play for the Kansas City Chiefs and Philadelphia Eagles - two powerhouse NFL organizations with a massive media reach.
Despite attempts by NFL organizations to create their own podcasts, none have come close to the success of these two individuals. Why is that? What is the value difference between an organization covering general topics and the first-hand account of unique individuals?
I believe the key to athletes' success as content creators lies in their unique stories. Their personal experiences and insider knowledge give them an edge that no production value can replicate. With the rise of digital platforms and the accessibility of technology, athletes are poised to become the most powerful content creators in the digital economy.
Align To Win: Together
The current sports industry is not yet equipped to fully leverage this potential.
Organizations and brands must shift their mindset to prioritize the athlete's perspective and enable their contributions as creators. Failing to do so will result in missed opportunities and the inability to retain top talent.
It's time to rethink strategies and embrace an athlete-first mentality to fully capture the value of this next wave in the digital landscape.
Joey Grant is the co-founder and CEO of GMTM. He believes that sports is the greatest vehicle to increase opportunities in the world and he will die on that hill.