As the looming possibility of an NFL work stoppage adds another layer of financial risk to the league’s average player, some athletes are turning to entrepreneurial pursuits to provide income streams once their playing days are over.
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With the league’s current labor deal set to expire after the 2021 season, the NFL Players Association warned players in May to financially prepare for a work stoppage “of at least a year in length.” While NFL executives and player representatives have time to negotiate a new deal, players were advised to set aside 50 percent of their salaries and bonuses over the next two seasons.
Labor disputes are just one obstacle for NFL players, many of whom play on non-guaranteed contracts despite a constant risk of injury in the high-impact sport. Since few NFL players earn enough money during their careers to retire for good, the development of a financial plan away from the field is a necessity, according to Thomas Morstead, the longtime New Orleans Saints punter and a minority owner of Main Squeeze Juice Co., a juice and smoothie bar franchise in the city.
“Regardless of the work stoppage potential, guys should be thinking about how they’re going to play [life after football],” Morstead, who also sits on the NFLPA’s executive committee, told FOX Business. “I hate the word retirement, because for the average guy, they’re 25 or 26 years old and it’s like you’re just changing jobs. The number of guys that retire and have the ability to do nothing is very small.”
Starting quarterbacks and other top NFL stars can earn tens of millions of dollars per season, but the financial reality is far different for rank-and-file players. The average NFL career lasts about 3.3 seasons. While the league’s average salary is about $2.7 million, according to various reports, fringe players often earn far less. The minimum salary for an undrafted NFL rookie is $495,000.
Player compensation and guaranteed contracts are expected to be major issues as labor negotiations progress. While traditional endorsements and appearance fees provide another source of income for players, more complex partnerships, such as investments in established franchises, can lead to a legitimate second career, according Patrick Powell, a sports marketing agent and business development agent whose clients include Washington Redskins tight end Vernon Davis and Atlanta Falcons wide receiver Mohamed Sanu.
“A franchise model will trump a traditional endorsement deal 10 times out of 10 as long as the right business team is in place. An endorsement deal provides a temp agency style structure, the player is used for a short term and then discarded,” Powell said. “When they become a business owner they make a shift from employee to boss. Whether they are a Pro Bowler or on the scout team, they create a residual revenue stream that exists as long as they desire to keep it alive.”
Why athletes invest in franchises
Food, restaurant and lifestyle franchises have emerged as a popular investment target for athletes. Saints quarterback Drew Brees is among the most prominent examples of the trend, with investments in Dunkin’ Donuts, Jimmy John’s and Title Boxing Club. Davis, the Redskins tight end, owns five Jamba Juice locations in California and recently partnered with Sanu to develop six more locations in the Washington, D.C. area.
The trend isn’t limited to the NFL. NBA legend Shaquille O’Neal recently invested in nine Papa John’s restaurants and joined the company’s board of directors, while Golden State Warriors star Draymond Green has invested in at least 20 Blink Fitness gyms in Michigan and Illinois.
Davis said his partnership with Jamba Juice began in 2006, when he learned about the company from his friends Venus and Serena Williams. A meeting with former Jamba Juice CEO James White led to an endorsement deal. Davis used the proceeds to invest in his first store.
“Most guys in the past, even myself and what I would do, a lot of companies would offer you, say, $150,000. Most guys would take that, walk away with it, spend it on whatever, maybe buy something, a car, whatever,” Davis said. “But nowadays we’re seeing a lot of guys take that money and put it back into the company.”
Davis later repeated that model with PathWater, a company sells water in recyclable aluminum bottles. He received equity as part of his endorsement deal with the company and later invested more of his own money into the brand. He also owns Timeless, a line of workout supplements.
The NFL’s financial challenges
Given the relatively short lifespan of the average NFL career, the NFLPA takes various steps to prepare its players for life after football. The process begins even before players leave school, in the form of its college outreach program, which educates prospects about the NFL scouting process and how difficult it is to earn a roster spot.
For players who manage to reach the next level, the NFLPA provides career-planning services, coordinates internships at companies such as Under Armour and identifies potential one-off earning opportunities.
Morstead decided to serve on the NFLPA’s executive committee in part out of a desire to learn more about the league’s benefits and pass that knowledge on to his teammates. Entering his 11th NFL season, he identified irresponsible spending, an inability to say "no" to family and friends asking for loans and careless dealings with business managers as three of the most common mistakes NFL players make in regard to their finances.
In terms of the possibility of work stoppage in the coming years, Morstead said most players have learned from the last round of negotiations in 2011, when an impasse between owners and union reps led to a lockout that nearly interrupted the season.
“It just happened the last time we didn’t have a CBA. I think that reality makes this a lot easier for guys to prepare,” he said. “That’s helpful for players to get all of their ducks lined up, to know that, hey, this is not just us throwing a red flag up to posture for the league, this is telling guys to get ready, this is a possibility. It just happened and it could happen again.”