An excellent podcast for entrepreneurs is “My First Million” featuring internet pioneers Shaan Puri and Sam Parr. In episode No. 367, posted on September 27, Puri discussed the business dealings Roger Federer (steered by his agent Tony Godsick) and how he has become one of the few athletes who have become billionaires. Here’s what Puri had to say!
Ninety percent of his money came not from winning tennis tournaments. So he’s made $130-ish million from official prize money from tournaments and he’s got 20 Grand Slam wins, but most of the money he makes is off the court.
So just for example, last year, he made $300,000 in prize money, but $90 million from sponsorships off the court, which is insane. But his story is cool. And when I was studying these different athletes, the moves that they made this happen. So one of Federer’s big moves was that early on he was not getting paid jack shit.
Even when he was the best player, they would pay Andy Roddick more because they’re like, “Oh, Andy Roddick, he’s American. America is a bigger market.” Federer is Swiss, the Swiss market that’s a tiny population. He’s this clean cut boring guy. He doesn’t have this big personality and even though he is really good, he’s not as marketable, he’s not as sellable and this is what they used to tell him.
So he was getting very small… (Clothing lines) were paying Andy Roddick more than they were paying Roger Federer. He was making very little money from Nike. Then he carries on and he goes and he gets to a $10 million a year deal with Nike.
And it’s like, “Well you made it. You should be happy you got this 10 million a year deal. You’re set. Your family’s set, whatever.” But he made two decisions, really one decision led to two things that made him an extra $600 million.
And here’s what those two were. So the first is his contract with Nike is coming up and the expectation is that he’s going to just renew with Nike and he goes to Nike, he says, “Hey. I’m one of the best tennis players in the world. What could he do for me?”
And they’re like, “Roger, We put so much marketing behind you. The reality is you can’t compare yourself to basketball players or to soccer players. Tennis is just a different thing. Here’s the best we could do.”
And they gave him a deal. And the deal was basically every year that you’re playing, you get X amount of money and something similar to what he was making right then. But he decides, “You know what, I’m going to pause here. I’m not just going to take this deal. I’m going to go shop around a little bit more and see what I can do.”
And then UNIQLO comes at with this crazy offer. And so UNIQLO, who’s not even into sports apparel game really, but they kind of had this tennis vibe, they’re trying to come the West. And so UNIQLO comes at and they offer him a 10-year deal with $300 million that pays him even when he retires. He signs this deal knowing that he will retire during this deal and he is going to get paid 30 million a year doing this.
He goes back to Nike, he tells Nike, “Hey guys, I got this offer. Can you also give me an offer this? It doesn’t even have to be as much.” And they’re like, “No, we’ll throw in this. Here’s an extra free but no, you’re not getting a new deal.” He’s like, All right, he leaves.
But there’s one key thing that he knew here, which was a UNIQLO doesn’t make shoes. He signs the UNIQLO deal. He starts wearing UNIQLO, but he’s still wearing Nike shoes.
And they ask him at the press conference, they’re like, “Roger, I notice you’re still wearing your Nike.” He’s like, “Are you allowed to?” He’s like, “Oh yeah, I don’t have a deal with them. I’m shopping around. We’ll see what’s out there for me. It’s exciting. I want to see what’s out there.”
And so for three years he keeps wearing Nike’s essentially for free because he’s just playing in them. He doesn’t have a shoe deal. And then finally he does, he gets a shoe deal with the brand called On Running, which I’m guessing about On the running brand also. They’re another Swiss company. They’ve taken the world by storm. I think they make over a billion in revenue now. They went public at peak, it was $11 billion valuation now with market corrections back closer to six billion, but at its peak.
So Roger owned 3% of the brand in exchange for, he did an equity deal. So he said, “All right, I get it. You guys don’t have the same cash that these guys can offer. How about a piece of the company?” And so he owns 3% of the company at its peak stake is worth 300 million down.
So bet on yourself and then do an equity deal. Don’t trade dollars for time. Trade your brand for shares, trade it for equity, and that becomes $300 million. And then he says, “All right, what else can I do?” So he then takes matters into his own hands. He cuts ties with his current representation company. He starts his own player management firm to represent him and other players.
Then he starts creating his own tournaments, he’s got his own cup. (The Laver Cup). That’s basically the equivalent of the Ryder Cup in golf where it’s Europe versus (The World). So he wants to do the same thing and now he’s got his own competition thing. He has built this whole empire made over a billion dollars total, most of it, 90% of it off the court.
And I think this is amazing, and if you look at it, there’s a couple interesting things here. So he goes upmarket. So he goes basically, “How do I go premium? So his sponsors are Mercedes-Benz, Rolex, Lindor Chocolate. He didn’t do what Jordan did, which was Coca-Cola and McDonald’s, right? Cause he’s like, “All right, where’s my niche? Where’s my market? How do I get paid? Let me go to these.” Go to Rolex, basically. The second thing that he did was he basically, not only did he bet on himself, not only he take matters into his own hands, he played a patient game. I think most people, during those three years where they don’t have a shoe deal, they’d just be counting the dollars that they’re missing out on. I make five million or $10 million a year if I just signed this contract.
