John-Michael Liles knows the temptations that can accompany a lucrative NHL contract. His came in the form of a ’69 Chevy Camaro.
Back when the retired defenseman was a rookie in 2003, he was wowed by a muscle car owned by a Colorado Avalanche teammate. Liles vowed that if he ever landed a big National Hockey League contract, he’d build that custom Camaro. Five years later, the Indiana native signed a four-year deal with the Avalanche -- then proceeded to fritter away $100,000 on a yellow convertible with black racing stripes.
“I probably spent more money on it than I realistically should have,” Liles, 38, said in a phone interview from his home outside Vail, Colorado. “It was a great car and I loved it, but at some point I had to become an adult. I have two kids and it’s not exactly child-friendly.”
To help him avoid bigger lures and protect 14 years of NHL earnings, Liles said he has relied on Royal Bank of Canada.
The firm was earlier than most in specifically targeting hockey players as clients and thinks it can replicate that success with other athletes. As its hometown Toronto Raptors celebrate breaking Canada’s 26-year championship drought in the biggest North American sports, Royal Bank sees an opportunity.
It has plenty of competition from major banks trying to ride the wave of surging salaries in professional sports. Morgan Stanley established a Global Sports & Entertainment division almost five years ago, and now has 132 directors and associates in the group. Goldman Sachs Group Inc. made a similar move last July, setting up a Sports and Entertainment Solutions business in its private wealth-management division.
“We have longstanding relationships with clients who are within the sports and entertainment industry, going back decades. Within the past year, we decided to have a more dedicated presence,” Nicole Pullen Ross, who oversees the business at Goldman, said in an interview. “We’ve been extremely fortunate to have some very early success.”
Seeking Action
It’s not just banks. Smaller companies, independent money managers and boutique firms are clamoring for some of the action in a business with mammoth contracts and sponsorship deals. Financial adviser Chris Moynes, who spent a decade in Royal Bank’s sports division before becoming managing director of One Sports + Entertainment Group, handles about 75 NHL players. Even former athletes have made the leap. The latest example: Tony Parker, a four-time National Basketball Association champion who retired from playing last week, joined NorthRock Partners LLC’s sports, artists and entertainment division.
The biggest firms are on the hunt for sports clients eager to avoid getting burned in a world rife with financial mismanagement. Professional athletes alleged almost $600 million in fraud-related losses from 2004 through 2018, Ernst & Young LLP said in a report.
And there’s plenty of money to be taken: Multiple baseball stars signed contracts this year paying more than $300 million, and a dozen NBA players may score nine-figure deals this summer. Average athlete salaries in the NHL, National Football League, NBA and Major League Baseball ranged from $2.7 million to $7.1 million in 2017, according to the EY report. Endorsements and sponsorship deals brought in $887 million for the top 100 earners.