Are footballers more interested in flash cars and bling watches than long-term financial planning? Some clichés are true, Swiss tennis pro-turned-wealth manager Thierry Grin tells finews.com.
Footballer Cristiano Ronaldo sent shock waves through corporate boardrooms when he moved sponsor Coca-Cola’s bottles out of the frame at a post-match press conference and said «agua» was better. The powerful imagery conveyed how much sway athletes hold over consumers – and how much money is involved.
«We are reaching a point where some athletes – and Ronaldo is a perfect example – are becoming their own media and he can influence the share price of Coca-Cola,» Thierry Grin, founder and CEO of Baseline, a 15-year-old wealth management boutique in Geneva, told finews.com.
Porsches, Not Piggy Banks
Switzerland's footballers were widely mocked for showing up to training camp in Lamborghinis, Ferraris and Porsches – viewed as an ostentatious display of wealth at home (now that the team is through to the quarter-finals of the European Championship, where they face Spain on Friday, the chorus of disapproval has abated).
Grin says that some of the clichés around spendthrift athletes are true. «When it comes to team sports like soccer, there is also a competition between the players,» Grin (pictured below) says. «They want to have the most beautiful car or the most beautiful watch – social media is of huge importance today.»
Baseline, an 850-million-Swiss-franc ($925 million) wealth manager formerly known as Alpenrose, will focus more exclusively on the wealthy from the world of sports and entertainment which currently make up just over a third of its clients. It is a world that Grin knows well. He spent four years playing professional tennis, including on Switzerland’s Davis Cup team, and remains the tournament director of the Geneva Open.
When the Curtain Falls
The 52-year-old, who studied law in Lausanne after his pro career ended, sees it as his job to address uncomfortable truths. «It's really difficult also when the career is on to really be able to convince these athletes because most of them have a very big ego – this is also the reason why they are great athletes,» he says.
«At some point, you have to tell your clients to be careful because they may end up struggling in their financial life.» Catering to athletes and entertainers is well-established in the U.S., where UBS recently named ex-pro U.S. footballer Adewale Ogunleye to oversee the segment.
Different Market
Swiss wealth management loves sponsoring sporting events – UBS is a long-standing Formula 1 backer, for example. The industry has been less systematic on the client-side: Mirabaud’s Philippe Hertig – himself a former professional soccer player – specializes in young athletes. Grin was part of the launch of UBS’ sports and entertainment business, which has since been mothballed.
«The portfolio that you will be managing on their behalf will not be very much different than the one that you would you would manage for an entrepreneur, but there are other important factors that you must take into consideration when you are the wealth advisor of an athlete,» according to Grin.
Financial Literacy
Differing levels of financial literacy and the drop-off in income after active sporting careers end – nearly impossible to predict in advance. Most endorsement contracts are renegotiated at that point, for example. Grin took care of the finances of a basketball player who, despite pulling down $1.2 million a month in the NBA, never managed to save.
«In my experience, it very much comes down to the education of each individual because you have some who have been very well educated in their family they've been educated to be very careful with money and when it comes to spending, and others not so much,» says Grin.
Taxing Issues
Unsurprisingly for a boutique owner, Grin believes small and specialized is beautiful. «We are not for example sports agents – we are wealth managers and there are limits to what we can do,» he notes. Baseline relies on a network cultivated over 15 years for specialists such as for intellectual property rights for performing artists.
Cross-border tax issues are also of major importance: many Formula 1 race car drivers have settled in Monaco (no personal income tax) or Switzerland (competitive flat-tax arrangement). However, wealth managers need to pay attention to where endorsement contracts are paid, and what withholding tax is levied where they are signed, Grin notes.
«Most of the time, the very successful athletes most even without the benefit of a degree in economics will always ask the right questions,» he says.
