As star athletes’ salaries skyrocket, they change into trophies that banks covet

John-Michael Liles is aware of the temptations that may accompany a profitable NHL contract. His got here within the type of a ’69 Chevy Camaro.

Again when the retired defenceman was a rookie in 2003, he was wowed by a muscle automotive owned by a Colorado Avalanche teammate. Liles vowed that if he ever landed an enormous Nationwide Hockey League contract, he’d construct the identical customized Camaro. 5 years later, the Indiana native signed a four-year cope with the Avalanche — then proceeded to expend US$100,000 on a yellow convertible with black racing stripes.

“I in all probability spent extra money on it than I realistically ought to have,” Liles, 38, stated in a telephone interview from his house exterior Vail, Colo. “It was an awesome automotive and I cherished it, however in some unspecified time in the future I needed to change into an grownup. I’ve two youngsters and it’s not precisely child-friendly.”

To assist him keep away from greater lures and defend 14 years of NHL earnings, Liles stated he has relied on Royal Financial institution of Canada.

The agency was sooner than most in particularly concentrating on hockey gamers as shoppers and thinks it may well replicate that success with different athletes. As its hometown Toronto Raptors have fun breaking Canada’s 26-year championship drought within the greatest North American sports activities, RBC sees a chance.

It has loads of competitors from main banks making an attempt to experience the wave of surging salaries in skilled sports activities. Morgan Stanley established a International Sports activities & Leisure division virtually 5 years in the past, and now has 132 administrators and associates within the group. Goldman Sachs made the same transfer final July, establishing a Sports activities and Leisure Options enterprise in its private-wealth-management division.

“We’ve got longstanding relationships with shoppers who’re inside the sports activities and leisure trade, going again many years. Throughout the previous yr, we determined to have a extra devoted presence,” Nicole Pullen Ross, who oversees the enterprise at Goldman, stated in an interview. “We’ve been extraordinarily lucky to have some very early success.”

John-Michael Liles has used RBC to assist him keep away from buying lures and to guard 14 years of NHL earnings.

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It’s not simply banks. Smaller firms, impartial cash managers and boutique companies are clamouring for a few of the motion in a enterprise with mammoth contracts and sponsorship offers. Monetary adviser Chris Moynes, who spent a decade in Royal Financial institution’s sports activities division earlier than changing into managing director of One Sports activities + Leisure Group, handles about 75 NHL gamers. Even former athletes have made the leap. The most recent instance: Tony Parker, a four-time Nationwide Basketball Affiliation champion who retired from enjoying final week, joined NorthRock Companions’ sports activities, artists and leisure division.

The most important companies are on the hunt for sports activities shoppers desirous to keep away from getting burned in a world rife with monetary mismanagement. Skilled athletes alleged virtually US$600 million in fraud-related losses from 2004 by way of 2018, Ernst & Younger stated in a report.

And there’s loads of cash to be taken: A number of baseball stars signed contracts this yr paying greater than US$300 million, and a dozen NBA gamers might rating nine-figure offers this summer season. Athlete salaries within the NHL, Nationwide Soccer League, NBA and Main League Baseball ranged from US$2.7 million to US$7.1 million in 2017, in keeping with the EY report. Endorsements and sponsorship offers introduced in US$887 million for the highest 100 earners.

In serving these extremely paid athletes, Royal Financial institution stands out, having suggested professionals for nearly three many years. It targeted initially on hockey gamers, whose careers usually shuttle them between the U.S. and Canada.

“No person has our cross-border capabilities,” Bob McKee, Royal Financial institution’s managing director for sports activities professionals, stated in an interview at his Vancouver workplace. “That’s the key.”

It is not a 9-to-5, Monday-to-Friday job. You’ve got received to have the ability to work 24/7, seven days per week. It is not a job for everyone.

Bob McKee, managing director for sports activities professionals, Royal Financial institution

The corporate works with about 900 sports activities professionals, about 80 per cent tied to hockey — largely NHL gamers, but additionally these enjoying within the American Hockey League or Europe, in addition to drafted junior gamers, retired NHLers, coaches, brokers and executives. The remainder are in MLB or the NFL, the place Royal Financial institution expanded up to now two years, or within the NBA or skilled golf.

A 38-member Royal Financial institution workforce features a dozen non-public bankers in Canada and the U.S. who act as “quarterbacks,” coordinating the financial institution’s response to consumer wants, together with 15 funding advisers, McKee stated.

“It’s not a 9-to-5, Monday-to-Friday job,” stated McKee, 63, who spent years as a non-public banker for athletes earlier than transferring into his present function. “You’ve received to have the ability to work 24/7, seven days per week. It’s not a job for everyone.”

Royal Financial institution established a North American sports activities professionals section inside its private-banking division in 2004, consolidating providers for athletes scattered throughout its department community. However the beginnings attain again additional, when McKee was a senior loans officer at a department close to the Canucks’ Vancouver area. His break got here in 1991, when he landed gamers Trevor Linden and Cliff Ronning as shoppers.

Royal Financial institution’s U.S. foray beginning within the late 1990s helped broaden the observe of serving border-hopping NHL gamers. The agency prolonged its attain when it purchased Metropolis Nationwide — Hollywood’s financial institution to the celebrities — in 2015.

A playbook emerged: Get athletes once they’re younger — usually 18, 19 or 20 years previous — to offer them steering earlier than the large paychecks and larger temptations arrive. To win over these gamers and their households, attending the annual NHL entry draft grew to become a requirement — together with this week’s gathering in Vancouver.

The opportune time is earlier than they begin to consider what they are going to do with this cash — and a few of it could possibly be frivolous like shopping for a Ferrari or one thing

Bob McKee, managing director for sports activities professionals, Royal Financial institution

“The opportune time is earlier than they signal that contract, earlier than they begin to consider what they’re going to do with this cash — and a few of it could possibly be frivolous like shopping for a Ferrari or one thing,” McKee stated.

Royal Financial institution additionally attracts athletes halfway by way of their careers or approaching retirement. Immediately, about 18 per cent of shoppers are retired gamers.

Daniel and Henrik Sedin, Swedish twins who performed their total 18-year profession with the Canucks earlier than retiring final yr, find out about heady profession trajectories. The longtime Royal Financial institution shoppers went from getting about US$100 a recreation in a Swedish league within the late 1990s to incomes about US$1 million a season with their first NHL contract, a three-year deal in 1999. Their salaries reached US$7 million a season of their ultimate years.

“It’s simple to say numerous gamers make some huge cash, however for essentially the most half gamers make league minimal or as much as 1,000,000 and a half, possibly $2 million,” Henrik Sedin, 38, stated in a telephone interview. “When you play for 3 or 4 years, you’re not going to have the ability to stay the remainder of your life doing nothing — and that’s the case for almost all of gamers within the league.”

Henrik Sedin and Daniel Sedin of the Vancouver Canucks at their ultimate NHL recreation in 2018.

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The Sedins are a wealth supervisor’s dream: They’d lengthy careers and profitable contracts, but are restrained of their spending. Their greatest indulgence got here once they every spent round $150,000 on motorboats for his or her oceanfront house in Sweden. They didn’t actually get pleasure from them, and offered a yr later at a loss.

“We grew up in a household that by no means actually talked cash — we didn’t suppose that means,” Henrik Sedin stated. “We had been by no means guys that purchased something luxurious or stuff like that.”

Nonetheless, the previous captain relied on Royal Financial institution’s acumen to assist on difficult monetary points, together with placing collectively a mortgage for an condominium in Stockholm and transferring the cash overseas forward of a good deadline.

I’ve performed actual property agent, I’ve taken supply of vehicles, I’ve delivered paperwork and so forth to bizarre locations, to inns. I’ve gone all the way down to the depths of locker rooms, gone to the observe amenities. You make your self out there to them, at their schedule

David Vander Voet, non-public banker, Royal Financial institution

Out-of-the-ordinary calls for from sports activities stars have been the norm for RBC’s David Vander Voet throughout his 13 years as a non-public banker in Toronto.

“I’ve performed actual property agent, I’ve taken supply of vehicles, I’ve delivered paperwork and so forth to bizarre locations, to inns. I’ve gone all the way down to the depths of locker rooms, gone to the observe amenities,” he stated in an interview. “You make your self out there to them, at their schedule.”

Vander Voet works with “brand-name athletes” in addition to hockey executives, brokers and retired gamers. He sometimes manages round 150 households, and at present 20 are in sports activities, together with lively gamers within the NHL, MLB and NBA. His first consumer as a non-public banker was a newly acquired Toronto Maple Leafs participant, and he’s since constructed relationships with younger athletes and their households, from their junior hockey days, to American Hockey League debuts, and on to the NHL.

Younger gamers are usually “a bit boring” of their calls for, Vander Voet stated, not like some gamers taken on later of their careers. “I’ve shoppers that I’ve inherited once they’re near retirement, when it’s been extra of a 911 as an alternative of a 411. It’s been a little bit of a tire hearth and we’re making an attempt to get them proper once more.”

Like his colleagues, Vander Voet received’t disclose consumer names. He’s coping with one participant keen to purchase a $10 million home, and as soon as had a Raptors basketball participant who was paying $eight,500 a month in hire for a apartment and much more for Toronto parking stalls for his vehicles and people pushed by his entourage.

Liles’ tastes have been much more modest, Camaro however. He purchased and offered some properties, however largely rented throughout his profession. He was tempted by a trip membership, however his Royal Financial institution adviser, Trevor Johnson, made him rethink.

“Any time I had one thing in my thoughts that wasn’t on monitor with my plan for my profession and post-career, Trevor was all the time there to say ‘Let’s simply desk this one for a short time,’” Liles stated. “For essentially the most half, we’ve made some fairly sound monetary selections.”

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