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After NCAA Ruling, Morgan Stanley Takes On a New Market

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Pro athletes Steph Curry, LeBron James and Roger Federer boast some of the most lucrative endorsement deals in the world. 

Now it’s college athletes’ turn to start profiting from their name, image and likeness (NIL) since the National Collegiate Athletic Association in June gave approval for student players to make endorsement and sponsorship deals as well.

The NCAA is allowing all student-athletes to “monetize their name, image and likeness. It gives everyone the opportunity to make money off their [NIL] while they’re in college,” Sandra L. Richards, head of Morgan Stanley’s Global Sports & Entertainment Division, tells ThinkAdvisor in an interview.

Indeed, the deals already are coming at a fast clip. These range from relatively simple social media influencer contracts to mega-sized endorsements such as the $2 million deal that Hercy Miller, who starts playing basketball for Tennessee State University this fall, has reportedly signed.

Previously, under NCAA rules, student-athletes were prevented from earning NIL money because of their amateur status.

Some states have now put NIL laws into effect, while several universities are creating their own NIL policies.

In June, the Supreme Court ruled that student-athletes are permitted to receive paid internships and the like, and profit from sponsorships. 

The ruling stemmed from an antitrust lawsuit that found the NCAA’s compensation restrictions for student-athletes for their play in violation of the Sherman Antitrust Act.

Now that they’re allowed to make money off their NIL, a door has opened for financial advisors to serve this new market segment.

Morgan Stanley’s GS&E Division was founded in 2014. 

Managing $100 billion in assets, it has about 191 FAs who have earned an internal MS designation making them “directors” that specialize in helping athletes, actors, media executives, social media influencers and other entertainment types to maximize their financial assets.

As for the student-athletes, GS&E is starting off by providing financial education “as they’re coming to this newfound opportunity of making money,” Richards says.

ThinkAdvisor recently held a phone interview with Westchester County, New York-based Richards, who joined the firm in 2007 and was named head of GS&E in 2018. 

Earlier, she was director of corporate and foundation relations at the Jackie Robinson Foundation.

She says the financial plan for players is “a road map” that helps them “get where they want to be and hopefully [avoid] making headlines [revealing] they have no money after they’ve left their professional career.” 

Here are excerpts of our interview:

THINKADVISOR: Please explain the change in the National Collegiate Athletic Association’s rules concerning pay for college athletes.

SANDRA RICHARDS: Now student-athletes can be compensated and take sponsorships in endorsement deals. They’re able to make money off their name, image and likeness [NIL].

And service providers [financial advisors] can engage with them when they need help determining how to manage the money they’re getting and to seek advice about what they should be doing with it. 

What are examples of how the athletes could profit from their name, image and likeness (NIL)?

By signing autographs at a local sporting equipment store or if a pizzeria wants to hire them to be the face of their advertising in the local market.

Or if their name or likeness are used on a [certain brand] of sneaker or other apparel, they can get paid for it.

Who does the paying?

The sponsors, the people engaging them in a partnership or brand deal. Not the schools or the institutions.

Why wasn’t this permitted before?

The NCAA had rules and policies that prevented the student-athletes from earning money under their amateur status.

Is it just the star players to whom this is relevant?

It equals the playing field for all student-athletes to monetize their name, image and likeness. It’s all athletes, whether you’re on the football team, the lacrosse team, women’s basketball team, men’s basketball team.

It gives everyone the opportunity to make money off their [NIL] while they’re in college.

Some states have put NIL laws into effect. Elsewhere, it may be up to the universities to create their own version. 

Therefore, it seems that many athletes would choose a college where an NIL law is in effect. Thoughts?

I think the NCAA is going to work to ensure that there’s an equal playing field that will benefit everybody.

Are the Morgan Stanley Global Sports & Entertainment directors — FAs who have an internal designation focused on serving athletes and entertainers — the only advisors at MS that would work with the student-athletes? 

Or can other MS advisors without that designation do so as well?

We steer people to our GS&E directors because they have the experience and in-depth knowledge of working with athletes and entertainers and understand the typical ways they get paid.

They also have deep knowledge about things that may jeopardize the athletes’ eligibility.

Is the GS&E business an area where diversity among advisors is evident?

We have about 191 GS&E directors across the country that hold that designation, and they are diverse in terms of representation: men and women, African Americans — both Black and Hispanic — and geographically diverse, too.

Is it reasonable to presume that many African American athletes prefer working with an advisor who is also African American?

We definitely have a diverse representation of advisors. But also, when someone selects an advisor, they select them based on compatibility — the way they can connect and how their thought processes align. 

So certainly [diversity] is a factor, but you also want to have [an advisor] you’re comfortable with in a varying number of areas.

In what way is Morgan Stanley interfacing with the college players now?

Our focus is on financial education and ensuring that as they make decisions and enter new fields, they’re armed with knowledge about what they can do to ensure that they maximize opportunities.

How does the NCAA’s NIL decision provide an opportunity for Moran Stanley’s GS&E division?

The financial opportunity remains to be seen. What we’re focusing on now is financial education. That’s how the Global Sports & Entertainment business was built: The foundation is financial education.

If we can make an impact there, we know that when it’s time for a player to come into some significant amount of money, they’ll look at Morgan Stanley as one of the places they want to consider doing business with.

For financial education, would the student-athletes come directly to the firm, or do they need to go through agents?

They can find us on the GS&E website. They can find an advisor whose local office is located near their school. They can definitely call us.

Would you then sign them as a client?

We wouldn’t necessarily sign them as a client [at that point]. First we would figure out their needs and give them guidance and education about how to manage money, how to budget, how to save.

And also, how to build out a team, including a CPA or tax consultant. 

It’s about helping them determine who they need to have on their team and giving them some education as they’re coming to this newfound opportunity of making money.

Several NIL college student deals have already been transacted. When would your firm come into the picture to help players invest their money?

Some of the deals are on a very large scale, and some are just social media influencer deals for $10,000 and the like.

When they seek us out and say, “We’re looking to engage your services,” we need to understand what they’re trying to accomplish and what they want to do with the money, and then start to build a plan around that. 

When they’re ready to have a conversation about their long-term goals, short-term goals, how to invest, what they want to do, they need to build a plan so they can maximize the opportunity.

Players need to focus on the future because a professional sports career is typically short. By the time they retire, many have spent all their money or were swindled out of it and have nothing left. 

So is post-retirement something you help them plan for?

Absolutely. Our advisors sit down one-on-one and ask, “What’s your goal? Where do you ultimately want to be?” 

[Later] they’ll ask, “Is this decision that we’ve made today going to get you to where you said you ultimately want to be? If not, then we probably shouldn’t go that route. If so, let’s move forward.”

So the advisors help guide the players along the process. 

The financial plan is really the road map to help them get there and hopefully [avoid] making headlines [revealing] they have no money after they’ve left their professional career.

Instead, because they’ve been planning for this for so long, when they retire and move on to something else, they have that plan in place, which has helped them from the beginning.