Naomi Osaka Is Launching Her Own Sports Agency
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Naomi Osaka had a pretty good day yesterday. The 24-year-old tennis star was named the world’s highest-paid female athlete by Sportico. That’s the third consecutive year she has held the top spot, which means that she has been the highest-paid female athlete in the world since she was just 21-years old.
Her $53.2 million in annual income is a record for female athletes, and 98% of it ($52 million out of $53.2 million) came via endorsements off the tennis court.
But just hours later, Sportico broke the news that Naomi Osaka was making another major money move — Osaka’s contract with IMG expired at the end of last year, and she is now leaving the company to start her own sports agency called “Evolve.”
“I’ve spent my career doing things my way, even when people told me that it wasn’t what was expected or traditional,” Osaka told Sportico in an email. “Evolve is the natural next step in my journey as both an athlete and businesswoman, as well as a way to continue being myself and doing things my way.”
Osaka’s agent Stuart Duguid is also leaving IMG and joining her at Evolve. They both will hold an equity stake in the new firm, and there are currently no outside investors.
“I’m excited to start this with my business partner Stuart and our plan is to use the same approach we took in building my businesses authentically and strategically as a vision for this company,” Osaka told Sportico. “I strongly believe in the power athletes have to use our platforms to drive meaningful business.”
You can read the entire article by Sportico here (subscription).
I think this news is interesting for several reasons. First, this isn’t necessarily a new concept. We have seen athletes like Jack Nicklaus, Greg Norman, LeBron James, Roger Federer, Rafael Nadal, Kevin Durant, and others leave the traditional agency model behind and start new ventures with their closest associates and confidants.
But Naomi Osaka is the first female athlete I can think of to do this on a large scale.
This model tends to work well for the top 1% of athletes. Think about this — most of the value an agency provides comes from negotiating contracts, signing endorsement deals, and just generally opening doors and servicing you to the best of their ability.
But an athlete like Naomi Osaka (or any of the ones I mentioned above) doesn’t really need that in today’s world. Instead, these athletes want an infrastructure that allows them to take bigger swings. I’m talking about equity endorsement deals, venture capital investing, new business incubation, and more. That’s not to say they can’t do all of that within an agency like IMG; it’s just not what that model was built for.
Osaka’s agent Stuart Duguid told Sportico that they are “not interested in building Evolve into a large firm” and would likely only take on “another client or two.”
“The core of Evolve is building Naomi’s business from $50 million a year to $150 million a year,” Duguid said.
So I think Roger Federer is probably the best comp for contextual purposes. Federer left IMG with his agent Tony Godsick in 2013 to launch an agency called Team8.
The firm only has 3-4 clients in total, and the business primarily exists as an entity to service Roger Federer’s various business endeavors. But it has also been the driving force that has enabled Federer to become one of the highest-paid athletes in history.
He left Nike to sign a deal with Uniqlo that pays him $30 million annually. He owns 9-figures of equity in On Running after agreeing to an equity endorsement deal with the company before they went public, and his team owns and operates the Laver Cup.
These moves have launched his brand into another stratosphere. For example, Roger Federer brought in $85 million last year and ranked as the world’s 8th highest-paid athlete. But here’s the crazy part — just $700k (<1%) of that came on the court.
Roger Federer is an extreme example. There are probably less than five athletes in history who have built and monetized their brand to the level he has. But that doesn’t mean it isn’t the right model. I think it is the right model for the right athlete.
Naomi Osaka needs to continue to perform, of course. But she has already built herself into a global brand. And given that she is still just 24-years-old, she now has an incredible opportunity in front of her to potentially build one of the biggest brands in all of sports (male or female).
So I’m happy to see her going for it. Ownership is essential, and generational athletes like Naomi Osaka are ideally situated to capitalize on this trend financially.
I hope everyone has a great day. I’ll talk to you tomorrow.
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