The $10 billion-a-year sports agency business is almost as difficult to break into as the major leagues themselves – the gatekeepers are entrenched and powerful, and the cost of competing with them can be prohibitive. Right now, though, a growing disconnect between athletes and agents — players want their agents to find them profitable ways to capitalize on their fame, while agents want to focus on high-dollar contracts — creates opportunities for entrepreneurs to disrupt the business. Some of them come from the music industry, leveraging their own cultural heritage to find clients and opportunities, including Jay-Z, whose Roc Nation includes a sports agency business. Young Money APAA Sports; and Sports Quality Control. More music stars are on the way again this year.
The business is now dominated by five companies — CAA Sports, Wasserman Sports, WME Sports, Excel Sports and Octagon — which together generate half of the $6 billion in commissions collected by the top 20 companies, according to Forbes. On the surface, these companies operate a bit like music and film/TV agencies, where executives identify opportunities for their clients and negotiate on their behalf. But the vast majority of money comes from long-term player contracts that yield gigantic commissions, and many athletes believe that this leads agents to ignore opportunities and investments associated with sports. Roc Nation and Rich Paul's Klutch Sports, built on their reputations for combining sports and entertainment, have used it to challenge established players, with enough success that they now rank No. 7 and No. 9, respectively, according to Forbes.
Does this mean other musicians and music executives will follow suit — or should they? Starting a sports agency is expensive — it can run between $40 million and $50 million, according to Forbes, which is a big gamble even for most stars. This usually means finding additional investors, in the form of financial backers or other entrepreneurs, as well as athletes who are either looking for an agent or a new one.
Roc Nation, which had a strong source of cash and credibility in Jay-Z, entered the sports business in 2013, five years after launching the company, with four-time All-Star Yankees second baseman Robinson Canó. Its sports division now has 190 clients, including Charlotte Hornets point guard LaMelo Ball and New York Giants running back Saquon Barkley, and about $2 billion in player salaries and another $500 million in sponsorships and non-salary deals, according to Forbes, which estimates the company's sports operations bring in $203 million annually. (Roc Nation declined to comment on its finances.) Klutch Sports, where Paul is LeBron James' agent and manager as well as a board member of Live Nation Entertainment, produces about half.
That kind of success brings competition, including from music executives Kevin “Coach K” Lee and Pierre “P” Thomas, who launched Quality Control Sports in 2019, four years before HYBE bought their company. Their agency clients include New Orleans Saints running back Alvin Kamara and Kansas City Chiefs wide receiver Richie James. Lil Wayne-owned Young Money APAA Sports has also put points on the board by signing University of Miami's Leonard Taylor III ahead of the 2024 NFL Draft.
However, this does not mean that every venture succeeds. Jeezy launched his Sports 99 agency in 2019, but it closed during the pandemic, and Kanye West's Donda Sports, which launched in 2022 with basketball players Aaron Donald and Jaylen Brown, collapsed within months after West made a series from anti-Semitic comments.
The rapid evolution of both the sports and music businesses may continue to lure musicians with money and influence, but anyone entering the sports agency business, no matter how famous, will likely do so as an outsider.
This story will appear in the February 10, 2024 issue Advertising sign.
