The Curious Cat is a journey where I aim to reconnect with my inner-child and explore my curiosity. I pinpoint themes & topics I’ve been interested in within the last 7 days, ask myself questions about them and then write about them. I hope you find value within this issue and have a fantastic day doing what you love.
Did you hear that Messi just signed a $150mn contract with Inter Miami? Not only that, he’s negotiated a revolutionary deal that will see him earn a % of the revenues from MLS, Apple and Adidas. All while he rejected a $400mn per year offer from Saudi Arabia! How and why? Let’s dig in.
The Deal
Lionel Messi, after achieving everything possible in his career, is going to see out his final days in the MLS (the football league of USA & Canada) where he will represent Inter Miami. Arguably the best player of all time going to the 6th most watched league in the world, which no one outside North America cares about, sounds peculiar. But once you put your business hat on, the rationale quickly becomes apparent.
Messi is not only a footballer; he is an icon, an influencer and an asset. He brings with him a global audience compromised of 470M Instagram followers (6% of the global population & 10% of those who have access to the internet), and a unique story that is rooted in poverty but finishes with him conquering the world. He built an entire career based on brilliance, devotion and virtue. For many years I was a huge Real Madrid fan and could conjure up a million lies as to why Messi is no bueno. But the simple truth is, it is very hard to dislike Lionel Messi (aside from that cheating handball back in 2007). He is a PR dream.
And so, with an immense audience that loves him, the powers at be want to leverage his image in seek of filling up their pockets. Up until last week, the conventional model was to sign a football player, pay them a fixed salary, and then hope to recoup the cost by growing other revenue streams (ticket & merchandise sales, broadcasting rights and advertisements to name a few). Aside from their hugely inflated salary, players are treated as regular employees, with no equity and additional remuneration streams. The mechanics of their contracts are not that much different to a regular worker. We can look at CR7, Pele, Cruyff and Neymar as examples. All of those legends were lured to obscure leagues in the hope of adding value to their new club, in return for colossal salaries.
Lionel Messi and his father managed to change the norm…without the help of a professional agent! Although unconfirmed, this is what Messi’s new contract looks like:
Set to be paid between $120-$150mn across 2 years (could be more and longer, we don’t know)
After purchasing the broadcasting rights for MLS over the next decade, Apple will pay him a share of the revenue from MLS Season Pass subscriptions.
Adidas is giving him a share of the increased profits they realise within the North American football market.
Inter Miami will give him a share of the merch sales.
Similar to David Beckham’s deal, Messi will be given the choice to become a part-owner in an MLS club upon retirement.
Implications
So what does this mean for other athletes, across all sports? What does this mean for Rafa Nadal, Rory McIlroy and LeBron James?
I think Messi’s deal marks a new era. A new era in which athletes correctly monetise themselves and become shareholders in the range of businesses they collaborate with and boost revenues for (see Francis Ngannou’s new deal with the PFL). It’s also going to change the focus in sports and give a boost to a trend that is already unfolding: viewers are more interested in the story of individual characters, not the institutions they represent. It’s easier to read, track and relate to the story of a sole individual, over an entire team that recycles its constituents every ‘x’ years. Ultimately, people are more interesting than companies. It’s why Kylie Cosmetics, MrBeastBurgers, and PrimeHydration have penetrated saturated and are growing multiple times faster than their competitors.
The success of Drive to Survive and the unique insights into the lives of drivers gave birth to a new audience for F1, and turbocharged a company that was struggling to entertain its viewers (pun very much intended). To back up that idea with some statistics: total revenue for the US Grand Prix grew by 88% from 2020 to 2021 while attendance went up +50%. People like watching Daniel Ricciardo sing and Guenther Steiner’s magnificent ability to curse. I’ve only ever watched one episode of Drive to Surive and after hearing his story, I will forever be a fan of Estaban Ocon. I don’t even like F1 and I still like to keep up-to-date with Ocon’s career. It’s not competition (or lack of it in F1) that captivates viewers, but storytelling.
Messi’s story, like all stories, is built upon 3 pillars: a beginning, a middle and an ending.
Beginning: Born to a poor family in Rosario, Argentina. Suffered from a growth hormonal disorder that limited his maximum height to 4”7. He injected himself with somatotropin every night starting at age 12 in hope of growing taller. He was also freakishly good with a football at his feet.
Middle: He endured the challenges and became a professional footballer at Barcelona. He won every trophy possible with them and was the heart of perhaps the best football team ever assembled.
Ending: Messi’s achievements were vast, but they lacked the crown jewel - success with his national team of Argentina. Then last year, Argentina won the WorldCup in Qatar, cementing Messi’s legacy as one of the best footballers to ever play the game. Now he moves onto Inter Miami to share the fruits of his story and monetise the fuck out of them. Expect a Messi Netflix Special within next 18 months.
If we look at the history of football: viewers subscribe to a team and passionately follow that team until infinity. The personalities of their players weren’t visible and were often intentionally kept secret (see Giggs & Maradona). But with the rise of social media, we’re seeing individual personalities grow their own fanbases; often to the point where they become bigger than the sport itself (see Conor McGregor). They are no longer athletes, but content creators who move viewership, audiences and subsequent merchandise. They are essentially the equity of a business. I remember Conor demanding equity in the UFC back in 2017. The man was onto something.
The Super League (an alternative football league which would include the biggest teams across the globe) was born on the idea that fans don’t care about the leagues, but the clubs and their personalities. I’ve no allegiance to LaLiga, but I do care and am interested in Real Madrid and Luka Modric. If Real Madrid and LaLiga were to divorce after 95 years together, I would still watch my club, but have little-to-no interest in LaLiga if my favourite club and players weren’t there. With synchronised objectives and rewards, athletes are probably more likely to be loyal to their clubs as both parties benefit from them being there. Align incentives and you evict the principal-agent problem. We’re also seeing it in Golf, with the rise of LIV (alternative to PGA) which has targetted individual golfers and used them as bait to lure viewers to the new tournament. Will you watch the PGA tour if the world’s best golfers aren’t there?
The dynamics are changing. Sports people are no longer contracted employees but capital. It’s the merger of labour and equity. The value is in individuals and their ability to tell their story. So as I close this piece, I’ll ask you two questions: how interesting are you, and how well can you tell your story?