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Patrick Mahomes: Building A Billion Dollar Investment Portfolio
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Hey Friends,
After sitting behind veteran quarterback Alex Smith for essentially his entire rookie season, Patrick Mahomes burst onto the scene in 2018. He threw for more than 5,000 yards, 50 touchdowns, and won the NFL’s most valuable player award.
Patrick Mahomes NFL Resume
10th overall pick in 2017
Super Bowl Champion (LIV)
Super Bowl MVP (LIV)
NFL Most Valuable Player (2018)
NFL Offensive Player of the Year (2018)
First-Team All-Pro (2018)
Second-Team All-Pro (2020)
3x Pro-Bowl (2018-2020)
NFL Passing Touchdowns Leader (2018)
Sports Illustrated Sportsperson of the Year (2020)
Still, at just 25-years-old with a $500 million contract, Patrick Mahomes is already planting the seeds to cement his legacy off the field also.
Patrick Mahomes’ rise to prominence is well documented. The Chiefs traded up to select him with the 10th overall pick in the 2018 NFL Draft out of Texas Tech. He sat behind & learned from veteran QB Alex Smith during his rookie season, taking over the starting role for his sophomore campaign.
The result was magic. Through a combination of Andy Reid’s aggressive play-calling and Mahomes’ knack for making the impossible look routine, the Chiefs became virtually unstoppable on offense.
He won MVP honors & a Super Bowl Championship in short order, but not to be outdone, Mahomes followed it up with a 10-year extension that could be worth more than half a billion dollars in total.
Contract Details
10-year, $450M extension (Max value of $502M)
Over $60M fully GTD upfront, with $100M due in the 1st year
Annual $1.25M incentive for AFC Champ. win
Annual $1.25M incentive for NFL MVP honors
Furthermore, here’s a breakdown by Tom Pelissero of the NFL Network showing the annual cash flow on Mahomes’ new deal.
The big payday at such a young age — Mahomes doesn't turn 26 until September — has enabled Mahomes to be more aggressive on the investing front. Combine that with the fact that he makes more than $20 million in annual endorsement income, and the NFL superstar is already one of the highest-paid athletes in the world.
Patrick Mahomes Endorsements Include
Adidas
Airshare
BioSteel Sports Nutrition
Bose
CommunityAmerica Credit Union
Directv
Electronic Arts
GEHA
Hy-Vee
Molson Coors Brewing
Nestlé
Oakley
Panini
Procter & Gamble
State Farm Insurance
Whoop
Adding more than $20 million through endorsements to his ~$50 million in annual NFL earnings is certainly nice, but the bigger impact will come from investing. Mahomes has already made equity investments in several businesses, most surrounding sports, entertainment, and health & wellness.
First up? The Kansas City Royals, with Mahomes joining the MLB ownership group last July when the team was valued at $1 billion. To be fair, this is more of a long-term play. The team is already established and won’t provide the asymmetric upside typically seen in high-growth tech companies.
Still, professional sports teams have a strong record of value appreciation, produce consistent cash flow due to locked-in media rights, and Mahomes will get season tickets and unlimited perks. You can’t beat that.
Kansas City Royals Valuation History
2005: $187 million
2010: $341 million
2015: $700 million
2020: $1.02 billion
The 25-year-old NFL quarterback also invested in Whoop, a human performance company that collects and provides physiological data 24/7 to optimize how you recover, train, and sleep, when the company raised a $100 million Series E funding round last year.
That valued the company at $1.2 billion — the large total addressable market (TAM) still leaves significant upside — and Mahomes was named a brand ambassador, providing him with a marketing fee to reduce his capital investment risk.
Other investors in Whoop include NBA star Kevin Durant, pro golfers Rory McIlroy & Justin Thomas, and fellow NFL players Larry Fitzgerald, Eli Manning, and Russell Okung.
Deals with Hyperice & BioSteel came next, with Mahomes continuing to build his investment portfolio within health & wellness. Hyperice, a maker of athletic performance recovery products, raised a $48 million Series A funding round in October, valuing the company at $700 million and also adding Mahomes as a face of the brand.
With a $700 million valuation, Hyperice isn’t exactly a startup. But with $200 million in revenue last year — 20x the $10 million in sales they did three years ago — and a history of profitability for 5 consecutive years, these are exactly the type of industry-changing companies Mahomes will profit from long term.
As if that investment lineup wasn’t impressive enough, Patrick Mahomes doubled down on the local Kansas City community this week. Major League Soccer’s Sporting KC announced Mahomes as a member of their ownership group on Tuesday, marking his second professional sports minority equity stake within the last year (KC Royals).
The MLS club is currently valued at $550 million and brings in over $45 million in revenue during a typical, non-pandemic year. Revenue multiples are high compared to other pro sports leagues — avg. MLS revenue-to-value multiple is 12.2x vs. 6.4x in the NFL — but valuations should continue to climb as the league finishes expansion, caps the total amount of teams, and focuses on growing broadcast revenue.
Average MLS Franchise Valuation
2018: $240 million
2019: $313 million
2020: $550 million
Interesting note: Patrick Mahomes’ fiancée Brittany Matthews also owns an equity stake in the Kansas City National Women’s Soccer League, which, at low 7-figure valuations currently, might eventually provide even more upside than the KC Royals.
Only time will tell how much Patrick Mahomes is able to maximize his net worth through investments, but he’s off to a great start. The NFL was a much smaller business in the 80s and 90s. Players got paid well, but there were certainly not any $500 million contracts being handed out.
My point being, Mahomes is earning more money than anyone in NFL history at an extremely young age, putting him in a unique position to aggressively compound capital for the next few decades.
My guess? If all goes well, Patrick Mahomes might eventually become part of a small group of athletes that crossed $1 billion in career earnings will still active. That list currently includes — Lebron James, Tiger Woods, Floyd Mayweather, Cristiano Ronaldo, Lionel Messi, and Roger Federer.
Have a great day, and we’ll talk tomorrow.
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