I’m not sure if I’ve ever explained why I chose the name of Sport of Money for my blog on personal finance.
I thought there were a lot of similarities between being successful in sports and in personal finance. I also thought there would be great lessons we can learn from sports that we can apply to personal finance.
If personal finance is a sport, money is how you keep score. Therefore, I decided to name the blog Sport of Money.
My original intention was to write about lessons gleamed from sports and how they can apply to personal finance. But after soliciting feedback from some people, I decided to take it another direction.
I focused more on general personal finance matters instead of focusing it on sports. The feedback received was that the blog should be as inclusive as possible.
What about readers who don’t follow sports? Would they have any interest in reading about personal finance lessons learned from the sports world? I don’t know the answer to those questions.
After writing for over a 1 year and a half, I think I would like to insert more sports related posts. I figure I can inject such posts in between general finance posts.
Who knows? Maybe I can convert some non-sports enthusiasts to sports fans.
I Enjoy NFL Football
I am a fan of NFL football. After all, football is the most popular sport in America.
The Super Bowl is the biggest annual event of the NFL season. For those not familiar with American football, the Super Bowl is the annual championship game.
It is a big deal in America. A lot of people look forward to the big game. You can count me as one.
The Super Bowl is typically the most watched event on television for the year with about 100 million viewers annually. Even the commercials and half-time shows are hyped up.
Super Bowl advertisers are willing to shell out about $5.6 million per 30 seconds of airtime during the 2020 Super Bowl.
The $500 Million Dollar Man
Speaking of the 2020 Super Bowl, the Kansas City Chiefs played the San Francisco 49ers in that game. The Kansas City Chiefs ended up winning that game.
Patrick Mahomes II played the quarterback position for the Kansas City Chiefs during that Super Bowl. The quarterback is the main conductor of the offense for a football team.
Mahomes led the Kansas City Chiefs to victory in the 2020 Super Bowl and was named the Super Bowl Most Valuable Player (MVP).
He had a great year in the past NFL season culminating with that Super Bowl victory.
While he didn’t win the Super Bowl in the prior season, Mahomes still put together one of the best years for an NFL quarterback. He threw for over 5,000 yards and 50 touchdowns; becoming only the second quarterback in the history of the NFL to achieve that many yards and touchdowns in a single season.
Mahomes ended up winning the NFL MVP award for that season. He accomplished this in just his first full season as a starter.
For what Mahomes has accomplished, the Kansas City Chiefs recently awarded him with a contract extension – a 10 year contract worth up to $503 million. That is the biggest contract ever awarded in American sports and is the only one to top $500 million in size.
Lessons From Patrick Mahomes’s $500 Million Contract
While that number is staggering and really hard to wrap my head around, I see 8 lessons we can learn from Mahomes’s path to this record setting $500 million contract that we can apply to our own financial situation.
Lesson #1: Enter Into A High Paying Profession
I believe the key to wealth follows a simple equation:
Earn + Save + Invest = Wealth
Earn is how much you make. Save is how much you keep of the money earned. Invest is putting that saved amount to work. You do that and over time, you will be wealthy.
Now I do believe that if you want greater wealth, you should utilize the financial power of compounding. The earlier you start, the greater your wealth.
Therefore, the simple equation for greater wealth is Earn ASAP + Save ASAP + Invest ASAP = Greater Wealth. ASAP stands for As Soon As Possible.
If you want to accumulate wealth, increase the Earn part of the wealth equation by entering into a high paying profession. It becomes so much easier to save and invest your money when you are earning an outsize pay.
It literally pays to be in a high paying profession. The average NFL players make $2.7 million a year in 2019. In order to crack into the top 10 earning players in 2019, a salary of over $20 million is needed.
Being in a high paying profession brings with it a lot of upsize reward for a strong performer. Mahomes was able to get compensated to the tune of $500 million in his contract extension because NFL team owners are used to doling out big dollar amount contracts.
But we don’t all have to be professional football players to enter into high paying professions.
Check out this list of the 10 highest paying professions to get into in 2019 according to Glassdoor:
Lesson #2: Go Into A High Paying Position Within A High Paying Profession
Not only is it wise to enter into a high paying field, it is wiser still to be in the right position in that field.
The highest paying position at the NFL level is the quarterback. Not surprisingly, Mahomes is the quarterback for his team.
The quarterback directs the offense and is the player with the biggest impact on the fortune of the team during game day. It shouldn’t come as a surprise that 7 out of the past 10 Super Bowl winning teams are led by future Hall of Fame quarterbacks (yes, as a New Yorker, I’m counting Eli Manning in that group).
And if Mahomes can continue his high level play, he will be a Hall of Famer one day as well.
In order for us to maximize our earnings, it also makes sense for us to be in the right position within the profession or field.
Take going into the financial services industry for instance. Different jobs within the industry pay different amounts.
Obviously, selecting the position that pays the most is how you can build your wealth quicker.
Lesson #3: Prove Your Worth And Deliver Good Results Before Expecting A Big Payout
There is no way Mahomes would be able to get a $500 million contract before he has even started a game in the NFL.
Mahomes was able to prove his worth through 2 seasons as a starter. He won the league MVP during the first season. He brought the Kansas City Chiefs their first Super Bowl in 50 years during his second season.
His two seasons were exceptional seasons for any quarterback, let alone a young quarterback who might not have hit his peak yet.
With a proven track record, he went to the negotiating table and asked for an enormous contract.
The same applies to us. Before you are compensated well, make sure to prove your worth to the company and deliver good results.
Build that track record and proven history of success first before asking for a raise, promotion or a big payout.
Lesson #4: Performance In Critical Situation Is Important And Will Be Rewarded Immensely
If you want a big payout, performance is important in critical situations. Success will be rewarded.
Take the Super Bowl for instance. With a championship on the line, 100 million people watching, and the hype leading up to the game, there is a lot at stake. The football players feel a tremendous amount of pressure to perform during this big game.
But the people who can perform under this situation have typically been compensated handsomely for getting the job done at the biggest, most critical moments.
Mahomes showed up when it counted the most. He brought the Chiefs back from a deficit earlier in the game. For his effort, he was awarded the MVP award for the Super Bowl.
I’m sure seeing that Mahomes was able to perform in the most critical situation made it easier for the team to reward him with the $500 million contract extension.
Lesson #5: Best To Have A Big Win Prior To Negotiation
Mahomes had a huge win, the best kind for a player in his position. He just came off a season in which he won the Super Bowl MVP award.
It is hard to top that as a football player if you want to accomplish a big win before walking into a contract negotiation.
I approach it the same way in my job. I work in the financial services industry and my year-end compensation is a significant part of my pay.
Since so much of my compensation is paid at the end of the year, I try my best to rack up the big wins closer to the end of the year. I figure any mistakes made during the beginning of the year will be forgotten by the time year-end rolls around.
But a big mistake made at year-end will have a disproportionate impact to my year-end compensation.
It is also easier to ask for a raise, a bigger year-end bonus, or a promotion immediately after a big win in your job such as getting a key client, completing a big project, or winning business for the company.
Lesson #6: Be A Good Ambassador For Your Employer
Not only is Mahomes a great football quarterback as evidenced by his accomplishments on the field, he is also a great face of the franchise.
In fact, he is slated to be the face of the NFL in the near future. There is no way the Chiefs would hand out such a massive contract if they don’t believe Mahomes can be a good ambassador for the team as well.
As an employee of a company, I am expected to toe the company line. I need to embrace the culture of the company and help perpetuate the company’s culture to the people.
There are reasons why companies issue mission statements, have core values, and distinct cultures. The leaders want their employees to understand how they should act and how to represent the company in the best light.
Be a good ambassador for your employer within the company and to external constituents. That is a good way to move up in the organization and to be rewarded.
Lesson #7: Have A Good Team Around You
The $500 million contract didn’t just happen in isolation. Mahomes had a whole team working with him.
This is true on the football field and off the field. Obviously, he needed to rely on his football teammates. He needed good offensive linemen to block the opposing defense, receivers to catch his passes, and strong running backs to help take some pressure off of him.
He also needed trainers, coaches, and nutritionists to make sure he can perform at his physical peak and to be prepared for game day.
Additionally, he relied on a good agent to help him negotiate the contract.
It is important for all of us to surround ourselves with a good team for financial success.
As a real estate investor, I want to make sure I work with good real estate agents, attorneys, mortgage agents and contractors. Having good people in those roles can help me save money or help me maximize my payout on real estate transactions.
If you want to have greater financial success, make sure you surround yourself with a great team that can help further your finance such as good tax accountants, brokers and financial advisers.
Lesson #8: Sacrifices Are Necessary
Mahomes would never have been able to achieve his massive contract without having made sacrifices in the past.
Not only did Mahomes spend countless hours working out to make sure he remains in top physical shape to handle the rigors of being a NFL football player, he also spent tons of time studying game tapes.
Even his $500 million contract has stipulations on what he can’t do as a result of the contract. He can’t engage in any intense athletic activities which might result in injury such as basketball or jet skiing.
I can’t picture anyone achieving success without making sacrifices.
If you want to achieve financial success, be ready to make sacrifices as sacrifices are necessary for success.
To the audience: Do you believe there is a lot that can be learned from sports you can apply to your own personal finance? Do you see any other lessons from Mahomes and his $500 million contract extension?
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Many people work hard to better their physical and mental health. What about their financial health?
I started this blog back in 2019 to help people better their financial health as well.
My financial journey began with tens of thousands in student loan debt. Over the span of 20 years, I am close to achieving financial independence.
I truly believe anyone can get to strong financial health. Hopefully, this blog can help you on your financial journey to greater wealth and financial independence.
You can read more about me here.
Thank you for visiting. Come again soon!
Excellent lessons from sports. One caveat I can think of is that some people will have a hard time choosing their position. For example, Shaq couldn’t possibly be a point guard no matter how much he would have tried.
Shaq is an extreme example obviously but same thing can happen when choosing your profession and position.
For example, I have the qualifications to be in a very technical position. However that would be a very bad fit for me. I would be average at best. I’m better at moving people, leading and motivating teams to achieve excellence. I can be a top achiever at it compared to being a technical person.
True – sometimes it is better to pursue a position in which you have more talent and desire to excel.
But outside of those extreme cases, I think a lot of skills can be learned and honed over time. If I am going to bust my back to get ahead, might as well do it in a position that can pay me the most.
I tend to agree with Backpack. I lived all of your listed principles, but mostly because I was very fortunate to be gifted with a powerful STEM inclined brain and awesome parent instilled soft skills. The fact is not many people could choose to be a high performing chemical engineer and then morph into a Fortune 500 corporate officer like I did. You need a nearly perfect ACT or SAT score to hope to master the course work, and even then only maybe 5% of those excell in working with teams and in building enough trust to move up to high income senior management. I just don’t think that choice is there for everyone. Just as only a select few people could ever master neurosurgery or theoretical chemistry, or be a QB with Mahones skill set.