In rhyme, Jay-Z has name-checked some of the biggest athletes in the world. And now he’s hoping to ink some of them to his new sports agency firm.
A major power merger took place on Tuesday when two of the biggest names in entertainment announced they were joining forces with one of the biggest names in sports. Jay-Z announced that he’s getting in the sports-agent business through his Roc Nation Sports, and not only did he ink an unprecedented deal with leading sports and entertainment agency CAA, he stole Yankees star Robinson Cano from the most powerful agent in baseball, Scott Boras, who also represents Miguel Cabrera, Ryan Braun, Ryan Howard and others. And he’s not likely to stop there: Jay-Z has been temporarily licensed to represent professional baseball players; over time it’s likely he will take on football and basketball too. (While it may seem that branching out into basketball would conflict with his ownership stake in the Brooklyn Nets, according to Forbes, that stake has dropped to one-fifteenth of one percent.)
Cano is a four-time all-star who has spent his entire career with the New York Yankees and is in the final year of a $57 million contract, according to ESPN, and will be co-managed by the two companies. For their part, CAA Sports manages more than 800 athletes across a broadspectrum of sports, while Roc Nation is the home to Rihanna, J. Cole, Rita Ora, Shakira, Timbaland, Solange, M.I.A., Deadmau5, Meek Mill, and more. Roc Nation Sports will be co-headed by Jay-Z and Roc Nation president Juan Perez.
Reps for Jay-Z, Roc Nation and CAA declined to comment on the announcement beyond a series of prepared statements. In his, Jay said: “Because of my love of sports, it was a natural progression to form a company where we can help top athletes... the same way we have been helping artists in the music industry for years."
"Jay Z and his team at Roc Nation have successfully orchestrated powerful brand and business-building opportunities for their clients,” said Michael Levine, Co-Head of CAA Sports, in a statement. “We look forward to combining our wide-reaching resources on behalf of top athlete clients like Robinson Cano to help them accomplish their goals on and off the field."
And while the news certainly was exciting for both sports and hip-hop enthusiasts, this unprecedented deal opened up a lot more questions than it answered.
“I don’t know how big of a deal it is right away,” says Keith Reed, senior editor at ESPN the Magazine, who specializes in sports and business management. “I think it’s fair to say that entrepreneurs have their first acts... and if they’re really successful and transformative, then they get a second act. A great example of that would be [BET founder] Robert Johnson. Here’s a guy who started a television network, ran it, built it, took it public, took it back private and made a billion dollars. And then he started his second act. [He’s the former majority owner of the NBA’s Charlotte Bobcats.] When I look at Jay-Z beginning his second act, I have to ask the question, ‘Is this a guy who’s second act is going to be all about building the kind of clout, the kind of influence in sports that he already has in entertainment?’”
Indeed, being a sports agent -- and owning a firm that reps athletes -- is a very highly specialized business that has many parallels with Jay’s experience in the music business, which includes being president of Def Jam Records for a number of years, as well as running his multiple other businesses, including RocaWear, Carol’s Daughter and the 40/40 Club. But it’s not like they’re parallel fields.
Jay isn’t the first high profile rapper to flirt in the world of sports. T.I. and Lil Wayne are regulars on ESPN outlets, and in 2009 T.I struck a collaborative record label deal with New York Knicks player Amare Stoudemire. But the most obvious parallel comes from Master P, who launched a sports management company in 1999 and signed running back Rickey Williams -- at the time, was pegged to be one of the hottest players in the NFL. Williams’ contract is generally considered one of the worst in sports history -- it was heavily incentive-based, a bad deal for an NFL contract, considering that most money in the league isn’t guaranteed. Williams parted company with the firm in 2000, and P’s sports management company has since folded.
But Jay’s approach to the sports world is very different from Master P’s. “The one thing that hurt Master P is that Master P one-man banded it,” says Ira Childress, president of Childress Sports Consulting, which works with college and professional athletes. “He was his trying to do everything on his own. He really didn’t know the sports world like Jay knows it. He didn’t have the relationships like Jay does. And he signed a bad deal. When he signed Ricky Williams... there was no way for Ricky to be able to live up to that.”
Keith Harrison, associate professor of the DeVos Sports Business Management Program at University of Central Florida, notes that since Master P’s heyday, Jay and many other rappers have had enormous success at brand building. Music, of course, is what launched artist/entrepreneurs like Ice Cube, Snoop, Dr. Dre, 50 Cent, Queen Latifah and Jay-Z in the first place, but for the most part, their businesses, which have practically nothing to do with spitting verses, are what have made them wealthy beyond measure.
“You have to study how they broaden their brands,” Harrison, said. “All of these people start out in a musical context and then evolve. It’s a natural convergence of sports and entertainment management. If we listen to Jay-Z over the years, we kind of knew this was coming. He’s rapped about his affinity with sports. He wants to get in that game. It’s not necessarily going to be a great revenue return [at first]. We have to understand that Jay-Z is positioning these things to market the other businesses he has.”
Those sentiments were echoed by Michael “Blue” Williams, CEO of management firm Family Tree Entertainment (Big Boi, Busta Rhymes). "Hip-hop is such an entrepreneurial business that the lines have become blurred between music, sports and entertainment," he said. "Jay-Z is synonymous with being cool, so I think the synergies will be in extending the clients’ brands in cool ways. Lawyers and others will work out the money part, so it’s probably more about the branding and why a deal like this makes sense.”
Indeed, the money move in Jay’s case was lining up with CAA.
“It’s not necessarily Jay-Z stepping out saying ‘I’m a sports agent.’” Childress says, “because people will say, ‘Where does the credibility lie in that? He hasn’t been to law school. How do I know you’re getting me the best deal?’ But being partners with CAA is helpful because he’s saying, ‘Look, I need you to believe in me. I’m going to be able to market you. I’m a great businessman. I have different relationships with many companies out there. I can help you on that end.’ But CAA can handle the nuts and bolts of a contract. You have both ends covered.”
Childress and Reed both say Jay-Z’s strongest role could be to act as a recruiter.
“The biggest thing Jay can provide... is the ability to build and have relationships,” Childress says. “The reason why he was able to land Robinson Cano is because they developed an interpersonal relationship over years. Jay will provide access. That’s key. It’s all based upon trust. Robinson Cano knows that Jay-Z is working with people who can get the numbers. But he also knows ‘I trust Jay.’ So that’s a big step.”
And the dollars may make sense. The New York Times reports that baseball agents typically earn 5% of a deal. If Cano’s earning potential holds, he could fetch a $200 million contract at the end of the season, which would earn Roc Nation and CAA $10 million. That’s not too shabby, considering that Roc Nation is the division Jay opened back in 2008 in a joint venture with Live Nation.
Despite his past success, opinions are mixed on whether or not Jay and Roc will succeed in the sports game. Harrison believes that because his brand is already so strong, he’ll end up enticing other big name athletes to come on board his new venture -- and on Wednesday, a source told ESPN that New York Giants wide receiver Victor Cruz may be joining Jay’s new venture before the new season begins; Cruz is now signed with CAA.
He also noted that Jay’s brand already has a strong presence in the sports world. “Look, Jay-Z wants a good ROI -- he does. I went to the Barclays arena in December, and one of the things that I noticed in there is that throughout the arena is his music. BK is highly repped. The activation of Jay-Z as a brand is all over Barclays. It’s a great investment for him,” Harrison says. “And hey: being a sports agent is the sexy thing to do.”
That could bode well for Jay’s potential as a sports agent, even though the New York Times found at least one naysayer about this new deal, a competitor who spoke off the record.
“I don’t know a lot about writing songs,” the agent said, “and he probably doesn’t know about negotiating player deals.” Sour grapes? Time will tell...