Q&A: Sports banking in a changing universe
The business of banking relationships with athletes and athletic teams and related businesses continues to turn into vast and diverse opportunities (see recent related articles here, here and here). City National Bank, based in California, was a leader in the field. CNB’s Charles Frazier, senior vice president and head of the entertainment and sports banking team, discussed the landscape with ABA Banking Journalis Craig Colgan.
Q/ What has changed in recent years when it comes to sports banking? What trends and opportunities does City National see?
AND/ Without a doubt, it is college athletics, especially with the appearance of names, images and likenesses, NONE, of opportunities. Historically, our relationships with athletes began when they transitioned into professional sports. We now work with clients as young as 18, sometimes even earlier, as they enter their NCAA careers. This evolution has created opportunities to build long-term relationships. It’s not just about banking their immediate earnings, but also providing them with financial education, tailored products and working closely with their advisors to ensure they are ready for the long term.
Another trend we have observed is the change in the business model of college athletic departments. With new, rising salary costs for athletes and coaches, universities are transitioning from non-profit to for-profit enterprises. That leads to tough decisions, like at the University of Arkansas, which recently canceled men’s and women’s tennis to redirect dollars to revenue-generating programs.
Q/ How has opening up to college athletes changed your business over the last few years, if at all?
AND/ These developments have created a new segment for us, building on our long history of supporting athletes and the sports industry. With college athletic departments, it’s a constant start from scratch as banks turn to clients facing financial pressures they’ve never had to contend with. I spoke with an athletic director the other day who wanted to fill a funding gap while the program adjusts to the new NIL environment. City National leverages our deep commercial banking expertise to help these programs manage their balance sheets, meet their borrowing needs and plan for long-term sustainability and growth.
Q/ What are the pitfalls that banks can avoid in this business?
AND/ You need to know your client and who has the authority to make financial decisions. A 17-year-old athlete can sign a lucrative NIL contract, but cannot open a bank account or form an LLC without a parent or guardian. This can create layers of complexity, especially if family dynamics are strained.
Another potential pitfall is overlooking the importance of reputation management. These are young individuals, often in public, who may not yet fully understand the long-term implications of their actions. As their financial partner, we have a responsibility to guide them not only in managing their wealth, but also in protecting their personal brand. We emphasize the importance of making sound decisions on and off the field.
Q/ Anything else you would like to add?
AND/ This is an incredibly exciting time for college athletics. The transition to a more professional business model is long overdue and it is inspiring to see athletes finally being compensated for their contributions. For banks, this evolution represents a huge opportunity. College athletic departments are now capital-intensive enterprises.
Whether it’s a young athlete just starting out, a seasoned professional, or a college athletic department navigating uncharted territory, we’re here to provide the expertise, resources and support they need to succeed.
