The Inconvenient Truth seems to be that investments in Clean Energy have fallen lately. And that trend is going to continue for quite a while. Investments in green energy fell by 14% in the third quarter of 2013 compared to the previous quarter. Only a Christmas shopping spree in clean energy can prevent 2013 from being the second year in a row with falling investments in renewables and energy-smart technologies.
The major challenge is that most Clean Energy Technologies are still in an early face of their product life cycle. Heavy investments are needed for Research & Development and the rewards for investors when the product goes to market are far from guaranteed. This is why government subsidies are necessary to mature this market.
In the US President Barack Obama has done what he could to help the green cause. This has brought good results in the form of employment and more environmentally safe technologies being installed (electricity generation from wind and solar power increased nearly 71 and 40.3 percent between 2008 and 2010) . But unfortunately the costs have been too high.
According to figures from The Institute for Energy Research $34.4 Billion have been invested and 2,298 permanent jobs have been created. An average of $14.49 million of tax payers’ money per job. With the recent budget crises in mind it’s probably safe to bet that the US will not be ramping up its Clean Energy investments any time soon.
And the same picture shows up all over Europe with Germany the most notable country to limit and/or withdraw subsidies. The government subsidies for installing solar panels used to be so generous in Germany that nobody could afford to not have solar energy. But since job creation has halted even governments have to be efficient with how they’re allocating funds.
To end on a positive note, though, if the light at the end of the tunnel is fueled by green energy it should still be burning when government subsidies are ready to return.
I am fascinated by numbers. What fascinates me the most is telling the stories Behind The Numbers. JPLisdorf @ twitter.com
Thursday, October 17, 2013
Saturday, October 5, 2013
What Stephen Levitt didn’t understand about ”Good to Great”
A little while back Stephen D. Levitt, co-author of “Freakonomics”, wrote a blog post criticizing Jim Collins’ seminal book “Good to Great” . Unfortunately, everything he criticizes only underlines how little he understands about business and stock markets.
And I mean that in the nicest way possible.
No joke, Levitt will even be the first to admit that he doesn’t know anything about stocks, markets or general economic patterns. “If you ask me about whether the stock market's going to go up or down, if you ask me whether the economy's going to grow or shrink, if you ask me whether deflation's good or bad, if you ask me about taxes-I mean, it would be total fakery if I said I knew anything about any of those things" he says in the foreword to Freakonomics.
What then prompted him to go out of his way to criticize Collins’ book is beyond me. But it doesn’t stop me from defending a book I find to be very insightful.
Levitt has misunderstood the basic premise of the book since he thinks the book is about companies that made “the transition from good to great, but they also had the sorts of characteristics which made them “built to last” (which is the title of Collins’s earlier book).”
Although he is right about the part that Collins’ earlier book was called “Built to Last” the book’s stated theme is not as he writes. “Good to Great” is simply about companies who were good (part of the S&P 500) and became Great (beating the average market return three times over a 15-year period). It is about the strategies that these companies utilized and what sets them apart from other companies. The book describes periods of different companies and what they did during a particular 15-year period of their history. Nowhere in the book does it guarantee that these companies are going to keep giving continued above-average returns.
Levitt has noted that Good to Great companies don’t guarantee perpetual above-average returns, but his message “Overall, a portfolio of the “good to great” companies looks like it would have underperformed the S&P 500” only proves that he doesn’t know anything about investing. Timing is the essential art of investing. If Levitt read the book thinking he was going to find the magic formula for getting continuous risk-adjusted returns above the mean he’d be wrong. There’s no secret formula for finding companies that will always get you returns above the S&P 500. If there was a secret formula by the time the book came out the market would have adjusted prices to predict such future returns.
The fact that Levitt hasn’t even taken the time to research if the companies stuck to the strategies that helped them make the leap from Good to Great further accentuates that his blog should not be taken that seriously.
But the timing of the blog post is curious at least. As published on July 28th 2007 Levitt ends up looking like one of the last passengers on the Titanic saying that the course of this ship is not safe. Only a few months later the whole market crashed (including the Good to Great companies) and no one could predict who would outperform the S&P 500.
The fact that the accompanying graphs to Levitt’s blog post show the intra-day movements of 3 Good to Great-companies once again proves that the Freakonomics-team isn’t in the investment business. Only Day Traders pay any attention to intra-day price changes. And Day Traders don’t read Jim Collins.
To quote the honorable Jay-Z:
“Audemars that's losing time, hidden behind all these big rocks
(Ball so hard) I'm shocked too, I'm supposed to be locked up too”
Unfortunately, that’s not really a cool way to finish off this post. Especially because I haven’t expressed my deep respect for Levitt and most of his writing. “Freakonomics” and “Super Freakonomics” were hugely inspirational reads for me. But in those books he and Dubner wrote about subjects where they’d done the necessary research to make bold statements. The same can’t be said about his ramblings about “Good to Great” where he in a hastily-put-together blog contradicts a researcher whose team has spent the equivalent of more than ten person-years researching for the book.
To quote Jay-Z from the song “U Don’t Know”
“The coke prices up and down like it's Wall Street, holmes.
But this is worse than the Dow Jones, your brains are now blown”
And I mean that in the nicest way possible.
No joke, Levitt will even be the first to admit that he doesn’t know anything about stocks, markets or general economic patterns. “If you ask me about whether the stock market's going to go up or down, if you ask me whether the economy's going to grow or shrink, if you ask me whether deflation's good or bad, if you ask me about taxes-I mean, it would be total fakery if I said I knew anything about any of those things" he says in the foreword to Freakonomics.
What then prompted him to go out of his way to criticize Collins’ book is beyond me. But it doesn’t stop me from defending a book I find to be very insightful.
Levitt has misunderstood the basic premise of the book since he thinks the book is about companies that made “the transition from good to great, but they also had the sorts of characteristics which made them “built to last” (which is the title of Collins’s earlier book).”
Although he is right about the part that Collins’ earlier book was called “Built to Last” the book’s stated theme is not as he writes. “Good to Great” is simply about companies who were good (part of the S&P 500) and became Great (beating the average market return three times over a 15-year period). It is about the strategies that these companies utilized and what sets them apart from other companies. The book describes periods of different companies and what they did during a particular 15-year period of their history. Nowhere in the book does it guarantee that these companies are going to keep giving continued above-average returns.
Levitt has noted that Good to Great companies don’t guarantee perpetual above-average returns, but his message “Overall, a portfolio of the “good to great” companies looks like it would have underperformed the S&P 500” only proves that he doesn’t know anything about investing. Timing is the essential art of investing. If Levitt read the book thinking he was going to find the magic formula for getting continuous risk-adjusted returns above the mean he’d be wrong. There’s no secret formula for finding companies that will always get you returns above the S&P 500. If there was a secret formula by the time the book came out the market would have adjusted prices to predict such future returns.
The fact that Levitt hasn’t even taken the time to research if the companies stuck to the strategies that helped them make the leap from Good to Great further accentuates that his blog should not be taken that seriously.
But the timing of the blog post is curious at least. As published on July 28th 2007 Levitt ends up looking like one of the last passengers on the Titanic saying that the course of this ship is not safe. Only a few months later the whole market crashed (including the Good to Great companies) and no one could predict who would outperform the S&P 500.
The fact that the accompanying graphs to Levitt’s blog post show the intra-day movements of 3 Good to Great-companies once again proves that the Freakonomics-team isn’t in the investment business. Only Day Traders pay any attention to intra-day price changes. And Day Traders don’t read Jim Collins.
To quote the honorable Jay-Z:
“Audemars that's losing time, hidden behind all these big rocks
(Ball so hard) I'm shocked too, I'm supposed to be locked up too”
Unfortunately, that’s not really a cool way to finish off this post. Especially because I haven’t expressed my deep respect for Levitt and most of his writing. “Freakonomics” and “Super Freakonomics” were hugely inspirational reads for me. But in those books he and Dubner wrote about subjects where they’d done the necessary research to make bold statements. The same can’t be said about his ramblings about “Good to Great” where he in a hastily-put-together blog contradicts a researcher whose team has spent the equivalent of more than ten person-years researching for the book.
To quote Jay-Z from the song “U Don’t Know”
“The coke prices up and down like it's Wall Street, holmes.
But this is worse than the Dow Jones, your brains are now blown”
Saturday, September 28, 2013
I got 99 Problems but a Blog aint one
It’s been almost a year and nothing new has been added to the blog. Behind the Numbers has sunk in to the kind of slump that most blogs end up in. The “343 Days since Last Update Slump”.
It’s been so long that my last Blog Update was about The Champions League Twenty20 Cricket tournament. But not the one being played right now in India. The one from last year. In the blogosphere that type of silence is deadly.
For almost ten years I avoided blogging because I didn’t want to end up like the 99% of bloggers writing for no particular audience but themselves and while doing that for a couple of weeks then just stop and never update. So when I finally started my own blog I wanted it to have a specific focus. I decided to write the stories Behind the Numbers. My inspirations were blogs like The Big Picture, and The Economist’s Game Theory blog. That’s how I wanted my blog to be. Because I didn’t have a job at the time I had lots of time to write. In short I tried creating a job for myself by blogging.
There are lots of stories about bloggers who turned there blogs and passion in to daytime jobs. My favorite, all-time hero Bill Simmons did just this. After graduating college he worked for a newspaper for a couple of years covering high school football. Since that didn’t get him where he wanted, he quit his job, worked as a bartender and started blogging. His prose and style earned him many readers and he was “discovered” by the now defunct ESPN Page2. Today he holds a senior position within that company and is the godfather of sportsjournalism 2.0 in the US through the Grantland website.
I tried to do the same without the same conviction. I mean, I love writing, but after being one of many freelance journalists who suffered at the hands of the financial crisis I recreated myself in finance (if you can’t beat them, join them). Today I work for Wells Fargo, I’m a CFA Level II Candidate and I’m on my way to a great career in finance. But along the way of getting more efficient something was lost.
And it wasn’t until I read Lauren Foster’s CFA Blog this week that I was able to describe what I was losing. The blog Weekend Reads for Advisers: Investing, Poker, and Retirement talks about following your curiosity towards subjects that not necessarily are related to your job. In fact, she explains my challenge, better than anything I could’ve written:
Curiosity underpins success because it begets relentless questioning. Adam Bryant of the New York Times captured it well in the column “Distilling the Wisdom of C.E.O.’s.”
“Why ‘passionate curiosity’?” he asks. ”There are plenty of people who are passionate, but many of their passions are focused on just one area. There are a lot of curious people in the world, but they can also be wallflowers. But ‘passionate curiosity’ — a phrase used by Nell Minow, the co-founder of the Corporate Library — better captures the infectious sense of fascination that some people have with everything around them.”
And as Jason notes in his recent post, “Advice on How to Become a Research Analyst” curiosity is an important trait. After all, by reading across a wide array of topics and publications, we create, what he calls, “a mosaic of knowledge.”
So, without further ado, this is the resurrection of my blog. Behind the Numbers Ver 2.0 has less numbers, more stories, more hip-hop quotes, more stories about passion and play and of course, there'll still be lots of cricket, but most of all, a lot more hip-hop quotes. In fact, here’s one from LL Cool J.
“Don’t Call it a Comeback”
It’s been so long that my last Blog Update was about The Champions League Twenty20 Cricket tournament. But not the one being played right now in India. The one from last year. In the blogosphere that type of silence is deadly.
For almost ten years I avoided blogging because I didn’t want to end up like the 99% of bloggers writing for no particular audience but themselves and while doing that for a couple of weeks then just stop and never update. So when I finally started my own blog I wanted it to have a specific focus. I decided to write the stories Behind the Numbers. My inspirations were blogs like The Big Picture, and The Economist’s Game Theory blog. That’s how I wanted my blog to be. Because I didn’t have a job at the time I had lots of time to write. In short I tried creating a job for myself by blogging.
There are lots of stories about bloggers who turned there blogs and passion in to daytime jobs. My favorite, all-time hero Bill Simmons did just this. After graduating college he worked for a newspaper for a couple of years covering high school football. Since that didn’t get him where he wanted, he quit his job, worked as a bartender and started blogging. His prose and style earned him many readers and he was “discovered” by the now defunct ESPN Page2. Today he holds a senior position within that company and is the godfather of sportsjournalism 2.0 in the US through the Grantland website.
I tried to do the same without the same conviction. I mean, I love writing, but after being one of many freelance journalists who suffered at the hands of the financial crisis I recreated myself in finance (if you can’t beat them, join them). Today I work for Wells Fargo, I’m a CFA Level II Candidate and I’m on my way to a great career in finance. But along the way of getting more efficient something was lost.
And it wasn’t until I read Lauren Foster’s CFA Blog this week that I was able to describe what I was losing. The blog Weekend Reads for Advisers: Investing, Poker, and Retirement talks about following your curiosity towards subjects that not necessarily are related to your job. In fact, she explains my challenge, better than anything I could’ve written:
Curiosity underpins success because it begets relentless questioning. Adam Bryant of the New York Times captured it well in the column “Distilling the Wisdom of C.E.O.’s.”
“Why ‘passionate curiosity’?” he asks. ”There are plenty of people who are passionate, but many of their passions are focused on just one area. There are a lot of curious people in the world, but they can also be wallflowers. But ‘passionate curiosity’ — a phrase used by Nell Minow, the co-founder of the Corporate Library — better captures the infectious sense of fascination that some people have with everything around them.”
And as Jason notes in his recent post, “Advice on How to Become a Research Analyst” curiosity is an important trait. After all, by reading across a wide array of topics and publications, we create, what he calls, “a mosaic of knowledge.”
So, without further ado, this is the resurrection of my blog. Behind the Numbers Ver 2.0 has less numbers, more stories, more hip-hop quotes, more stories about passion and play and of course, there'll still be lots of cricket, but most of all, a lot more hip-hop quotes. In fact, here’s one from LL Cool J.
“Don’t Call it a Comeback”
Saturday, October 20, 2012
In Cricket, Veterans Past Their Prime Continue to Outperform Younger Players
If there is a country for old men, right now it is South Africa and they are playing cricket there. The Champions League Twenty20 cricket competition currently being played in the Rainbow nation showcases many of the world’s top international performers from yesteryear; Herschelle Gibbs, Brett Lee, Brad Hogg and other old men have found a lucrative way in to retirement by playing the shortest format of the cricket game.
Usually in sports the sight of legends past their prime is associated with lower quality –Pele playing in an American soccer league, Björn Borg in the early 1990’ies, any boxing comeback you can think of- but in cricket the legendary names still perform at the top of their game and continue to keep younger players out of the starting line-up.
The only notable absence from the tournament is 43-year old legendary Australian leg-spinner, Shane Warne. After retiring from international cricket in 2007 he has continued to play in the shortest format and in 2008 he coached and captained his Indian side, Rajasthan Royals, to the Indian Premier League Twenty20 title. Recently he has played in the Australian Big Bash league for The Melbourne Stars who failed to qualify for the Champions League Twenty20 competition.
The traditional explanation why most sportsmen fail to compete in their late 30’ies is rooted in the fact that the body deteriorates. While it is true that reaction time gets slower and physical capabilities deteriorate no theory has been able to convincingly explain the connection between physical deterioration and changes in the decision making process. What can be observed, though, is that while the body may deteriorate the decisions get better. Retired NFL-player and Hall of Fame inductee, Jerry Rice, explained it best when he said “as you get older and slower, you have to get smarter to stay in the game.” He backed up his words by playing until he was 44 years old.
The veterans may not have the fitness levels or reaction time of their peak years but their cricketing knowledge and decisions are so good they remain elite performers. Batsmen survive longer in the game by changing their decision making process and limit themselves from playing the high-risk shots, while bowlers stick to the more basic low-risk deliveries.
The reason why veterans continue to outshine the younger players in the shortest format of the game has to do with the difference between aerobic (low-intensity) and anaerobic (high-intensity) workload. When crossing the anaerobic threshold, lactic acid begins to build in the body, which makes muscles start to burn and causes fine-motor skills to deteriorate. Older players with lower fitness levels cross in to the anaerobic zone faster than younger players. This is why the older players lose their places in starting lineups in the long formats of the game.
In the shortest format the player rarely moves into the anaerobic zone making veterans able to replicate performances of their prime in the short bursts allowed in twenty20 cricket.
This is the reason why you can watch cricket stars past their prime still playing with the best in the world.
Usually in sports the sight of legends past their prime is associated with lower quality –Pele playing in an American soccer league, Björn Borg in the early 1990’ies, any boxing comeback you can think of- but in cricket the legendary names still perform at the top of their game and continue to keep younger players out of the starting line-up.
The only notable absence from the tournament is 43-year old legendary Australian leg-spinner, Shane Warne. After retiring from international cricket in 2007 he has continued to play in the shortest format and in 2008 he coached and captained his Indian side, Rajasthan Royals, to the Indian Premier League Twenty20 title. Recently he has played in the Australian Big Bash league for The Melbourne Stars who failed to qualify for the Champions League Twenty20 competition.
The traditional explanation why most sportsmen fail to compete in their late 30’ies is rooted in the fact that the body deteriorates. While it is true that reaction time gets slower and physical capabilities deteriorate no theory has been able to convincingly explain the connection between physical deterioration and changes in the decision making process. What can be observed, though, is that while the body may deteriorate the decisions get better. Retired NFL-player and Hall of Fame inductee, Jerry Rice, explained it best when he said “as you get older and slower, you have to get smarter to stay in the game.” He backed up his words by playing until he was 44 years old.
The veterans may not have the fitness levels or reaction time of their peak years but their cricketing knowledge and decisions are so good they remain elite performers. Batsmen survive longer in the game by changing their decision making process and limit themselves from playing the high-risk shots, while bowlers stick to the more basic low-risk deliveries.
The reason why veterans continue to outshine the younger players in the shortest format of the game has to do with the difference between aerobic (low-intensity) and anaerobic (high-intensity) workload. When crossing the anaerobic threshold, lactic acid begins to build in the body, which makes muscles start to burn and causes fine-motor skills to deteriorate. Older players with lower fitness levels cross in to the anaerobic zone faster than younger players. This is why the older players lose their places in starting lineups in the long formats of the game.
In the shortest format the player rarely moves into the anaerobic zone making veterans able to replicate performances of their prime in the short bursts allowed in twenty20 cricket.
This is the reason why you can watch cricket stars past their prime still playing with the best in the world.
Friday, October 12, 2012
The Un-Luxuriousness of Luxury
In Economy 101 we learn that products can be sorted in to three different categories. Generally, when you make more money, you buy less of inferior goods (usually low quality products) and more of normal goods (which is why they are called “normal”). But those are absolute terms. There’s a third category called luxury goods. Luxury goods are the ones that make you change the percentage of funds you allocate to a particular type of product.
If you’re making $25,000 a year, you probably don’t need to own a Jaeger-leCoultre watch since a normal $10 will be just as good at telling you the time. But if your annual bonus is $25,000 you have to own at least one luxury watch. So from spending 0% on luxury you allocate a certain percentage of your salary to luxury.
This is why the main driver in the luxury industry is related to general economic growth. At least that’s what we learned in Economy 101. If we follow that reasoning the luxury business should be in a sad state these days. The world economy is still punch drunk after being down twice, and it’s not sure if it wants to get up again or lay down a third time to let Europe join the party.
But in spite of these circumstances most luxury brands are actually massively outperforming the general market. Companies like PPR (Gucci, Brioni, Bottega Veneta et. al.), Richemont (Cartier, Dunhil & IWC) and LVMH (Louis Vuitton, Fendi, Berluti, Bulgari, TAG Heuer et. al.) have all produced double digit growth in 2012.
Does that mean that economic theory is wrong and that we have to re-write the economy books? Well, yes and no. Economic theory accurately describes the historical trends it is built upon, but it comes to terms when being forced upon events of the past fifty years.
Although income disparity has grown during the last century –the rich getting richer and the poor remaining poor- the general utility score of the average individual has risen. The utility score describes the possibilities an individual has. A hundred years ago only the rich were able to stay updated on current affairs (buying a newspaper), enjoy music (going to a concert) or be entertained by going to the theatre. Today, internet access will let you access all the news, music, movies and entertainment you want. For free.
This significantly alters the distribution of funds in the household budget. With all the entertainment you want available for the price of a decent web connection it frees up funds to buy stuff that you might not need, but that you want. Like luxury products. This is why the general economy might be worse than 5 years ago but the luxury business is bigger than ever before. Luxury items have not become cheaper but they have become more attainable by the general public. This makes luxury products more democratic, less exquisite, and as a result, a little less luxurious.
Thursday, September 20, 2012
In Hip Hop you don’t need to make music to make Money
“Get rich or die tryin’” was the title of the 50 Cent album that made him a Global Hip Hop Phenom and propelled him into the Hop Hop Spheres of Stardom. By now it seems fairly obvious that he succeeded. For two reasons.
- 50 Cent is still alive
- He ranks second on Forbes’ List of Hip Hop Cash Kings 2007-2011 (only Jay-Z managed to make more money in that time-span)
What isn’t that obvious at all is what 50 Cent has done to become rich. Yes, he made an album that sold well. But, if you thought, that the Hip Hop artists got rich by making music, it seems, you're wrong. Music does not keep them rich.
Generating income from music is a very volatile business. Styles and preferences change quickly, while icons of sub-genres remain the same. Just look at Timbaland (no. 5 on the list). In 2007 he was at the top of his game, he had produced albums by Justin Timberlake and Nelly Furtado (whose two albums combined for 7 No. 1 singles between them), and his own cash cow “Timbaland Presents: Shock Value” hit the streets with every top name in the business making an appearance. At the time, Timbaland had the sound. Not just a sound or his own sound. Timbaland had the sound. The sound that everybody wanted to have that year. Everyone wanted to sound like that.
And it is a great sound. Just listen to practically any track from Nelly Furtado’s “Loose” or Justin’s “FutureSexLoveSounds”, close your eyes, and the sound takes you back in time. But then new years came around and all of a sudden it is 2008. All of a sudden, the Timbaland sound is “so last year”.
Everything he’d done in the early noughties led straight to “Timbaland Presents: Shock Value”. It was the zenith of his career. But that only lasted so lang, and after that he just didn't have the sound anymore. Now people want a different sound and Timbaland has been nowhere near the position he had in 2007.
| Artist |
Income 07'-11'
|
| Jay-Z | $251 Mill. |
| 50 Cent | $216 Mill. |
| P. Diddy | $158 Mill. |
| Kanye West | $100 Mill. |
| Timbaland | $81 Mill. |
| Dr. Dre | $80 Mill. |
| Pharrell Williams | $76 Mill. |
| Snoop Doggy Dogg | $73 Mill. |
| Ludacris | $68 Mill. |
| Lil' Wayne | $66 Mill. |
| Eminem | $66 Mill. |
The same thing can be said about the remaining artists on the Forbes list. They are not rich because of their ability to release new music (there's a correlation of 0.08 between money made and number of albums released). What sets the Cash kings apart is the fact that they have successful business ventures not directly related to music. Jay-Z is part-owner of the Brooklyn Nets and is the creator of apparel company Rocawear. 50 Cent made half his fortune on the list from selling his stake in a company he founded Glaceau to make a vitamin water drink and has many other interesting companies in the pipeline.
So 50 Cent might have made his initial fortune by making music, but it’s his entrepreneurial spirit and business savy that keeps him in the Top 10 of Hip Hop’s Cash Kings.
Sunday, September 9, 2012
Big boys get no love from Sponsors (NFL edition)
If you’re a young football player hoping to one day play in the NFL and have fame, wealth, girls and lots of lucrative sponsorship deals, your best hope is to be at a position where your ideal playing weight is below 250 pounds. That is the conclusion after analyzing the data from Forbes’ list of The World’s 100 Highest-Paid Athletes in 2012.
The highest salaries in the NFL may go to defensive linemen Haloi Ngata (Baltimore Ravens) and Ndamukong Suh (Detroit Lions), who are both above 250 pounds, but the big boys find it harder to secure sponsorship deals.
To attract top endorsement dollar, you have to be smaller. Eli Manning, 218 pounds of quarterback for the New York Giants, makes $8 mill. a year or 30.1% of his total income from endorsements. At the other end of the spectrum is Charles Johnson, 285 pounds of defensive end for the Carolina Panthers, who only makes $100,000 a year (0.3% of his total income) from endorsements.
To explain, let’s look at the highest paid player pound-for-pound in the NFL. This classification tells us how much money each player is able to generate in salary per pound of body weight. Larry Fitzgerald, WR for the Arizona Cardinals, is the best paid with each pound of body weight generating $161,927 of salary in 2012.
Because of their huge pay checks both Suh & Ngata are in the Top 10 of salary per pound of body weight. But they don't receive similar endorsements. Nobody over 250 pounds feature in the Top 10 of endorsement dollars per pound of body weight.
It gets worse: nobody over 250 pounds are able to make seven figures from sponsorship deals. Even though Ndamukong Suh is the player with the best endorsement deals ($500,000 per year) he is forced to settle for fame and wealth (according to this GQ profile of Ndamukon Suh the only girl in his life is his sister, who is also his manager).
The highest salaries in the NFL may go to defensive linemen Haloi Ngata (Baltimore Ravens) and Ndamukong Suh (Detroit Lions), who are both above 250 pounds, but the big boys find it harder to secure sponsorship deals.
To attract top endorsement dollar, you have to be smaller. Eli Manning, 218 pounds of quarterback for the New York Giants, makes $8 mill. a year or 30.1% of his total income from endorsements. At the other end of the spectrum is Charles Johnson, 285 pounds of defensive end for the Carolina Panthers, who only makes $100,000 a year (0.3% of his total income) from endorsements.
To explain, let’s look at the highest paid player pound-for-pound in the NFL. This classification tells us how much money each player is able to generate in salary per pound of body weight. Larry Fitzgerald, WR for the Arizona Cardinals, is the best paid with each pound of body weight generating $161,927 of salary in 2012.
Name
|
Salary/P
|
|
1.
|
Larry Fitzgerald
|
161,927
|
2.
|
Peyton Manning
|
140,870
|
3.
|
Darelle Revis
|
136,364
|
4.
|
Charles Johnson
|
120,351
|
5.
|
Sam Bradford
|
119,643
|
6.
|
Ndamukong Suh
|
115,635
|
7.
|
Mario Williams
|
112,671
|
8.
|
Haloi Ngata
|
109,118
|
9.
|
Mark Sanchez
|
103,111
|
10.
|
Tom Brady
|
102,667
|
Because of their huge pay checks both Suh & Ngata are in the Top 10 of salary per pound of body weight. But they don't receive similar endorsements. Nobody over 250 pounds feature in the Top 10 of endorsement dollars per pound of body weight.
It gets worse: nobody over 250 pounds are able to make seven figures from sponsorship deals. Even though Ndamukong Suh is the player with the best endorsement deals ($500,000 per year) he is forced to settle for fame and wealth (according to this GQ profile of Ndamukon Suh the only girl in his life is his sister, who is also his manager).
Subscribe to:
Posts (Atom)