Despite the downturn in the crypto markets where once high-flying companies are going bankrupt, and the pockets of individual retail participants are hurting, more professional athletes are converting their salaries into bitcoin (BTC).
This piece is part of CoinDesk's Sports Week.
Meanwhile, the New York Yankees recently partnered with NYDIG, a New York-based bitcoin startup, to offer its employees, including players, concession workers and accountants, bitcoin as compensation.
Athletes in a variety of sports are taking bitcoin as compensation, demonstrating the widening appeal of crypto. But they’ve drawn criticism from many who say athletes should not be promoting risky investments so openly.
Darren Rovell, a prominent sports reporter, calculated as of Jan. 23, 2022, that NFL star Odell Beckham Jr., a wide receiver for the 2021 Super Bowl champion Los Angeles Rams, had netted $35,000 on a $750,000 deal (after taxes) because he was paid in bitcoin. And this was calculated in January when BTC was worth $36,000, more than $12,000 than it's worth today.
But athletes say bitcoin compensation is here to stay.
Take Brazilian mixed martial artist Matheus Nicolau.
In an interview with CoinDesk, Nicolau, ranked seventh among UFC flyweights, said, “I truly believe that more and more athletes and workers across the world will start receiving compensation, at least part of that, in bitcoins.”
Bitwage’s metrics corroborate Nicolau’s statement. Bitwage’s transaction volumes have never been higher, according to co-founder and CEO Jonathan Chester, as “people want to receive their salaries in bitcoin or cryptocurrency or stablecoins, and I think that this trend of athletes isn’t going anywhere right now.”
Compensation consultant Fred Whittlesey predicts that athletes accepting crypto as compensation will become more common in two years.
Whittlesey, founder of the Compensation Venture Group, said that eventually athletes being paid in crypto will no longer be news and will be as common as an employee being paid via direct deposits.
But why would these athletes take their earnings in an asset that is roughly a third of its all-time high price back in November 2021?
Long-term PoV for Bitcoin
Athletes are looking beyond the recent dip – which has seen BTC fall from $69,000 to about $24,000 as of this writing – to the longer term.
Pinheiro said, “Think about this: It takes on average 10 to 15 years for an individual to get a black belt in Brazilian Jiu Jitsu, so my time preference here is equally long if not longer. black belt time preference, I call it.”
Buying the top in November 2021, Beckham tweeted: “It’s a NEW ERA & to kick that off I’m hyped to announce that I’m taking my new salary in bitcoin thanks to @CashApp.”
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New eras last longer than a couple of months. When considering the short careers of athletes, especially ones in MMA fighting and football, it makes sense for athletes to hold BTC as a way to adopt a long investment horizon for their futures.
And, by virtue of converting portions of their salary into BTC, athletes who are already deeply immersed in the sports industry also become included in the Web3 ecosystem.
Announcements about receiving compensation in BTC have “given athletes and teams a way to stand out and a way to show how forward-thinking they are,” according to Kelly Brewster, chief marketing officer at NYDIG. Athletes can build their brand in a new way.
Athletes are learning about branding as a form of career insurance that extends beyond their athletic prowess and enhances the possibility of lifetime income, Whittlesey says.
Nicolau said, “Bitcoin makes our voice stronger,” which enables athletes to create a stronger brand.
Bitcoin fundamentals are attractive
Pinheiro and Nicolau are also motivated by bitcoin benefits like instant access to funds, quicker transaction times and hedging against inflation.
In an interview with CoinDesk, Nicolau brought up Fernando Collor de Mello, former president of Brazil, who seized balances from people’s savings accounts in 1990 to highlight how nobody can seize the BTC in his noncustodial wallet. “If anything happens in the world, our money is saved on our wallet,” Nicolau said.
The first time Pinheiro fought in the UFC, logistical difficulties in dealing with her bank in Brazil were abundant. It took more than a month for Pinheiro to have her money in her hands, but now, BTC enters her wallet seamlessly within a few hours through her collaboration with Bitwage.
Moreover, Pinheiro knows “a thing or two about inflation and its effects.” She said, “I was born around 1994. At that time, Brazilian currency real was introduced and pegged 1:1 to the U.S. dollar. Now it is 5 BRL for 1 USD.”
For Pinheiro and Nicolau, bitcoin is a hedge against inflation.
The best talent
One potential driving motivation for why the Yankees decided to partner with NYDIG and offer their employees BTC may stem from how “employers are in a battle to find and keep talented workers,” according to NYDIG’s 2022 consumer and workforce survey.
From a sample of more than 2,500 full-time employees, “one out of four workers would prefer a company that offers a bitcoin payroll benefit when deciding between equivalent jobs.”
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Twenty percent of workers who took the survey expressed how they would leave their current job for a comparable role at another company that offered compensation in bitcoin.
The U.S. job market is the tightest it has been since the 1950s, according to Bloomberg, and so the recent move to offer BTC by the Yankees can be seen as them developing a competitive edge against other employers.
The Yankees aim to attract and retain the best talent to presumably continue their long history of success, which consists of 27 World Series titles and global recognition.
Sports as a vehicle for bitcoin education
The sports world is looking to play an integral role in educating the public about bitcoin.
Bitcoin is the oldest and largest cryptocurrency by market capitalization. More people know about bitcoin than any other cryptocurrency, and yet, according to developers, the biggest obstacle for mass adoption is education.
“I see working with Matteus [Nicolau] and Luana [Pinheiro] as part of a greater education effort to help educate people who are thinking about this or have never heard of this,” Chester said.
Not everyone needs to have a technical understanding of the code behind bitcoin as developers do but understanding concepts like what a noncustodial wallet is – and what the technology is attempting to accomplish – is important.
For many in the sports and crypto world, the growing list of athletes taking BTC as compensation will be a main driver for bitcoin’s education.
It will be interesting to see whether the trend of crypto compensation in sports continues. But, for now, these announcements seem to be more about signaling solidarity with crypto than any hope of making outsized money from it.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.