Sports

Crypto crash devastates salaries of stars including OBJ, Aaron Rodgers


Who could have predicted this volatile currency falling in value?

Who could have predicted this volatile currency falling in value?
Photo: Getty Images

It’s been a roller coaster of a season for Odell Beckham Jr., and the ride only continues — just as the Rams are headed to the NFC championship, his Bitcoin salary may have taken an enormous hit. In the midst of a cryptocurrency crash, the value of Bitcoin has been sent tumbling to nearly half of what it was worth in November when Beckham originally announced the deal.

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Beckham isn’t the only athlete whose salary is at least partially paid out in cryptocurrency. Aaron Rodgers, Klay Thompson, and Andre Iguodala also agreed to take part of their salaries in Bitcoin, which is starting to look like an interesting financial decision as the market collapses — it’s a bit early to use the term “unwise,” but some may describe it that way.

In November, Beckham signed on with the Rams and announced that he would be taking his salary in Bitcoin, which was valued around $64,000 at the time. It reached its all-time peak in November at $69,000, but sank down to $33,000 earlier this week — less than half of the November value. It’s back up to $36,000 today, but nevertheless, Beckham’s original salary, valued at $750,000 in Bitcoin, is down to just above $400,000 before tax.

With federal and state taxes adding up to 50 percent on the original distribution, former ESPN analyst (and MLK enthusiast) Darren Rovell estimated that Beckham’s salary with the Rams this season will come out to around $35,000.

However, this situation takes place under the assumption that Beckham received a lump sum when the deal was initially made and invested it all into Bitcoin at that time — essentially, the picture that Rovell lays out is a worst-case scenario. And Beckham will receive bonuses worth hundreds of thousands of dollars for divisional, conference, and national championship wins if the Rams continue to move forward in the playoffs. Financially, he’ll be fine, but it’s still an interesting trend to examine and question whether this severe drop in the market will affect future athletes’ decisions to imitate Beckham, Rodgers, and Thompson.

Though there is some risk in stock options, shares, and more traditional investments as partial compensation, cryptocurrency is a far more volatile speculation, due to its relative newness and a virtual lack of federal regulation. Of course, for professional athletes of this stature, their existing net worths can provide a comfortable safety net to take risks like a Bitcoin salary. Perhaps the examples made out of these athletes will serve as a cautionary tale — or, if the cryptocurrency market doesn’t enter into a “winter” and bounces back, as an encouragement to wait out your investments.

The S&P 500 and the Nasdaq are both down from the start of the year as well, but have not dropped nearly as far as the almost-50 percent hit that Bitcoin has taken. It’s all a game of risk and hedging your bets, and Beckham hedged his on cryptocurrency. It might look dumb right now, but there’s a chance it could look brilliant in a few years. A chance, not a guarantee. If they’re in it for the long haul, it would be a good time for athletes to invest at a low buying price — particularly the ones who are getting sponsorship money for partnering with Cash App to do so.

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I’m not an expert, so I’m going to stay away from making any concrete statements on whether Bitcoin is a sustainable investment, but there is one more point to make. Part of Beckham’s and Rodgers’ Cash App collaborations involved giving away the equivalent of $1 million USD in Bitcoin to fans — all of whom, if they kept the Bitcoin, have now also taken a loss. Whoops.

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