The business of banking relationships with athletes and athletic teams and related businesses is morphing constantly into vast and diversified opportunities (see recent related articles here, here and here). City National Bank, based in California, has been a leader in the field. CNB’s Charles Frazier, SVP and team leader, entertainment and sports banking, discussed the landscape with ABA Banking Journal’s Craig Colgan.
Q/ What has changed in recent years when it comes to sports banking? What are some trends and opportunities City National has seen?
A/ Without a doubt, it’s college athletics, particularly with the advent of name, image and likeness, NIL, opportunities. Historically, our relationships with athletes started when they transitioned to professional sports. Now, we’re engaging with clients as young as 18, sometimes even earlier, as they enter their NCAA career. This evolution has created opportunities to build long-term relationships. It’s not just about banking their immediate earnings but also about providing financial education, tailored products and working closely with their advisors to ensure they’re set up for the long haul.
Another trend we’ve observed is the changing business model of college athletic departments. With new, rising payroll costs for athletes and coaches, universities are transitioning from nonprofits to commercial enterprises. This leads to tough decisions, like at the University of Arkansas, which recently cut men’s and women’s tennis to reallocate dollars to revenue-generating programs.
Q/ How has the opening to college athletes changed your business in the last few years, if at all?
A/ These shifts 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 standing start from zero as banks pitch themselves to clients facing financial pressures they’ve never had to contend with. The other day, I was speaking with an athletic director who was looking to plug a funding gap as the program adapts to the new NIL landscape. City National is leveraging our deep expertise in commercial banking to help these programs manage their balance sheets, meet their borrowing needs and plan for long-term sustainability and growth.
Q/ What are pitfalls banks can avoid in this business?
A/ You have to know your client and who has the authority to make financial decisions. A 17-year-old athlete may sign a lucrative NIL deal, but they can’t 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 the public eye, who may not yet fully grasp the long-term implications of their actions. As their financial partner, we have a responsibility to guide them not only on managing their wealth but also on protecting their personal brand. We emphasize the importance of making sound decisions both on and off the field.
Q/ Anything else you would like to add?
A/ This is an incredibly exciting time for college athletics. The shift to a more professionalized business model is long overdue, and it’s inspiring to see athletes finally being compensated for their contributions. For banks, this evolution presents a tremendous opportunity. College athletic departments are now capital-intensive businesses.
Whether it’s a young athlete just starting out, a seasoned professional or a university athletic department navigating uncharted territory, we’re here to provide the expertise, resources and support they need to succeed.
