As family grieves, heirs will need to get up to speed on esoteric assets and make hard choices on how to divide his empire.
Death is usually a shock, but when you’re 41 and tragedy hits, the paperwork is rarely up to date. We hope that Kobe Bryant had a complete estate plan in place that reflected his wishes and his family’s needs.
Even if he did, however, it’s going to take specialized expertise to take his investments to maturity. And even then, it might be impossible to fill the gap he leaves behind.
After all, Kobe had officially walked away from the court and the sponsorships that pushed his career earnings well above $500 million. The next phase was going to be very different and promised to ultimately pay off even better.
All he needed to do was hang in the game another few years. But now, with that timetable in question, someone needs to step up as quickly as possible to evaluate the investments and set up the next moves.
The problem wasn’t that Kobe didn’t know how to handle his money. If anything, his financial footprint left everyone else in pro sports a bounce behind.
From cash flow to the commanding heights
The basics are easy enough. In a 20-year career, Kobe made a lot of money.
The NBA ultimately paid him $323 million and sponsors easily took him into $500 million territory.
Take out taxes and the luxury lifestyle (three mansions at one point) and there should still be plenty of money for Vanessa and other survivors.
They shouldn’t worry about the raw numbers as long as enough of that wealth is actually liquid. In that scenario, taking care of them is a simple matter of transferring title on the accounts.
Even if there’s no will, the beneficiary assignments and California’s community property inheritance laws will take care of the rest.
Vanessa gets at least half of the money that came in since they got married in 2001. That’s effectively all of it, barring maybe $10 million from his rookie contract.
Ideally there’s a mechanism to create trusts for his surviving daughters if they aren’t already in place. I’d be surprised if they add up to more than $10 million apiece for reasons we’ll talk about soon.
The only real question is how current Kobe kept his paperwork. A lot of 40-year-olds never think to change their beneficiaries when they get married, and since he needed his parents to cosign his early contracts, their names may still be in place as the heirs of record.
When that happens, money bypasses the surviving spouse and moves back up a generation, where it would then need to transfer again to get to the grandkids. It’s not something most people want.
For Kobe at least, the odds of that happening are relatively slim. He got in a public feud with his mother over money back in 2013 and then almost split from Vanessa a few years later.
During that cycle, he would have reviewed his feelings on how he wanted to divide his wealth, and then the near-divorce would have given his lawyers a window to make those feelings official.
I’d bet that his estate plan was a whole lot tighter than what most 41-year-olds leave behind. Vanessa is probably the primary heir of record. There might be a little money for his parents, but not a whole lot.
After all, he fought his mother over a $450,000 house. Giving her even $10 million feels a little uncharacteristic.
Liquidity and survivor shocks
But while title is probably clear, accessing Kobe’s wealth will be more challenging. He loved the world of venture capital and reading between the lines, most of his free money was tied up in his Bryant Stibel partnership.
Bryant Stibel was a fantastic venture for a young guy with a lot of money. Kobe could review the pitches, make the placements and occasionally lend a little star power to take portfolio companies to the next level.
It was his post-basketball passion, filling the role that charity normally plays with ultra-high-net-worth retirees. (The family foundation is relatively small, with barely $350,000 in assets.)
Now the expertise and star power are gone. Kobe was more than a figurehead for the fund, but the fund still doubled as his family office.
That’s the worst of both worlds for the family. The fund depended on Kobe’s continued financial and personal participation, while the family now depends on the fund.
If the fund fizzles in his absence, the family is as stuck as if the breadwinner had died unexpectedly.
I hope the fund has a key person insurance policy in place and that Kobe also had personal coverage. That will help cushion the loss for awhile.
Sooner or later, however, Vanessa or the girls are going to want to take distributions. That’s not what venture capital is set up to support.
These are the kinds of illiquid investments you pursue when you want to take the next 30-40 years building an empire. They don’t pay dividends and negotiating even a small asset sale gets complicated and expensive.
Kobe wanted to hold these companies until someone made him an offer he truly couldn’t refuse. At a minimum, that ambition would probably take years of high conviction to achieve.
Look at his stake in sports drink BodyArmor, for example. Brilliant decision: he put up $6 million for 10% of the company and a few years later Coca Cola paid a huge premium to get a slightly larger taste.
But there’s zero sign that Kobe ever cashed out. And with Coke mulling whether to exercise its option to buy the rest of the company, an IPO is vanishingly unlikely.
On paper, that stake might be $150 million or more of Kobe’s net worth. (I’m not thrilled with the reporting around this company, but that’s a long story for another time.)
It’s all paper. Vanessa and the girls can either sell back to the other owners and exit, or they can hold on for the long win. It’s a huge question that requires expert knowledge of the company to really resolve.
And that’s true of Kobe’s venture capital interests across the board. In theory his partners at Bryant Stibel can counsel Vanessa on what these companies are worth, but she needs to make the call herself.
Obviously they’d be thrilled if she keeps the money where it is, unless they have enough capital sitting around to buy out their star investor. Either way, while they might go the extra mile for her, the interests they’re obligated to protect here are their own.
Kobe was her advocate in that world. He loved that world. The partners look as stunned as the rest of us. It’s a shock for everyone.
Challenges of youth and scale
We’ll just have to see how well Bryant Stibel bounces back and how it structures its ongoing relationship with the family.
The family needs professional support now. I hope they have it. Presumably Kobe had entertainment lawyers and managers. Now is their moment to shine.
The entire “Kobe Inc.” complex is in play. He’s permanently out of the loop and so the vehicle he built to drive his ambition needs to evolve.
My guess is that it will become a licensing vehicle. In that scenario, it can also hold the venture capital for the long haul while his posthumous celebrity rights bring in income.
Kobe took a long break from sponsorships. His estate may have other plans.
And other sports stars will be watching. Kobe taught the world to jump a whole lot higher and run up bigger scores.
We didn’t even talk about the NBA pension program. As far as I know it hasn’t been publicly tested around spousal benefits because the program is so new and most enrollees are so young.
At best it pays around $200,000 a year. That’s great for players who never hit the stratosphere, but I think Vanessa and the girls are a long way from that world.
If they need that cash to pay the bills and give the venture portfolio a little more time to mature, I hope the NBA makes sure they have it.