Source: Southpac Group
A New Zealand financial services firm administering more than $6.8 billion in assets is expanding into California’s sports and entertainment sector, with a focus on young professional athletes and Hollywood figures whose wealth can climb into the millions almost overnight.
Bay of Plenty-headquartered Southpac Group is moving into the market following approaches from US lawyers seeking asset protection solutions for professional athletes and entertainment figures with rapidly growing wealth.
Mike Arand, Southpac Group CEO, says the California expansion reflects growing demand from US advisers looking for more sophisticated ways to protect the rapidly expanding wealth of clients in sport, entertainment and other high-growth sectors.
“We are seeing increasing interest from advisers whose clients can accumulate substantial wealth very quickly, but whose asset protection measures may not have kept pace with that growth.
“California is a natural market for us because it combines enormous concentrations of private wealth with a highly developed legal and advisory sector. Our strategy is to build relationships with the lawyers, accountants and wealth advisers who are already working with these clients and can identify when more robust asset protection structures such as international trusts may be appropriate.”
The move comes as the amount of wealth generated by elite sport continues to rise sharply, while a growing proportion of that wealth is being generated away from the field through endorsements, investments, business interests and other commercial ventures.
Latest industry estimates show the world’s 50 highest-paid athletes generated around US$4.1 billion over the past year, more than double the US$1.9 billion earned by the equivalent group in 2017.
More than half of this year’s top 50 are aged under 30, while their combined off-field earnings reached a record US$1.1 billion.¹
Matthew Smith, a Southpac Group lawyer and director of business development, says the significance of those figures is not simply that athletes are earning more, but that many are also taking a more active role as investors, business owners and entrepreneurs while they are still competing professionally.
“The modern professional athlete can look as much like an entrepreneur as a highly paid employee, because alongside the playing contract there can be property, private investments, equity stakes, endorsement income and direct ownership interests in businesses.
“That creates a much broader range of opportunities for them to build wealth beyond sport, which is obviously positive, but it also means there are more moving parts in their financial lives and more places where a commercial dispute or legal problem can potentially arise.”
Smith says Southpac’s discussions with US advisers have identified professional baseball, basketball, American football and ice hockey players as potential clients, with the principal concern generally not being litigation arising from what happens during competition.
Instead, he says the greater exposure can come from property investments, private ventures and other commercial deals that often follow a rapid increase in income, profile and access to investment opportunities.
“Someone can be 18 or 19 and suddenly be earning millions of dollars a year, and with that change in circumstances there can also be a very rapid increase in the number of people approaching them with opportunities.
“They may start buying property, taking interests in businesses or investing in private ventures through people in their wider network, and while most will have good advisers around them, their financial affairs can still become very complicated in a relatively short period of time.
“The issue is not that these people do not understand money. It is that their level of wealth and the complexity around it can increase much faster than would normally happen for someone building their assets gradually over 20 or 30 years.”
Economic analysis has estimated California’s annual tort-system costs at around US$72 billion, with the state recording among the highest estimated tort costs per household in the US.²
Smith says the appeal of California is the combination of substantial private wealth and an environment in which litigation is already a routine consideration for many business owners and high-net-worth individuals.
“California has an extraordinary concentration of private wealth across a number of sectors, but it is also an environment where litigation risk is something advisers and their clients are already accustomed to thinking about.
“When those two things come together, asset protection becomes a much more relevant part of the wider conversation, particularly for people who have significant property holdings, private investments or business interests.”
References
- Forbes, Inside the $4.1 Billion Haul by 2026’s 50 Highest-Paid Athletes, May 2026.
- The Brattle Group analysis prepared for the US Chamber Institute for Legal Reform on California tort-system costs.