Arnold Palmer Knew Best
Arnold Palmer was known as The King, and not just for his golfing ability. Palmer was a cutting-edge entrepreneur, transforming the sports industry and leaving a legacy that enriches modern athletes with millions of dollars each year.
And what started it all? A life insurance policy.
In 1961, Palmer was negotiating a new 20-year contract with his equipment manufacturer, Wilson.
He was 31 years old, married with two daughters. The previous year he had won eight golf tournaments, including the U.S. Open and The Masters. But his total prize winnings were just $75,263. (Last Sunday, Hideki Matsuyama won $2.07 million for winning The Masters.)
Palmer wanted more protection for his family’s financial security. So, he told Wilson’s Chairman that in order for him to sign the contract, Wilson would have to take a portion of his pay and buy him a $300,000 life insurance policy. It would have cost the company about $880.
Wilson’s Chairman said no. He didn’t want to give a golfer – even the best golfer on the planet – something that most Wilson executives didn’t receive.
That was the last straw for Palmer. When his existing Wilson contract concluded, he launched his own company, which ultimately became Arnold Palmer Enterprises. The firm began as a club manufacturer, but soon expanded into clothing, equipment and more.
Then, working with his agent Mark McCormack, Palmer secured several lucrative endorsement deals. Palmer’s sponsors over the years included iconic brands such as Rolex, Cadillac, Hertz, Pennzoil and United Airlines.
Before long he was making more money from sponsors than from prize winnings. Palmer was the trailblazer who redefined the market for athlete endorsements, paving the way for stars like Michael Jordan and LeBron James to earn considerably more from their business ventures than from their sporting accomplishments.
Before Palmer died in 2016, his total lifetime earnings were estimated at $875 million. Less than $4 million came from his U.S. tournament wins.
Who knows how much Palmer would have earned had he signed that deal with Wilson. But one thing is for certain: never underestimate the importance of a life insurance policy.