The Importance of an Athlete’s Financial Team
There are few jobs that pay you millions of dollars before you’re old enough to drink, yet where you face possible retirement in your 20s or 30s. A career in professional sports is one such occupation.
A small percentage of professional athletes play for more than a decade. Because a career-ending injury can be a play away, athletes need to think about how they will finance the next 30, 40, or 50 years of their lives— even before they sign that first contact. Working with a team of experienced financial advisors may mean the difference between financial security and financial hardship for an athlete.
Athletes should create and maintain a budget that allows them to enjoy the fruits of their labor, provide support to loved ones and consider business opportunities—all without incurring more debt than they can afford. This includes making in-season paychecks last the entire year. Athletes need to understand that signing a $10 million contact does not mean they will bring home $10 million. Taxes, and there are many of them, are now a bigger part of their lives. In addition union dues, agents’ fees, game tickets, and family travel are all part of the growing list of expenses to be factored in before the athlete makes any decision.
Athletes should accumulate and preserve wealth throughout their careers and beyond. This may entail due diligence of business opportunities, such as book, broadcasting and licensing deals, or other investments before signing on the dotted line. Athletes should understand their portfolios and work with advisors to determine the proper asset mix vs. potential risk exposure.
In addition to taxes, other areas an athlete’s financial team can focus on are insurance coverage and estate planning. We’ll cover each of these in subsequent blogs.
By becoming actively engaged with advisors and understanding their own financial pictures, athletes can secure their immediate needs and prepare for their retirement. If they apply the same determination to long-term financial security that they did to becoming professional athletes, they stand a much better chance of reaching the financial winners’ circle.