Money Bite-Size Read:
- Many athletes dream of becoming recognised as famous sports stars.
- However, 78% of NFL players and 60% of NBA players go broke after leaving the sport.
- Here’s what elite sports stars can do now to enjoy a healthy retirement later.
The Money Bites Take:
Many sports stars earning big salaries go bankrupt, which is why athletes need to start planning for a more comfortable retirement now, while there’s still time left in the game.
Athletes work tirelessly to become the best.
They train tirelessly, put in hours at the gym and give up on social events to put their sport first. And if they make it to the top of their game, championship winnings and sponsorship details await. In tennis for example, while 80% of players earn close to nothing, those who lift the trophy can become millionaires, such as Roger Federer, who earned $65 million by the time he was 30.
However, a considerable number of elite sports stars lose it all when they retire.
Sports Illustrated estimated in 2009 that 80% of NFL stars go broke, including going bankrupt or experiencing financial distress, just three years after their retirement, despite earning an average salary of $2 million a year. They also cited the 60% of NBA players who went broke within five years of retiring from the court.
The amount you earn does not determine whether you’ll experience financial stress.
Mike Tyson is a famous example who went from being worth $400 million to having less than $700 in his bank account. Making it to the top of your sport and earning big pay cheques is no guarantee of future net worth. That will be determined by the financial decisions you make now.
Here’s what elite sports stars can do now to enjoy a healthy retirement later:
1. Don’t take every line of credit offered to you
The moment you start earning more money, you might be able to access more credit. This is because the banks perceive you have a greater capacity to pay back loans, so they’re willing to lend you more money. While that money could come in use, consider how you’ll pay that debt back during your career.
2. Watch your spending choices
When you win a tournament or move up the rankings, you may wish to treat yourself. While we are huge fans of enjoying your money, make sure that this is within your budget. Take the time to find the right budgeting method that fits with your lifestyle so that your budget is sustainable.
3. Have a backup plan and side hustle
If a sports star becomes injured, this can sideline or end their sporting career. It’s worth having a backup plan, including an emergency fund and a side hustle to provide more than one source of income. Venus Williams is an excellent example of this, establishing an activewear company to support female sporting performance as she continues to play professional tennis at an elite level.
4. Get a financial advisor you trust
Many elite stars lose money due to bad investments made by financial advisors who exploit their clients or who are incompetent. Take the time to find an advisor your trust and who will work in your best interests while you’re playing your sport and when you retire.
5. Build a legacy for the next generation
Sports careers don’t last forever, which is why it’s important to build a legacy for the next generation. Star of the soccer pitch, Marcus Rashford has successfully campaigned for meals to be provided to low-income families during school holidays. While you’re still at the top of your game, take the time to support and champion those who will hold the trophy after you.
Elite sports stars of today should plan for their lives off the court while there’s still time left in the game.
We want to see more sports stars start more confidence in managing money while they’re still earning an income from the sport they love. Developing this financial wellbeing will enable them to thrive in retirement so they can afford to inspire the next generation of athletes who will follow them.