50% of Athletes Have Financial Issues (But Why?)
50% of Athletes Have Financial Issues (But Why?)
A Pro Athlete Who Made Over $50M During His Career Shares The Common Issues Athletes Run In To Financially
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NHL defenseman Chris Pronger shared his journey and I wanted to transcribe it for you here today. He’s one of the greatest defenders to ever play hockey.
I edited it a bit and added some thoughts at the end, but most of it is untouched.
Enjoy — it’s a good one👇
Financial Issues Athletes Run Into
I played for 20 years in the NHL. I was one of the highest-earning NHL players of all time.
I’m friends with many other pro athletes.
My guess is more than 50% of pro athletes have financial issues in retirement.
Read that statement again 😨
Here are 3 problems I’ve seen (and some stories)
Point #1: Bad Choices Early On
Athletes tend to be wasteful early in their careers and think the money train will last forever. (Been there, done that) - It doesn’t.
We are only one injury away from retirement. Always!
I had a $1M signing bonus at 18. That’s a huge sum for a young adult.
Understanding the magnitude of that was daunting to say the least. I was lucky to have great mentors early on. Many aren’t as lucky.
When I turned pro in 1993 a lot of players at that time made around $300k/year. Nowadays, the median salary in the NHL is maybe around $2m.
On a $2m/year salary, there is anywhere from 39% - 56% in taxes, give or take. But there’s also agents fees (3-5%), escrow, and much more.
Then there are job-related expenses. A chef/nutritionist, off-season trainer, $5k-10k/month for a house near the practice facility.
An athlete can easily spend $20k/month.
And since the average career is 4 seasons, an athlete might have $2m-$3m in savings when they’re done.
But with spending habits already formed, issues usually arise a few years later. And in my opinion, this is a fairly optimistic scenario.
For example, I’ve heard crazy stories about guys spending $1M in a strip club.
I know a player who had a $2M signing bonus:
He immediately bought $400k in cars
Dropped $1.5m on a home for his mom
But didn’t realize he owed taxes on it! IRS came knocking…
So, while the earning can be great. It’s easy to spend a lot…and the income doesn’t last as long as one might think.
Point #2: People take advantage of athletes
You always have to have your guard up. People will try to take advantage of athletes.
At times I felt like they had 2 sets of documents: one for athletes and another for everyone else.
Financial advisors, lawyers, agents, etc...they assume we don’t read the paperwork (often true for many) and charge us more than the average person.
You’re in your 20’s, a public figure, a celebrity of sorts and everyone knows you’re making money. You’re a mark.
Another common example:
It’s very common to get a pitch for an investment that needs $500,000 and closes in 3 days. Why are they doing this?
Because they can’t get money from the alleged more sophisticated investors.
After a few errors myself, my rule is:
If someone needs an answer right now, the answer is always NO. They learn this lesson real fast.
Another example: athletes are convinced to give power of attorney to advisors, which means they do not control their money. This is crazy!
New York Yankees pitcher Ardolis Chapman had $3m stolen from him by his financial advisor thanks to the power of attorney.
We’re pro athletes. Not pro-investors. So I understand why we sometimes make that mistake.
But the sad part is that shady professionals are far more common than most think. And it’s a common trap many fall into, not just athletes.
Point #3: Taking Care of The Entourage
It can be hard for some athletes to let go of friends from back home.
I’m lucky to not of had too many issues with this. But I’ve seen many instances of this.
Athletes often have the attitude of “if one of us makes it, we all make it.”
That means unqualified friends on payroll, investments in deals because we grew up together, and big entertainment bills. This is a dangerous trap.
Instead, athletes need to be vigilant about saying NO, which is always tough.
Oh Boy What About NIL…
This is a professional athlete who made millions of dollars during his career exposing the problems he sees within the NHL.
How do you think it’s going to go down in college athletics?
Do you think the college basketball, softball, or tennis player who made over $400 from NIL this past year knows they need to file with the IRS?
Doubtful.
Do you think most universities have the proper education, compliance, and trusted internal advisors to help every athlete?
No.
Athletes in college are going to get burned. Pro athletes (with lots of resources at their disposal) get burned.
My concern is for athletes, and the reality is that most of them don’t have the time, education, or right people in their corner to help.
Thanks for reading!
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Peace,
AP