A famous Chinese proverb reads “the best time to plant a tree was 20 years ago; the second-best time is now”. Time is you ally in achieving any goal, so the earlier you start planning, the better. This is especially true for athletes, who, as previously discussed, have short term sports careers and must have a post-retirement plan in place in order to transition as smoothly as possible into their new lives.
Over the past two years, we have all been tasked with navigating unchartered territories, due to the outbreak of the Covid-19 pandemic. A catastrophe of unparalleled proportion, which nevertheless, left us with a lot of lessons that should be considered, as we try to shift towards the post-Covid era. As stated in previous articles, professional athletes have been amongst the hardest hit by this pandemic, not necessarily in monetary terms, but in terms of seeing their status quo being challenged. Athletes have to rethink the way they approach their financial well-being and have to recalibrate their strategy towards financial freedom. In this article, we seek to explore how athletes should plan ahead, learning from the lessons of the Covid-19 era, to emerge financially stronger and more independent. Specifically, we will focus on why the pandemic has made the case for the need of multiple revenue streams, and how such streams can be pursued by professional athletes.
There is no doubt that the COVID-19 pandemic has had a profound negative impact on all the stakeholders of the sports industry, as the response of the majority of national and international decision-makers to the outbreak was the shutting down of sport competitions at all levels, including the Olympics. Professional and amateur athletes, sports organizations and sports-related companies and their employees, all had to face their own share of financial distress.
Sports was and is one of the hardest-hit industries by the pandemic, due to the fact that it relies on live action and interaction, momentum and the gathering of large crowds in stadia and other venues. The outbreak of the virus was like Armageddon for sports which saw most of its revenue streams temporarily blocked and stadia closed indefinitely, while clubs still had to pay the enormous salaries to their athletes. For athletes of individual sports, the situation was even grimmer. The Tokyo Olympics and the Euro championship were not spared either.
"Financial literacy" has become a very a popular term these days. It basically refers to having the right set of skills and knowledge that allows an individual to make informed and effective decisions with all of their personal financial resources. Specifically, it is about spending within your means, investing wisely and saving for emergencies. Although these “rules” sound simple, many people find it hard to adhere to them, especially athletes.
Despite being well paid, many professional athletes are looking for alternative sources of income to grow their wealth. To this end, they often use their sports earnings to invest in various ventures and projects. Most investments are usually made after retirement; however, we have a number of cases where athletes begin investing way before they retire. The rationale behind athletes’ investments is the creation of alternative sources of revenue which can potentially lead to the creation and accumulation of wealth.
The significance of creating a financial plan that can eventually guide athletes to financial freedom, has been reiterated in a number of articles, here on the Money Smart Athlete Blog. Being able to choose wisely when, where and how to invest money, in order for them to grow, is a very critical component of a financial plan which can help athletes meet both their short and long-term goals they set.
Athletes often put their bodies through rigorous training and expose themselves to many physical risks; at the same time though, they seem to neglect their mental health and stability. Mental illness is often overlooked by coaches, teachers, and parents of athletes as well. It is difficult for people to understand that the brain is just as important as the body when it comes to being a healthy athlete. This article will explore how mental health issues in athletes are just as important as physical injuries.
The ancients used to say ‘a healthy mind in a healthy body’ and I think many people can get behind that. The relationship between mental health and physical health intuitively seems obvious. For starters, during and immediately after exercise, the human brain releases endorphins, chemicals such as serotonin and dopamine that literally make us feel good. So, it would make sense that regular good exercise can help stay away from mood disorders and maintain a healthy mental state. But what about athletes?
On the MSA blog last week we discussed the recent events involving Naomi Osaka, her mental health and her decision to withdraw from the French Open. Mental health has long been overlooked in sports and in certain cases even repressed. Mental health issues and illnesses do not fit in the yes-can-do, celebratory and electrifying environment that characterizes sports. However, athletes are constantly under the spotlight, working hard week in and week out on the pitch, while trying to keep in touch with their fans and show their philanthropic face outside of it.
Winner of 28 Olympic medals, swimmer Michael Phelps is one of a number of star athletes who has publicly discussed in recent years his struggle with depression, anxiety and suicidal thoughts. NBA star basketball player DeMar DeRozan has also talked about the importance of addressing mental health issues, as all athletes are first of all humans. Gymnast Aly Raisman has described her efforts to cope with post-traumatic stress disorder after being the victim of sexual abuse.
The electronic gaming industry has grown dramatically in recent years as an alternative to other sports and, in many countries around the world, eSports is already recognized as an official sport which clearly illustrates its dynamic. In 2020, and in spite of the pandemic, the revenue of the eSports industry amounted to $947.1 million. According to analysts, the global revenue of eSports will reach and exceed $1 billion by 2021.
The online gaming industry is huge. There are currently over 2 billion e-gamers globally, generating approximately $1 billion per year for the industry. Additionally, a good amount of money is derived by purchases that the players make when playing, such as when they buy in-game currency or in-game items.
Most people are now familiar with eSports and people younger than 40 have almost definitely had a discussion regarding eSports with friends or acquaintances. When eSports started gaining traction, the very inclusion of the word “sports” in the context of videogaming was enough to lead to mockery and sarcasm. Generally, discussions orbiting around eSports spark controversy. The success of eSports lies—partly—on the fact that the industry tapped into a market that simply did not exist before, as gamers are not the first thing that comes to mind when one thinks of sports professionals or fans. Whether you love it or hate it, it does not matter anymore; eSports is on the up and up and one needs only turn to the numbers to understand the extent of its success.
Over the last decade, the eSports industry has experienced phenomenal growth, leading people to question the conventional definition of sports, one that assumes the involvement of physicality. In short, one side argues that eSports do not necessarily constitute a sport because they lack the physical aspect that we’re used to seeing in sports such as basketball, football and others. On the contrary, the other side suggests that eSports, through their competitive nature, as well as their ability to entertain, should definitely be included in the bucket of sports. In this article, we don’t seek to take part in this debate but rather explain why eSports, through their financial outlook and popularity, are here to stay.
Video games were considered a waste of time by the majority of parents who saw their children spending an excessive number of hours in front of a screen, with a controller in their hands, instead of studying for school. Nowadays, there are people who quit their 9 to 5 jobs to become professional gamers and earn up to six figures per year. This form of competitive video gaming, where teams or individuals compete against each other, mostly in online tournaments, to earn prize money or other benefits, is called Esports.
Last June the Intercollegiate Athlete Compensation and Rights Bill was signed into Law in Florida, by the state’s Governor Rick DeSantis. Florida’s move is the latest development of a precedent set by California, but certainly not the last as numerous states have similar bills in the legislative queue. What these laws do is simple: allow college athletes to profit from the use of their name, image, and likeness. Such laws are a direct assault against the so-called NCAA amateurism criterion which prohibits athletes from doing just that.
With five states enacting legislation on the use of name, image and likeness rights (NIL) by NCAA student athletes, it is imperative that student athletes start exploring how they can use this groundbreaking legislation, as best as possible.
College sports have been part of the American reality since the late 19th century when the Yale rowing team competed against the Harvard rowing team to what marked the beginning of an era: the era of college sports. Nearly 170 years have passed since then, but one thing remained the same, college athletes have never been able to use their image rights to benefit monetarily, up until recently.
