By Iacovos Iacovides, APC Sports Consulting Ltd
Regular followers of the MSA Blog will by now be acquainted with the “Sudden Wealth phenomenon”. At the very visible risk of becoming repetitive: the Sudden Wealth phenomenon relates to individuals who suddenly find themselves making exponentially more money than they previously did. The phenomenon is magnified when these amounts are six, seven, eight digits or more. Scientists have even created the term “Sudden Wealth Syndrome”. But athletes have not only themselves to deal with but also those around them; family, friends, coaches and partners.
You’ve managed to get that contract, you’re living your dream, doing what you love while making pretty good money. But it is not all rosy: there is a good to fair chance that all of a sudden some of those people who supported you throughout the years have finally turned up to collect, or even worse, people who were only on the margins of your journey now want to be your best friend, favorite uncle and whatnot.
Unfortunately, the great majority of athletes have to deal with people demanding a share of their success from their inner circle—their family—which undoubtedly has an emotional dimension to it. Phillip Buchanon is a former NFL player and author of New Money: Staying Rich. In a rather shocking statement, Buchanon reveals how his relationship with his mother was affected by his new contract:
“Soon after the draft, she told me that I owed her a million dollars for raising me for the past eighteen years. Well, that was news to me. If my mother taught me anything, it’s that this is the most desperate demand that a parent can make on a child”
The above statement can be very revealing as to how the emotional pressure that is put on athletes can make them cave. Not everyone will experience pressure of this magnitude but small things pile up while creating bad precedents, such as always paying the bill at the restaurant or the bar. It is no coincidence that financial advisors agree that family pressure is among the primary challenges that young athletes have to face and you can only imagine how such pressure can have an adverse impact not only on the athlete’s finances but also his mental wellbeing.
As if having to deal with people you know – or think you did—is not enough, you also have to deal with the professional sponges. There are certain people out there who if you ask them what they do for a living, they might as well identify as ‘professional leeches’ because all they do is hang around famous people befriending them, seducing them and ultimately living off of them financially.
All these are enough to drive someone to paranoia. It can certainly be soul-destroying not to be able to make new friends, acquaintances and develop personal relationships when you know that certain people out there are after the money and not the athlete. There is plenty of evidence of marriages ending shortly after an athlete’s retirement or after the athlete went broke. Nonetheless, this is a reality that athletes have to deal with, neither by blindly trusting every person who wants to hang around nor by blocking everyone out. What they rather need, are solid foundations and to utilise certain mechanisms such as prenuptial agreements alongside those foundations.
This story would not be complete without those “great investment opportunities” that are constantly being presented to you. People from all lengths of society, people you love, people you trust, people you don’t know will come knocking for you to invest “in their great idea” and that they really are “doing you a favor”. Whether it is your cousin with his “amazing new food delivery app” or a random person who “knows” that the value of Bitcoin will rise, you should always take a step back and discuss these things with an expert— hopefully you have an advisor for this purpose. You never know in which corner the next Ponzi Scheme is lurking.
A lot of young athletes find themselves making a lot of money out of the blue which in itself can be a lot to handle. Then they also have to deal with the fact they have suddenly become everyone’s favorite. Whether we are talking about people who want some cash, or they want you to invest in their great idea, or just want to live off of you, you have to learn how and when to say no. The first necessary step is financial education coupled with the cultivation of the right attitude and the assistance of experts. The only way to avoid these traps is to be aware of their existence and learn to identify them when you encounter them.