By Athena Constantinou, APC Sports
We often see that the commitment and dedication athletes give to their sport is not the same when it comes to their personal finances. The lack of basic financial knowledge has so far resulted in a substantial number of athletes making fatal financial mistakes. In addition, career athletes often do not have the same level of financial literacy as people who take a more conventional career path. The unique financial challenges that come from life as a professional athlete, combined with the lack of financial education, usually lead to poor financial decisions which unfortunately have an adverse lifelong impact.
We believe that through financial literacy athletes can acquire a basic knowledge about money, personal finances and financial options which will give them the tools to make wise decisions concerning money. It is widely known that athletes are amongst the most financially vulnerable persons of our times and the statistics globally support this claim.
The fact that athletes earn substantial amounts of income but within the limits of a short time span, usually 10 to 15 years makes them extremely vulnerable. The average annual salary of an athlete can be anywhere from 50 to 100 times more that the average household income both in the US and Europe. The end of the athlete’s field play usually marks the end of the substantial earnings both from field play and from other sources such as image rights exploitation, endorsements, etc. In addition, athletes earn their money at a very young age. Athletes’ earnings peak at the age of 25 to 30 and then take a huge plunge by the age of 35, as opposed to the rest of the normal work force who reach peak earnings between ages 39 to 55.
Furthermore, athletes’ earnings are extremely volatile. Most of the times athletes’ salaries are not fully guaranteed and their earning capacity can be adversely affected by poor performance, injuries, on and off field behavior, etc.
The lifestyle of athletes along with the expectations of both the public and their inner circle is another major factor that makes them prone to financial failure as shown below.
- Lifestyle and Gambling – The high income and celebrity recognition that athletes enjoy usually at an early age, draws them to a lifestyle of the rich and famous, living for the moment, and reveling in their fame and fortune.
- Divorce & Child Support – Divorce has a disastrous effect on the financial well-being of professional athletes, as a large number of athletes do not sign prenuptial agreements. In addition, a number of athletes have children from multiple wives and they are obliged to pay several monthly alimony and child support payments which are substantial.
- Bad Investments & Misplaced Trust – Advisor improprieties and misappropriations of funds have contributed to the financial problems of professional athletes. There are a lot of shady financial predators out there and athletes make an easy target.
- Family & Friends – Athletes have a lot of external pressures from family, friends, coaches, and others who have helped them succeed, and who usually seek financial rewards and returns from the athlete as recognition of their contribution to the athlete’s fame.
- Sudden Wealth – The receipt of sudden wealth is an intense emotional event, and it precipitates new financial challenges and decisions. A number of athletes come into money suddenly and they have to deal with their emotions and confront the fears that may arise from their newfound wealth.
Many of the factors that make an athlete financially vulnerable cannot be altered. Athletes will always have a family, friends, and other relationships, and will always have to make financial decisions for themselves. The answer lies into educating athletes to make sound financial decisions by cultivating financial literacy as a life skill for athletes of all ages and levels. Financially literate athletes will be able to make better financial decisions as well as adopt sound money management practices which will enable them to plan their desired financial future.
For more information on the financial education programs for athletes you may get in touch with us at [email protected] and we will be more than happy to assist you.