With professional athletes having a relatively short-lived career playing sports, relative to other professions, it is crucial for them to find ways to diversify their earnings streams outside of the playing field, during and after their sports career. A great way to do that is by taking advantage of the great influence they have on their fans and the general public; using their Name, Image and Likeness (NIL) to build and commercialize their brand image and therefore capitalize on it through sponsorships, endorsements and partnerships. This can be achieved through the creation of personal marketing strategies with well-defined branding activities, which are in line with the athlete’s personal values and what they want to represent.
Money Smart Athlete Blog
The aim of the Money Smart Athlete Blog is to provide athletes worldwide with the tools to become money smart and help them make savvy financial decisions. We created this blog to transmit and share the knowledge we have accumulated as financial and business advisors during the past two decades.
As discussed in last week’s article, athletes strive for financial freedom – which is all about having the resources to afford their desired lifestyle. In many cases, this financial freedom is attained through investing – as investing can eventually make your money work for you. Investment can be defined as committing capital or funds to different types of assets with the expectation that you will generate a gain or profit in the future. However, there are several factors that can negatively impact athletes’ investment; one such factor is inflation. Inflation is the rate of increase in prices over a period of time which means it can affect the value of future returns, deeming it a critical factor when making investment decisions.
The great desire to achieve financial freedom- which can be interpreted as having the financial resources to afford the lifestyle you wish- can be met by making your money work for you. Investing is one of the key ways to achieve this desire since it allows you to grow your wealth by generating additional income streams to support your lifestyle.
June 2022 Editorial: Athletes- Investments, the creation of wealth and long-term financial well-being
Athletes are in a mostly lucrative, albeit peculiar profession. Many receive astronomical salaries to compete, and make more in a year than the average person in their entire working life. Nonetheless, with retirement coming at a rather young age there is an abrupt...
The spending habits of many athletes render them unable to save and invest as much as they should, while still active. Approximately 25% of NFL players report financial difficulties in the first year after retirement and, within two years from their last game, 78% of all NFL players are divorced, bankrupt, or remain unemployed. The real issue is not their spending patterns per se, but rather their approach to money and their failure to realize the implications of their current behavior towards their finances upon their long-term financial well-being.
Almost a year ago, in May 2021, tennis player Naomi Osaka announced her decision to withdraw from the upcoming French Open, due to issues concerning her mental health. Her withdrawal followed the organizers’ decision to fine her for declining to attend press conferences.
Last week we discussed the complex relationship between athletes and social media vis-à-vis mental health. Teenagers are particularly vulnerable since their upbringing and reality are now fused with social media. The damage has been of such extent that there are teenagers out there who want to have surgery in order to adjust their looks to Instagram filters; an absurd sort of surrealism. Despite the obvious correlation between social media and mental health problems, social networking platforms are but one of the factors driving the current mental health epidemic. The coronavirus pandemic didn’t help either.
Social media are online platforms that help you connect with people from all over the world, upload family pictures and like your friends’ vacation photos. You can find people from all over the world who share your interests and follow your favourite athletes. There is, however, the flip side to all that which we’d rather not talk about that much; up until the moment it affects us. Bullying, body- shaming, hate, abuse, racism, sexism and a host of other -isms have crept their way into the day-to-day reality of social media.
Mental health has been at the forefront of discussions around the world for a while now, particularly because, according to the World Health Organisation, mental health conditions are on the rise, with possible contributing factors being the increasing use of social media and the COVID-19 pandemic.
Regarded as a taboo until recently, discussions on mental health have certainly become mainstream in the past few years. Several high-profile athletes have opened up about their struggles including the much-debated Osaka saga. It’s hard to persuade people that athletes with their celebrity status and millions of dollars deserve sympathy, but the reality is that neither talent nor money guarantee mental stability.
Living in a material world where we aspire to have and experience the best things in life, the temptation of making impulse purchases on credit can be a trap. Making purchases on credit is a major part of everyday life to the point that it is being frequently abused and may be transformed into excessive unmanageable debt.
Almost 78% of professional athletes go broke within three years after retirement. Such stellar proportion is a call to action for every professional athlete out there, to educate and surround themselves with competent financial advisors who will create a solid roadmap to financial freedom. Finding the right balance between spending, saving, and investing is a very tricky task and most financial advisors out there will have an opinion about which allocations between the above three comprise the “magic formula”. Truth be told, there’s no such thing as a “magic formula” and the exact percentage of your income that should be allocated between spending, saving, and investing depends on the individual’s risk appetite and goals. There are some basic rules and thresholds which should always be kept in mind when deciding what portion of your income should go into which basket.
The term budgeting tends to put people off and is usually associated with restrictive spending. Actually, having a budget is the first and possibly most important step in getting your finances in order and establishing the foundations for your long-term financial well-being. Another common misconception is that people with higher salaries – such as athletes – do not need a budget. The reality of it is, if you are prone to overspending it does not matter how much you earn; if anything, higher salaries are harder to calibrate in terms of spending. After all, a budget is nothing more than a summary of your expected income and expenses for a period of time; usually a month or a year.
The term “financial freedom” means something different to each person. Many define it as being able to have the lifestyle they want and knowing they can afford it financially, without worrying about paying bills and making ends meet. Financial freedom means that instead of having to work to generate income, you will have your assets working for you and these assets will be generating the income you need to support your desired lifestyle. In order to attain this goal, it’s important to begin investing as early as possible so that you generate passive income streams instead of having to work for every penny.
Financial literacy lies at the core of our mission here at the Sports Financial Literacy Academy. We define financial literacy as the ability to understand basic financial concepts and utilize a plethora of financial tools and skills in order to make informed and effective choices. Years ago, the Money Smart Athlete Blog was created when we identified a critical shortcoming of sportspersons around the globe; the ability to make prudent financial decisions and ensure their long-term financial well-being. We are glad to see that in recent years, more and more people are starting to appreciate the importance of financial literacy, both in the context of sports and outside of it.
Gender (in)equality has become an increasingly discussed topic in the 21st century. It started as a reaction of many females that felt trampled, but eventually grew to become one of the largest social and political movements society has witnessed. This increase in zest for the topic has resulted in it affecting several aspects of life, including – in a controversial manner – sports.
Serena and Venus Williams are two of the best athletes to ever grace the tennis court. They are nonetheless athletes, entrepreneurs, investors, and philanthropists. They are everything that young athletes – both male and female – should look up to and a near-perfect example of the overall strategy that athletes should try to emulate. What makes their case exceptional, is that they rose to prominence at a time where it was commonplace to consider female sports as subpar to male competition; they can be credited to an extent for changing that perception as well. The fact that they are sisters is just the cherry on the top.
Female interest and presence in the sports industry has been steadily increasing, particularly in the past couple of decades. Statistically, the percentage of females competing at a club level, is approximately 23% higher than their male counterpart percentage. This is mainly due to the push for gender equality; for which many female athletes fought to achieve in their own individual fields. However, the journey of female athletes in sports began a long time ago…
“An Olympiad with females would be impractical, uninteresting, unaesthetic and improper.” This statement was made by Baron Pierre de Coubertin, father of the modern Olympic Games. Since then, women have been fighting for equality, social change and have shattered many glass ceilings, not only in sports but in all walks of life.