By Constantinos Massonos, Contributor
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.
For athletes, cancelled or suspended competitions and inability to secure money or financial support from sponsors and other sources caused an inevitable loss of income. Now with life gradually returning to normality, athletes can and should reflect on how they can be better prepared for such career-altering situations and their implications, as the pandemic has only exacerbated the unique financial challenges an athlete can face during their professional career.
Athletes are already part of a highly competitive and risky industry, and their income can greatly fluctuate in case of an injury or poor performances, threatening an athlete’s lifestyle. Having in place a financial plan that accommodates all the dreams, goals and circumstances of the athlete and facilitates budgeting, saving and investing is vital in maintaining a secure financial future for the athlete, whatever the circumstances.
Another threat to an athletes’ income is the presence of a “force-majeure” clause in sports contracts. Such a clause allows the other party (that being a sports team or a sponsor) to stop performing their contractual obligations towards the athlete because of certain circumstances out of their control, such as the COVID-19 pandemic. This highlights the importance of having a trusted legal advisor in your team, a person who can assist you in navigating your legal options and the income associated with them.
The lack of financial literacy among athletes and the need for all sports stakeholders to assist in implementing financial literacy programs for athletes has been the main talking point in many articles on the Money Smart Athlete Blog. Athletes do not usually have the opportunity to develop their financial knowledge as other parts of the population have through formal education. The financial strain caused by the pandemic has forced people, including athletes, to reexamine more carefully the way they deal with their finances, something that athletes might find difficult due to lack of financial literacy.
Athletes usually do not only financially support themselves but also some of their friends and family. The pandemic has put an extra financial burden on all of the above, leading to increased requests for financial support from the athlete. Athletes should turn to their financial advisors who can evaluate the needs of each friend and family member and get an understanding of who is in real need and needs their support.
Last but not least, the pandemic has accentuated the importance of creating alternative sources of income for athletes. This must be planned and implemented well before the end of the career of an athlete in order to accommodate for situations where an athlete’s main source of income is haltered, such as the pandemic.
For more information on understanding the lessons the pandemic should teach us, please send an e-mail at [email protected]
