When it comes to athletes and finances, the perception is that while athletes have higher incomes than most of the general population, they tend to overspend and fail to account for their future. However, in recent years, many athletes have become more fiscally responsible and have taken steps to ensure their financial security beyond their playing careers. This shift in mindset can be attributed to a variety of factors, including increased education and awareness, more sophisticated financial planning resources, and a greater emphasis on long-term financial stability.
One key aspect of this trend is a growing emphasis on financial education and literacy among professional athletes. Many leagues, teams, and player associations now offer financial education programs and resources to help athletes learn about money management, investing, and other financial topics. In addition, there are a host of business managers who not only guide athletes in making financial decisions, but also coach and mentor these athletes to help prepare them for life after sports. These resources can help athletes make informed decisions about their finances and hopefully avoid
common pitfalls like overspending, fraud, and high-risk investments to name a few.
Another factor driving this trend is the rise of sophisticated financial planning tools and services that cater specifically to professional athletes. These services can help athletes develop personalized investment strategies designed for their unique financial situations and goals. For example, professional
athletes tend to have relatively short playing careers which coincides with a short window of high income. This requires a different approach to investing and asset management than for traditional investors. By working with wealth managers and investment advisors who understand their specific needs, athletes can develop a plan that maximizes their earning potential and helps secure their financial futures.
Perhaps most importantly, many professional athletes are now taking a more long-term view of their financial futures. This means thinking beyond their playing careers and planning for retirement and other post-playing activities. Many athletes are investing in real estate (both commercial and
residential), business ventures, venture capital and private equity and other opportunities that will generate passive income and provide financial security long after their playing days are over. We like to refer to these as “Passion Projects.” By leveraging their playing contracts to finance these opportunities, athletes not only pull forward the dollars owed to them by their team, but borrowing the necessary funds also allows them to keep their personal funds invested for the long term. By diversifying their portfolios and thinking strategically about their investments, athletes can create a strong financial foundation that will support them and their families throughout their lives and beyond.
