We’ve all heard the stories. A young professional athlete signs a contract and comes into millions of dollars. The temptation to spend it immediately on extravagant cars and homes, and even generously sharing their sudden wealth with families and friends, is common. But athletes have unpredictable incomes. In fact, their career lifespans are unpredictable. According to the NFL Players Association, the average career length is about 3.3 years. The average career of a Major League Baseball player is longer, but still only by two years. All too often, injuries can end their athletic careers abruptly.
Many athletes simply don’t have the experience in managing large sums of money or understanding the ramifications of the high-dollar assets they are purchasing. What looks like a golden egg can result in devastating personal and professional loss for the athletes and their families, including bankruptcy and divorce.
According to the ESPN documentary Broke, nearly 78 percent of NFL players run out of money less than two years after leaving the game.
That’s a startling statistic. While the NFL recognizes the problem and offers lectures on personal finance and personal responsibility as part of its annual four-day symposium for players, athletes need much more. They will quickly be surrounded by a team of advisors, including their agent, investment advisor, accountant, attorney and insurance professional. All of these advisors are important, but establishing a relationship with an accountant must move up in the order. Why? A qualified accountant can help the athlete establish positive savings and budgeting behaviors from the start. In fact, the best time for the athlete and accountant to meet is before the athlete signs their contract and receives a signing bonus.
For example, as a firm with expertise in providing sports accounting to athletes in all four major sports as well as individual athletes, the professionals in our Game Plan practice advise young athletes about smart saving strategies, so that their nest egg can be viewed as a long-term investment to spread over decades, rather than years. We work closely with athletes to set budgets based on monthly expenses, with frequent check-ins to ensure they are on track. We also determine the best tax-reduction strategies to maximize wealth, and provide cash projections depending on established goals.
Our goal is to help athletes simplify their financial lives by offering the guidance they need to secure long-term financial well-being. We work in tandem with athletes, their agent, insurance broker, banker, attorney and investment advisor for a well-synchronized approach.
By helping athletes focus on the big picture through sound sports accounting strategies, we challenge them to be better than the statistics.
If we can block the obstacles that prevent the athlete from achieving their savings goals, and get a budget in place, we can help advert the bleeding of funds and have them better prepared to meet with financial and investment advisors.
Daszkal Bolton, a South Florida CPA and business advisory firm, provides accounting and consulting services to athletes in all four major sports. Our CPA and sports accounting services include asset protection, budgeting, cash flow forecast and management, financial reporting & personal financial statement preparation, philanthropic giving and tax planning and compliance.
Questions about this article or our accounting services for athletes? Contact Arthur J. Hurley, CPA, Partner, Game Plan Practice Leader, Industry Leader, at 561-953-1512.