They earn megabucks but few actually make a decent plan for their post-working lives. While we’re not all multi-millionaires, everyone has something to learn from their mistakes, explains RBC’s Jonathan Gold.
Modern football is synonymous with wealth, whether through its astronomical wages or lucrative sponsorship deals.
But young players are often making a Faustian bargain in focusing on their trade at the expense of preparing for what comes after their sporting career.
An online search for “footballer” and “bankrupt” finds no shortage of multi-millionaire athletes who have played, earned well and fallen on hard times in only a matter of years. In 2014, former England goalkeeper David James was forced to auction his personal football memorabilia to pay his debts. Retirement is one of the sport’s only inevitabilities, but something that few actively prepare for – normally less than 10 per cent, according to recent research by David Lavallee, a professor at the University of Stirling’s School of Sport in Scotland.
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Premier League footballers earn on average £2.3m a year, excluding bonuses and commercial arrangements, according to a Sportsmail report. With a career in the Premiership lasting roughly eight years, maximising those earnings is critical. Once players retire, or are forced to stop performing at a specific level due to injury or contractual issues, their salary base immediately reduces – drastically altering financial circumstances. Sustainability therefore begins with asking what kind of lifestyle one hopes to have when the final whistle blows.
A strong defensive bedrock
Many players harbour aspirations to be a manager or pundit, or develop business interests. Whatever the post-playing career goal, the same planning methodology applies to everyone. Outline goals – career, financial, family – and put structures in place that meet those needs. Ex-players should take the time to think about what they want from life, working backwards to make sure investment and lifestyle choices are aimed at achieving this. Consideration of and adherence to a long-term plan are paramount.
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In the same way a team’s manager makes sure he has the right people – sports psychologists, tacticians, physiotherapists – to make his squad successful, ex-players should seek real wealth structuring and protection advice, engaging the services of an experienced wealth partner. Good advisers will seek not only to educate the player, but their partners and close family members, eventually leading to a point in retirement when the client can manage their own finances confidently.
Club culture often mandates taking much of the usual day-to-day responsibilities off players, so they can focus on performing at the highest level. This cotton wool approach places many of their affairs into the hands of others – and it goes all the way from routine matters such as planning a trip abroad or hiring a car, to the more onerous issues of longevity planning.
As such, one element ex-players particularly struggle with upon retirement is pay control. Trust structures and insurance can prove invaluable ways to make a salary last, while investments in property may provide further income and asset appreciation or protection.
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While footballers have the luxury of earning a lot of money in a very short space of time, it’s a non-sequitur that they should invest it in the same timeframe with a view to simply earning more. The spike in early-life earnings naturally lends itself to a slightly higher degree of risk for a variety of reasons but, as ever, all investments should be approached with prudence, thorough due diligence and research. Cautionary tales involving players investing in overseas property developments or film partnership schemes as a way of shielding earnings against income tax serve as a timely reminder that it’s critical not to jump headlong into a prospective opportunity. Post-retirement represents a window to invest both time and capital in what comes next.
Jonathan Gold is director of sports, media and entertainment at RBC Wealth Management.