When I started financial planning, I was sure that I would be doing financial planning for professional athletes. It made sense because I was an athlete most of my life, I love sports, and I could help them plan for the short duration and sudden influx of money. Best of all, I could help them escape those statistics that say they’ll lose it all. A few years ago, I had an Uber driver take me to the airport following a financial planning conference. He was a former NBA player. He couldn’t fit my suitcase in the trunk because it was full, and I think he was living out of his car (an old Jaguar).
I quickly realized (especially after watching ‘Ballers’ on HBO) that I am an early-to-bed girl and no way am I going to cater to the late nights and high maintenance craziness that many high-rolling athletes can become. This Olympic year has lit my fire again as there are so many women professional athletes like my new favorite rugby player, Ilona Maher, that maybe could use my help!
As the 2024 Paris Olympics showcased, female athletes are breaking records, shattering glass ceilings, and inspiring millions. Their achievements highlight not only their athletic prowess but also underscore the critical need for robust financial planning to secure their futures both during and beyond their sports careers. Today, we delve into why financial planning is essential for women in sports and how they can navigate their unique financial landscapes effectively.
The Financial Landscape for Women in Sports
The sporting industry, while sometimes lucrative, often presents a volatile career span, with earnings fluctuating based on performance, endorsements, and marketability. Female athletes, in particular, face distinctive challenges such as discrepancies in pay, limited sponsorship opportunities compared to their male counterparts, and a shorter professional window. These factors make financial planning not just beneficial but necessary.
Why Financial Planning is Crucial
- Managing Irregular Income: Athletes often experience irregular income flows, making it essential to establish a budget that accounts for fluctuating earnings. Financial planning helps in creating a buffer during off-seasons or in times of injury when regular income might not be forthcoming. In 2017, Olympian Allyson Felix became pregnant and at the time was a Nike sponsored track and field athlete. In renegotiating her deal, she was asked to take a 70% pay cut due to her pregnancy. She dropped Nike. Fast forward to today, and Allyson, a five-time U.S. Olympian with 11 medals, has her own shoe brand, and was just elected by her peers to the International Olympic Committee’s Athletes’ Commission.
- Planning for Life After Sports: The end of a sports career can be abrupt. Effective financial planning ensures that athletes have a transition plan, whether that’s further education, starting a business, or retirement. I’m sure you watched Gabby Thomas win 3 Gold Medals for her prowess on the track. Did you know she’s a Harvard grad with a degree in neurobiology and has a Master’s in Public Health in epidemiology from the University of Texas? I think she has a post-track plan. Don’t you?
- Investment and Savings: With high earning potential over a short period, investing wisely can yield long-term benefits. Financial advisors can help athletes choose the right investment strategies that align with their long-term goals and risk tolerance.
- Tax Management: Athletes’ earnings are often complex, with income coming from multiple countries, endorsements, and appearances. Proper tax planning ensures compliance and maximizes deductions and credits available.
Not all professional athletes are in the money. Most are struggling to train full-time and pay their bills. In Tampa Bay, I’m so excited to have a brand new professional top-tier women’s soccer team, the Tampa Bay Sun Football Club, that is kicking-off this weekend. I know these ladies have a reasonable salary, but they are not rolling in money. Financial planning for most professional athletes is about cash flow, debt management, and planning for the time after athletics.
Strategies for Financial Success
- Early Planning: Start financial planning early in your career. Engaging with a financial planner can provide structured financial strategies tailored to the unique needs of athletes.
- Diversification of Income: Explore opportunities for income beyond the sport. This can include endorsements, starting a business, or investing in real estate.
- Education on Financial Literacy: Understanding financial basics such as budgeting, saving, and the fundamentals of investing is crucial. Financial literacy empowers athletes to make informed decisions about their finances.
4. Retirement Planning: Despite the potential for high earnings, planning for retirement should begin early. This includes contributions to retirement accounts and exploring other long-term investment options.
Conclusion
For women in sports, financial planning is not just about securing wealth but also about ensuring stability, independence, and options beyond their sports careers. By adopting strategic financial practices, female athletes can protect their finances against the unpredictability of their careers and set a course for long-term security and success.