December 22nd, 2016
Signing a pro-sports contract comes with tons of perks. Free equipment, top notch sports medical care, the opportunity to compete and excel against the best athletes in the world and let’s not forget to mention – instant wealth. After spending years developing your skill set and fine tuning your body to outperform the competition, it should be a top priority to not only surround yourself with people you trust, but also people who have your best interest at heart and who know what they’re doing, especially as it relates to your finances. Unfortunately, I’ve worked with many clients with new-found wealth, and I’ve also seen them gain the world and lose it in an instant. That’s why having a good support team (agent, financial advisor, accountant and possibly a lawyer) can help you keep more of what you earn.
Accordingly, here are a few well-reasoned, simple tips for avoiding a financial pitfall.
- Have a Plan: Consider the day after you no longer wear the uniform. What type of lifestyle do you want? Do you want to sit back, take it easy, and not work anymore? Or, would you prefer to continue earning income as a business owner, coach or move into broadcasting? Even if you are unsure of your “day after” plan, adopt a tentative one anyway. If your plan changes, just like the position, or team for which you play, you can make the necessary adjustment when the time arrives.
- Your Ability to Earn a Living Forever is not Guaranteed by a Contract: You will never have more money than you have today because you are one critical event away from never making another dollar. Whether you sustain a major, career ending injury, are replaced by a rookie or veteran player, or face a contract voiding circumstance, you could never earn another dollar as a professional athlete past the end of this season. What you have in the bank today is a finite amount and when it is gone, it’s gone. How can you manage these dollars in the best way that will guarantee you a minimum living until you get back on your feet–or the rest of your life in the unfortunate event you are injured and cannot work again.
- Establish Regular, Unbreakable Commitments to Review Your Plan with Your Management Team: Whether it’s a monthly dinner meeting with your financial team and/or a quarterly, formal meeting every 90-days, make this time a “non-negotiable” event on your calendar. Just as you study a playbook, workout, or practice plays until they are hard-wired into your muscles, this exposure to your financial “playbook” is just as important. The more exposure to your finances you have, the more you will understand.
- Don’t Hire Your Friends. Period: You need emotional distance from your employees (remember your financial adviser is your employee). It can be difficult to criticize, reprimand, or fire your best friend if they mess up. You’ve spent most of your life developing the skills that enable you to earn huge contracts. In most cases, your friends haven’t spent as much time developing money management skills. This doesn’t mean you shouldn’t let them help you in some areas, but they shouldn’t be in charge of your finances.
- Interview Multiple Candidates: Teams didn’t only look at you; they looked at multiple prospects before drafting you or putting you on contract. When you look for a prospective financial advisor, consider as many as you can. Get referrals from teammates (especially veterans) and even people outside of your sport for references.
- Vern Gohanna is a former IRS Revenue Officer and President of TAXCORP LLC, a specialty accounting firm located in Huntsville, Alabama. He has an MBA from Columbia College and is Associate Professor of Accounting at Oakwood University. He helps businesses and individuals with tax issues across the country and is a sought after expert in the field of IRS Collection matters.