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The Financial Conflicts of Money for the Men and Women of Basketball

June 8, 2017

 The Men and the NBA

 

Basketball paychecks can create issues that can ruin you financially, if you let them.  Here are a few highlights: 
 

  1. Wealth Management and Relatives – The definition of “relatives” gets more convoluted with every dollar you make. Relatives are foolishly trusted with athletes' money. One guard in the NBA allowed his entire fortune to be managed by his former AAU coach, who had the player's power of attorney.  If a relative is managing your money, make sure they are certified and cognizant of your risk level.
     

  2. Supporting the Village – Some athletes feel obligated to provide financial support to extended family and friends. When a basketball player achieves his dream of getting drafted into the NBA, all kinds of “family” show up with their hands out asking to either borrow money or to convince you to invest in their business idea. The windfall creates pressure from friends and family to "spread the love." Learning how to say “NO” is very powerful.
     

  3. Financial Responsibility – Athletes take considerable measures to be on the top of their game and stay there. The game requires a high level of discipline, focus and intelligence…traits that can cross over to smart financial decisions. Players are not trained in wealth management and that world can be very intimidating. The player should educate himself and take a vested interest in his finances. Similar to preparing yourself year after year to compete, you need to prepare yourself financially. You should be able to understand what your financial advisor recommends and have a clear roadmap to your financially stable future.
     

  4. Trust - More than a few professional athletes have been duped, taken advantage of, or downright defrauded because they blindly trusted a smooth talking family friend or relative.
     

  5. Lack of Preparation – Athletes forget that their paychecks are not going to last forever. Their careers are short because of the evolution and caliber of young players in the sport and impact on their bodies that leads to injury. Most basketball careers last 5-7 years with earnings at approximately $3-5 million (if you take out the top franchise players in the average). Now you have 5-7 years to plan for retirement compared to the norm of 25-40 years for the average professional.

 

The Women and the WNBA

 

When a young woman gets drafted into the WNBA, there is a possibility that family will start showing up to help her out with her finances. In 2017, top picks can make $51,000 and a top player overseas can earn over $500,000 playing for seven months.   Perhaps not a “windfall” of money, but enough to make sure it is carefully allocated for the future.

 

When you are 30-35 years old, you probably will have to rely on the money you put away, or move on to a second career.  Perhaps you want to retire, years of in the WNBA and overseas…you earned it!

 

If you prepared for your future, you still have similar pitfalls as the men:
 

  1. Wealth Management and Relatives – Most WNBA players do not earn the amount of revenue on the windfall level and should be involved in the management of their money.  If a relative is managing your money, make sure they are certified and cognizant of your risk level.
     

  2. Supporting the Village – Without a windfall, most woman athletes feel less pressured from friends and family to "spread the love." The paycheck after taxes is really not big enough to “spread the love.”  Learning how to say “NO” is still important and very powerful.
     

  3. Athletes take considerable measures to be on the top of their game and stay there. The game requires a high level of discipline, focus and intelligence….traits that can cross over to smart financial decisions. Players are not trained in wealth management and that world can be very intimidating. The player should educate himself and take a vested interest in her finances. Similar to preparing yourself year after year to compete, you need to prepare yourself financially. You should be able to understand what your financial advisor recommends and have a clear road map to your financially stable future.
     

  4. Trust - More than a few professional athletes have been duped, taken advantage of, or downright defrauded because they blindly trusted a smooth talking family friend or relative.
     

  5. Lack of Preparation – Athletes forget that their paychecks are not going to last forever. Their careers are short because of the evolution and caliber of young players in the sport and impact on their bodies that leads to injury. Most women’s basketball careers last 6-8 years with earnings at approximately $500,000 (if you take out the top franchise players in the average). Now, you have 5-7 years to plan for retirement compared to the norm of 25-40 years for the average professional.

 

Please feel free to contact me if you have any questions or need additional advice.

 

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