Athletes and the pay game
We’re hearing plenty about sport and its pay disputes.
Most of our cricketers are unemployed and our rugby league players are making noises about pay issues.
We work closely with athletes at Front Row Financial Management so we are seeing a unique perspective on these pay matters.
Only last week, one of our clients who is a professional cricketer was unable to secure a loan because he’s unemployed while the pay dispute continues.
Unfortunately, he found a home that fits his needs perfectly but his loan application couldn’t proceed because of the pay dispute.
He has a good deposit and he’ll earn a nice income this summer when the dispute ends but, with the current uncertainty, the bank was unwilling to help him.
Without taking sides in the pay dispute, this highlights an example of the difference in the lives of athletes and non-athletes.
Non-athletes have a natural career earning progression – their income increases as they gain experience and become more skilled. It’s an upward curve.
Athletes have two career phases – one where they make most of their money and the second when they earn less. There are plenty of athletes who go from earning something like $300,000 annually to $60,000 the moment their playing career ends.
The key is this: athletes need a strategy in which they finish their career debt-free OR they must get to a point where they can service their loan on their post-sport income.
Players cannot have long-term investments / gearing set up on earnings of $300,000 when their post-playing career is not going to yield income anywhere near that.
At Front Row, we work with professional athletes to ensure that they create wealth through debt reduction and build equity in their property for the end of their playing careers.
That equity is important because it will open other doors financially once their careers end.
Yes, the lucky players who get into lucrative broadcasting roles may be able to continue on their income trajectory.
But the overwhelming majority don’t get that – the second phase of their career kicks in and it’s not as lucrative as the first.
Let’s hope the pay disputes are cleared up quickly so clients like our professional cricketer can continue to make smart financial decisions during their sporting careers.