How do pro athletes go broke?
“If you’re playing in the NHL, you’ve got a pretty good life”
These were the words spoken by Paul Maurice after an NHL player poll slated Winnipeg as “the most dreaded road trip.” As a proud Winnipegger, hearing how our “great” city is actually the worst place to travel in the entire 31 team league, it stung my pride a bit… But I’m also realistic – I’d rather sit on the beach in Florida, or swing my golf clubs in California than be stuck inside during a freezing cold Winnipeg winter day. It’s a no-brainer, so I understand where they’re coming from.
Anyhow, I’m not here to argue why I believe Winnipeg is actually a great city, like our welcome sign says. Rather, I’m here to build on those words Paul Maurice said – if you’re in the NHL, your life is pretty good. You job consists of travelling to beautiful cities (30 of them at least…), enjoying first class amenities, and playing a game that you love. The best part? You get paid a lot of money to do so.
You’re already won
It’s no secret, professional athletes get paid handsomely to do their job. As a financial advisor, I like to illustrate to players that by playing in the NHL, they’ve essentially won the lottery. With the proper management of their lottery winnings, they can enjoy financial freedom for the rest of their lives. Unfortunately, professional athletes have something in common with lottery winners: they can go broke.
How does it happen?
In a 2019 study in the U.S., it was discovered that “lottery winners are more likely to go bankrupt within 3-5 years than the average American”. Unfortunately, achieving riches in a short amount of time tends to get people into more financial trouble than the average person with a stable income. This is also common with professional athletes who make millions. But why does it happen?
There are several reasons, but the three driving factors are:
- They give too much away before they have enough for themselves,
- They make poor investment decisions,
- They spend too much on frivolous items.
First, athletes tend to be very generous with their family and friends. They feel that their support group is a huge part of the reason they got to where they are, and so they want to give back. This is a great thing to do from a generosity perspective, however it can be a leading cause of driving athletes into bankruptcy.
Second, professional athletes become an easy target for investment scams. They’re incomes are public knowledge, and many illegitimate investment opportunities come their way. Without the proper guidance and advice, a poor investment opportunity can be extremely costly.
Third, the lifestyle that comes with being a pro athlete is an expensive one. There is an element of “keeping up with the Joneses” that comes into play once you make the big league, and it becomes especially challenging for the young players on their first contracts. On top of finding a nice place to live and a fancy car to drive, many players nowadays will also have personal trainers, chefs, dieticians, etc. If you aren’t careful, your spending can get out of control in a hurry.
So how can you avoid this?
My responsibility as a financial advisor for professional hockey players is to help them find the balance between current lifestyle and their future. Our team believes that by having a proper savings and investment strategy is in place, a pro hockey player can set themselves up for a life free of financial stress.
Ask yourself the following questions:
- Do you know how much money you’ll have leftover from your contract once you pay taxes, agent fees, escrow, etc.?
- Do you know how much you are currently spending each month?
- Do you have an investment portfolio, and do you know what is in it?
- Have you considered what will happen when you stop receiving a hockey paycheck?
If you answered no to any of the questions above, you need to consult a financial advisor and get your finances in order. Give me a call at 204-223-2166, or send me an email ahenry@harbourfrontwealth.com
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