The Numbers Game
*Guest post from Pro Stock Hockey
Financial Plan A Must For Post-NHL Life
Bobby Orr is perhaps the greatest offensive defenseman in NHL history. In 1971, he signed the league’s first million-dollar contract.
By 1980, he was essentially bankrupt.
Why? An unscrupulous agent, Alan Eagleson, the former NHL players union head who would eventually plead guilty to mail fraud after being indicted on 34 charges ranging from racketeering to obstruction of justice.
“What he did was disgraceful to the people that trusted him like I did,” Orr wrote in his 2013 autobiography. “I trusted Alan. He was like a brother and I trusted him with everything. Not only me but so many players, he hurt so many players. It's incredible.
Incredible? Perhaps. But the tale of athletes losing their riches is a common one.
Orr rebounded, forming a successful agency group representing hockey players. But, once he negotiates their contracts, Orr refrains from offering advice because he wants his athletes to learn about their finances — which is just one way to improve an athlete’s chances of making their fortune outlive their fame.
The Numbers Game
A 2015 study found that, among NFL players drafted between 1996 and 2003, 15.7 percent of have filed for bankruptcy within 12 years of retirement — and those filings are not affected by the player’s career earnings or length. In 2009, Sports Illustrated reported that “60% of former NBA players are broke” within five years of retirement.
The reasons are hardly surprising — trust placed in the wrong person, poor investment choices such as restaurants and record labels, too many friends and family on the payroll, and simple extravagance.
The cures can be surprisingly simple. For instance:
Be disciplined. View your finances like your training. Know that what you do early will pay off — literally — late. More specifically, that means having a budget right away. Don’t blow that first big check on a car or a house. Establish a pattern of saving (maximize your 401K contribution, invest your signing bonus) to which you can stick.
Be realistic. Injuries on the ice can happen in an instant. Accidents away from the rink can alter your career path and earning potential in the bat of an eye. Professional Athlete Disability insurance can be a useful hedge against unexpected setbacks.
Have goals. Even with the best of health, the truth is, a 20-something pro athlete might be closer to retirement than a 50-something middle manager. View the gains in your portfolio as you might your stat line. Pay yourself first (meaning your retirement fund and necessities — mortgage, car payment, utilities, etc.) before splurging.
Pay your taxes. This sounds simple, but it’s a major pitfall for many athletes. Be honest. Don’t try to get away with something. And, if you can, establish residency in an income tax-friendly state.
Find a pro. A money pro, that is. Don’t trust a family friend because his heart might be in the right place if his training isn’t. Fast talkers with no track record should be avoided.
Be risk averse. Yes, this is contrary to your athletic training, where the daring and spectacular are rewarded. But your skills on the ice were honed over years. Don’t think you can jump into the restaurant game and be a superstar.
Living Like The Jones?
According to one study, people are happiest when they make about $75,000 per year. In other words, those folks are as happy as someone making much more, and happier than those making only slightly less. Ensuring you will always have enough is far more important than demonstrating you have the most. Let common sense, sometimes an uncommon commodity, guide you.
This post was written by AJ Lee. Lee is a Marketing Coordinator for Pro Stock Hockey, an online hockey shop that offers pro stock hockey equipment. He was born and raised in the southwest suburbs of Chicago, and has been a huge Blackhawks fan his entire life. AJ picked up his first hockey stick at age 3, and hasn’t put it down yet.