Major Sports Need A Focus On Financial Responsibility

Usually when I talk about fiscal responsibility, I am lecturing about how sports have got out of control with increased wages and the amount of debt that is being racked up every year. This time I think there should be a lecture about how the players are using their money.  Players and clubs together should be fiscally responsible.

Players have very limited careers and usually only have one chance to earn a big contract that will see them living comfortably for the rest of their lives. With all the money that is waved in their faces they are very prone to financial mismanagement. The amount of athletes in baseball, soccer, football, basketball, and other high paying sports who end up in bankruptcy is considerable, considering the funds that have to be thrown away in order to receive a winding up order.

The case of Vince Young is a current example of how players can go astray when they get used to living a certain way. His career is most likely over, but during the lockout he decided that he really wanted to throw himself a mega birthday party. Who wouldn’t? You get to see all your friends, impress the hell out of your colleagues, there is cake, but when you aren’t being paid because your career is currently suspended where do you get the necessary funds for your birthday bash? So Vince Young, and his associates, decided they should get a loan of $300,000 with a 20% interest rate so that they could party in style. First problem here: why do you need that much money to have a party? How much cake are you trying to buy? I assume that you are buying yourself some sort of mega present involving an ostrich called Barry who lays golden eggs. Secondly, Vince Young was unemployed with limited hope of future employment, yet was willing to gamble away his finances because he wanted a birthday party. Not smart. And his advisors should really be sent to exile in Siberia for thinking that was a good idea. When you pay people as much as professional athletes are paid then sometimes they get used to it.  Poor financial management can lead to people like Vince Young being sued for $1.7m because of this one loan.

A second problem is that professional sportsmen are paid too much money too early in their careers. If you have a multi million dollar contract when you are 21 what are you going to do with that much money? Personally I’d like to think that I would buy myself some property, pay off any mortgages, invest part of my contract in long term stocks and shares so I’ll have enough money when I retire. What I would really do is another matter: I’m pretty sure it would be used to buy fancy cars, cool toys and loads of biscuits so I could balloon to the size of fat Ronaldo or Adriano. Giving someone millions of dollars at such a young age is never a good idea, especially if they have an advising team around them that is not looking out for the player’s best interests. Think about how kids with trust funds are often ridiculed for their lack of financial prudence, then compare that to modern athletes…not too much of a difference: both are young and often foolish. A fool and his money are soon parted, as the old saying goes.

This may be good for the economy–fans pay to see their player, he gets paid with money made from the fans, the player then spends his money on hula girls and an ice sculpture of Godzilla to advertise his new fragrance. The money eventually gets spent, and a few players are not joining the ranks of the multi millionaires. But it is destructive for the player and the club to be giving so much money to these young players, it destroys some players and it also destroys the clubs in a few cases. Giving the money to players in instalments over a longer period of time, not simply during the duration of the contract but after the contract too, or giving it to players in stocks or bonds would make the player have to ration his spending and also would come with a lower tax rate.

Financial prudence is something that the Western world seems to have forgotten about, given that we live in an age where personal debt is at its highest level ever. In sports the effect can be multiplied due to the huge amounts of money involved in the deals on a small group of players. And in the end shouldn’t we want what is best for the sport and for the players, both need some sort of financial guidance that is not being provided at the moment.

 

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