Finance for athletes is very important. Although athletes work hard to achieve their goals, money often vanishes within a few years. That’s why finances for athletes must be on the radar of any elite athlete.
Gustavo Mirabal as an amateur athlete and lawyer understands the legal and financial advice needs of athletes. Gustavo Mirabal is a financial advisor who spends good time raising awareness of finance for athletes.
Next we will know why athletes should be aware of their finance or look for good advisors in the field. Soon you’ll know why finance for athletes is important.
Table of Contents.
Celebrities ruined by disrecognisment of “finance for athletes”
It’s very common for elite athletes to end up ruined. A study by consulting firm Schips Finanz brought even less encouraging conclusions in:
- Europe: Footballers who leave the sport, 50% end up bankrupt.
- United States: American footballers who leave the sport, 78% end up bankrupt.
A 2009 study by Sports Illustrated magazine also exposed that 60% of NBA players end up ruined. But even more serious is that this happens in just five years after retiring.
Here lies the importance of financial knowledge or professional advice. It’s not just about controlling expenses, it’s about how to make income maintain or increase in value. It is also important to comply with the laws and the tax to avoid fines that evade the hard-earned income.
They are definitely figures to consider when talking about the stability and future of an elite athlete. But it’s not just football and basketball players that are ruined. This is an evil that affects sport in general as we will see below.
- Mike Tyson (American Boxing Fighter): One of the world’s most famous pugilists during his career grossed $300 million. All this vanished and by 2003 he turned to the means to support him to put his life and finances back on track. His reputation for jewellery and luxury led him to waste as well as his cocaine addiction. Thanks to his “repentance,” the entertainment industry supported him and involved him in reality shows and films that have helped him recover.
- Evander Holyfield : The famous Holyfield lost a fortune worth $250 million. His 119-room mansion was auctioned because he was unable to pay the mortgage. The four-time world champion has trouble paying for the support of his 11 children. He is currently still with his new house sewn up for non-payment of mortgages.
- Poli Díaz (Spanish Boxer): Better known as the ‘Potro de Vallecas’ has had problems with drugs, violence and authority. He lost all his money because of it.
Basketball players ruined
- Allen Iverson (NBA Basketball Player): Lost his fortune due to his addiction to marijuana, gambling and a reputation for weapons.
- Antoine Walker (NBA Basketball Player): In 12 years he earned more than $100 million he lost to gambling and casino problems. A life full of luxuries and the real estate crisis were key in the loss of more than $100 million. In retrospect he felt like some friends and family around him took advantage of his fortune. In an interview he said, “During my career I went like an ATM.”
- Scottie Pippen (NBA Basketball Player): He was Michael Jordan’s partner in the fabulous Chichago Bulls. Unfortunately Scottie lost a fortune worth $120 million. This was due to bad investments and business. A lot of business ideas and investments went wrong. He ultimately lent more than 15 million to his personal adviser who never paid him back a penny of that.
- Ronaldinho (Brazilian world football player and European leagues): This famous player remains an idol of all time. However, debts do not forgive. His debts to the Brazilian prosecutor’s office took away his entire fortune. A fine imposed for building in a protected area took away their stability and future.
- Garrincha (Brazilian World Cup football player): The famous player was part of the Brazilian national team that won the 1958 and 1962 World Cups. While she was prepared for victory, she was not prepared for the money that came with her. His money went on in women and alcohol and at 49 he died in loneliness and addiction.
- Christian Vieri (Italian football player): Despite entering almost 100 million euros thanks to his career, Christian Vieri is ruined. Between overspending and failed investments, this man lost everything. Player of Juve, Inter, Fiorentina and Atletico Madrid. Also player of the Italian national team for the FIFA World Cup. His last $15 million was vanished by failed investments.
- Andreas Brehme (German Footballer): It was ruined by mismanagement and accumulated debts.
- Iván Zamorano (Chilean footballer): Bad financial advisers and terrible investments caused the Chilean footballer to lose his fortune. He currently faces lawsuits of 3 million euros and the courts have already seized several of his properties.
Ruined European league footballers:
- Paul Gascoigne: The English player from the beginning had problems of indiscipline. He started at the age of 18 and made a career throughout the English league. After I left football, he fell into alcohol and drugs. In recent years he’s been seen a little recovered.
- George Best: He is considered the greatest Irish footballer of all time. In 1968 he led his team to victory in the English league. That same year he received a best player award from France Football magazine. Women and alcohol were their vice and their undoing. Such was his addiction that he was credited with the following phrases:
- “In 1969 I left women and alcohol. were the worst minutes of my life.”
- “I’ve spent a lot of money on women, alcohol and cars. The rest I’ve wasted.”
Other athletes ruined
- Michael Vick (NFL Football Player): After being convicted of organizing illegal dogfights he lost everything. His football team contract for $130 million and sponsorships for $8 million vanished. His financial mismanagement ended up ruining it for good.
- Marion Jones (Athletics): Five medals at the Sydney Olympics in Australia, 3 gold and 2 silver, did not save her. A doping scandal took her to court with fines and imprisonment for half a year. Two years of probation and no money was the balance for Marion Jones.
How long does an elite athlete’s working life last? How you can learn “finance for athletes”
The working life of an elite athlete is between 10 and 15 years without injuries… do you need to think about the future? Gustavo Mirabal is here to give you advice on this and advise you.
Definitely a short period of time to accumulate the income and manage it to last the rest of your life.
Often the athlete starts his professional life very young and without the maturity necessary to manage so much money. That’s why counseling can be key to securing your future.
But “let’s dig a little deeper” into the topic to understand how elite athletes can be ruined. We will certainly understand why finances for athletes are so important.
How do you ruin a millionaire athlete?
The first thing to be clear about is that, although there are many elite athletes, not everyone earns millions. And it is that the millionaire contracts are for the most recognized athletes, a handful of the whole.
Athletes even being in first division teams, if they are not stars they will not have a big contract. The idea that all athletes earn what Messi or Cristiano Ronaldo earns is a myth.
We must also consider that within the sport many make long careers (as coaches or technical directors). But this is not the case for professional athletes.
Professional athletes in general have a career limited by their physical conditions, aging and injuries. Any of these aspects can cut short a career of a professional athlete early. And by cheating his career, finances for the professional athlete are cut short.
According to the Mexican magazine “Contenido”, a professional athlete has a fairly short average professional life, depending on the sport:
- Tennis: Average professional life of 12 years
- Football: Average professional life of 16 years.
- Basketball (NBA): Average professional life of 6 years.
Taking this into account, we must consider that the peak income of the professional athlete should be managed. This income should be used to cover your needs for the rest of your life.
This may seem like an easy task, but the environment and fame can make many lose their minds. If we add to that the “maturity” factor we must be even more aware, but what does the “maturity factor” mean.
Finances for the elite athlete and the maturity factor
In most careers there is an ascent that extends through professional life. Generally, the peak of experience (and income) occurs between the ages of 40 and 50.
This is because after school, most of which end at the age of 25, they begin to gain experience. And professional experience in companies is a long process that has a lot of trial and error. Thus, the person ascends in the company and acquires in different parts of the company consolidating.
In parallel with the acquisition of professional experience, the individual also acquires the necessary maturity to manage the resources acquired.
By age 40, a person has probably established a serious relationship. You will also have purchased a house after saving and striving, because your income at the beginning was low.
This is forging a way of thinking that is different from that of a 20-year-old. And that is where the problem of the professional athlete lies. Their career often begins at age 15 or 16.
The dizzying rise of the professional athlete leads him to stand out probably before his 20th birthday. When the rest of the professionals are just beginning to study, the professional athlete is entering his best moment.
Certainly, there are professional athletes with long careers, who continue until the 40-45 years. But athletes with long careers are not the rule, but the exception. We must keep in mind that sports have a high probability of injuries.
Injuries are one of the most frequent causes of the premature termination of a stellar sports career. This means that professional life can be cut short, and with it economic stability can also be truncated.
Choosing a Suitable Financial Advisor
Certainly, choosing a financial advisor is not something to be taken lightly. Gustavo Mirabal is a financial advisor focused on athletes. As an amateur athlete he understands the needs of the athlete in his present and in his future.
How can athletes avoid ruin at the end of their career?
As we saw earlier, there are several factors around the bankruptcy of an athlete.
Bad financial decisions, people taken advantage of, bad advisors, tax problems can cause a bad outcome.
However, there are tools that we can use to avoid this fate that seems to be beset by elite athletes.
Finance tools for athletes can help us grow wealth, maintain its value, and manage it.
Next, we will list the tools that athletes have at hand to avoid economic ruin:
- Savings: Without a doubt this is a key tool to have economic resources with which to live and which we will talk about next.
- Investments: Investments can help us maintain the value of our wealth and/or make it grow.
- A corresponding financial plan: This can help us make a savings and investment plan according to our goals and life expectancies.
- Knowledge in tax matters: The tax advisor will keep us in the legality making sure not to pay taxes in excess. It is key because some of the ruined athletes are due to fines imposed by the treasury. Poor advice can lead to not paying the right taxes or to a lesser extent to paying taxes excessively.
All these dimensions must be aligned so that we can achieve the balance between income, expenses, and savings in the present.
Thus, the athlete will have balanced income and expenses in the future and an income that allows him to live on his effort.
The next question is how to come up with a financial plan and how complicated the tax issues can be.
Next, we will look at some basic principles of each of these dimensions.
The role of savings in finance for athletes
Undoubtedly, this is the first step to a stable future. Savings will be the necessary germ to have a source of income after the end of the professional career.
Depending on the constancy with which the savings are made and the amount of it will be the future stability.
We are talking about that at this point it is considered that savings would be the only source to meet expenses. But according to all financial advisors this is not a good idea.
Even in the best economies there is a small indicator of inflation that causes money to lose value little by little.
Many accounts do not contribute interest, and those that do usually contribute below inflation. That is why our savings must overcome the loss of the value of the money saved, or in any case we must have investments that compensate for inflation.
A financial advisor can estimate several aspects necessary for adequate savings. Not only how much extra money you need to offset the inflationary effect, but you can also suggest better alternatives for placing the money.
Getting a sufficient return on the money is key to maintaining the value of money. That is where the role of investments comes in.
The role of investments in finance for athletes
Preserving the value of money is the key to having a sufficient economic reserve at the end of professional life.
What a person wants is not just to have an amount to spend when they retire. An athlete also wants to leave money for his children and family. Likewise, you want to have money for any unforeseen events beyond current spending.
Therefore, a financial advisor will not plan for his client’s savings to go to a pot to spend the rest of his life.
A true financial advisor will look for you to have enough investments. Enough for this to generate a return on investment for your current spending and your future.
Capital would be the source to attend to contingencies, or to leave your loved ones at the time of your departure.
Undoubtedly, investments are the key to securing the future. But of one thing we can be sure, not just any investment is good and therefore we will delve into the subject on a next occasion.
The finances of sports clubs
It is important not to forget that the finances of athletes are linked to the finances of the sports club where they participate. That’s why the most successful clubs can pay their players better. These finances are not limited to ticket sales. Go through multiple revenues such as additional events, shirt sales, etc. That is why the athlete must take into account that he is a public figure and the promotion of his club is key to his own image and finances.
Some clubs include clauses that boost player performance. This is often neglected by sports clubs. That is why Gustavo Mirabal has been interested not only in advising athletes, but also of the clubs in their management. It may sound like there’s a conflict of interest, but let’s look at an example of the clauses promoted by Gustavo Mirabal
- Additional goal income clauses for strikers
- Clauses for those players who manage to be defined as the best player of the match by a particular sports channel.
- Clauses for participation in charitable or special events that promote the image of the club and the player.
These clauses far from being a win-win for clubs to the detriment of players. This is the general look that Gustavo Mirabal prints to financial advice on sports matters. This helps players negotiate clauses based on their athletic performance. On the other hand, it promotes its inclusion in contracts by clubs. In this way the player’s results also encourage better results for the club by obtaining healthier finances for both.
Sports finances in coronavirus times
Undoubtedly the coronavirus has marked a before and after in sports finances. Tickets to sporting events are located in drought. In the meantime, transfer rights are beginning to become even more important than they already were. We can also say the same about the image rights of players in the field of video games.
Right now the finances of all parties are resentful and one of the keys is to advance a model that allows us to sustain sports activity in difficult times like the ones we live in.
As far as big clubs and leagues are concerned, there are few problems because there is diversity of income. A decrease in them can be managed through negotiation in which Gustavo Mirabal also has his own advice. If some of the club’s assets are invested in both investments and associated businesses such as membership in special clubs for fans, the prospects for such institutions can be improved.
However, small clubs don’t have it easy and even more so when the greed of big clubs “breaks the bag.”
The failure of the European Super League
The European Super League was an attempt to create a competition parallel to the official competitions. This attempt by the larger clubs was intended to create a monopoly on a competition through which these clubs would fully control the rights of transfer among other economic aspects.
Such initiatives, while not sounding bad, may end up affecting the competitiveness and finances of small clubs. It is a competition where clubs decide, not for sporting merits but for economic power, who enters the tournament or not, taking advantage of the fame they have acquired thanks to their participation in another institution.
The Attempt by the European Super League was rejected by both fans and Fifa and the Olympic committees. The pressure has been such that the invited clubs have retired. Players would also be affected by their rest by having to participate in additional competitions.
There are many ways to deal with the economic situation as a product of the coronavirus, but the European Super League was not one of them. He tried to take advantage of the coronavirus situation as an excuse to create his competition on the sidelines. Thanks to the firm call of the fans, the sports institution and some players we will certainly be able to continue enjoying good football where everyone can participate.
Finance for elite athletes.
The focus of Gustavo Mirabal and his company is Spanish-American athletes in European leagues. Still, its services really encompass any athlete who requires this type of advice.
Its services range from support for the signing of contracts with clubs and sponsors as well as legal and investment advice.
The important thing is that it is with Gustavo Mirabal or studying to acquire it, an athlete requires knowledge in finance. In future enlargements we will delve into the options and reasons to take the finance for athletes seriously.