By Athena Constantinou, Managing Director, APC Sports Consulting, Nicosia, Cyprus
We often see that the commitment and dedication athletes give to their sports is not the same when it comes to their personal finances.
The lack of basic financial knowledge has, so far, resulted in a substantial number of athletes making fatal financial mistakes. In addition, career athletes often do not have the same level of financial literacy as people who take a more conventional career path. The unique financial challenges that come from life as a professional athlete, combined with the lack of financial education, usually lead to poor financial decisions, which, unfortunately, can have an adverse lifelong impact.
We believe that, through financial literacy, athletes can acquire a basic knowledge about money, personal finances and financial options, which will give them the tools to make wise decisions concerning their finances. It is widely known that athletes are amongst the most financially vulnerable persons of our times and the statistics globally support this situation.
The fact that athletes earn substantial amounts of income, but within the limits of a short time span, usually 10 to 15 years, makes them extremely vulnerable. The average annual salary of an athlete can be anywhere from 50 to 100 times more than the average household income - both in the US and Europe.
The end of the athlete’s field play usually marks the end of the substantial earnings both from field play and from other sources, such as image rights exploitation, endorsements, and the like.
In addition, athletes earn their money at a very young age. Athletes’ earnings peak between the ages of 25 to 30 and then take a huge plunge by the age of 35, as opposed to the rest of the normal work force, who generally, reach their peak earnings between the ages of 39 to 55.
Furthermore, athletes’ earnings are extremely volatile. Most of the time, athletes’ salaries are not fully guaranteed, and their earning capacity can be adversely affected by poor performance, injuries, on and off field, behavior, and so on.
Many of the factors that make an athlete financially vulnerable cannot be altered but must be taken into account, when making financial decisions.
Athletes will always have a family, friends, and other relationships, and will always have to make financial decisions for themselves. The answer lies in educating athletes to enable them to make sound financial decisions, by cultivating financial literacy as a life skill for athletes of all ages and at all levels. Financially literate athletes will be able to make better financial decisions as well as adopt sound money management practices, which will enable them to plan their desired financial future.
Financial educational programmes for athletes at all levels, especially at the beginning of their careers, are the name of the game, and it is never too early to seek them out and start them!