By Steven Olenick
Although salaries of all professional athletes have steadily risen during the years, the ever-growing statistics regarding athletes filing for bankruptcy has risen. Risky investments, overallocation, and a sudden dip in the financial market, coupled with lack of appropriate due diligence creates a downward spiral for uneducated, neglected or exploited professional athletes. In a lot of ways, this problem is created by lack of foresight into understanding and monitoring their investments and the desire to seek professional guidance to assess risk. The problem is escalated even further when power of attorney is granted to a non-professional to manage the athlete’s fortune or enterprise. Such non-professionals often act in their own best interest, causing the athlete to lose money and make unprotected or risky investments.
Estate planning is critical in the protection of the athlete’s net worth. Pre-nuptial agreements can save the athlete’s fortune and avoid a litigious separation. Drafting of a basic will can preserve the estate and divide assets accordingly, instead of a legal battle amongst the family. Overlooking such basic protection measures could cost an athlete more than just the minuscule amount of money it would cost to protect them appropriately. For instance, Kansas City Chief’s linebacker Derrick Thomas reportedly died at the age 33 without a will and his entire estate was left to the court to decide among the five mothers of his seven children.
Creating a team around each individual athlete with trusted advisors will minimize risk and open discussion to tackle any problem presented during or after their playing career is over. All professional athletes regardless of what sport they play should have a team of trusted lawyers, business manager, an accountant and financial business advisor to assist their agent or advisor in career guidance. By having this powerful team of trusted professionals in place, an athlete can focus their attention on playing rather than worry about whether they are being exploited or whether they will have enough money to live a comfortable life up to their standards when their playing career is over.
As has been reported, the NCAA appears to be taking a very proactive role in trying to remedy unscrupulous agent activity. A quick solution will ultimately take time, but the problem that needs to be addressed is how the various coaches or other “guiding forces” are trying to take a more “proactive” approach to student-athletes’ well being and decision making. When a student-athlete becomes a professional, everyone and anyone attempts to influence the athlete and “guiding forces” try to become a surrogate fixture in the athlete’s decision making. In addition, when an athlete just relies on his agent, often times his contract is the only matter that gets resolved and his life remains in shambles. Moreover, when an athlete relies on his “guiding forces,” decision making is inherently flawed because the athlete’s best interest often times takes a back seat to someone else’s personal gain. Today, the present day athlete is a business – a multi-million dollar business if run appropriately with the right surrounding teammates. Every athlete is his or her own brand and they must appropriately set themselves up for the future with the right surrounding team or often face disastrous consequences. The reported statistics surrounding divorce and bankruptcy are staggering for professional athletes and it seems that personal management is a must. When an athlete solely relies on his agent or some non-professional, you often see the athlete’s personal net worth crumble because they have not been effectively managed throughout their career. When athletes dip into the professional ranks, and just rely on one person, it can cause a catastrophic effect on the individual athlete and tumultuous downward spiral. As the NCAA attempts to clear up its mess with agent impropriety, athletes should be taught by trusted professionals to help assist them and their career, so they will not become another statistic like so many before.
Steven Olenick is a lawyer at Davis & Gilbert LLP in New York City. He counsels current and retired professional athletes, coaches, and sports agencies in all aspects of their career.
