The Importance of Financial Management and Post-Career Planning in Professional Sport

The Importance of Financial Management and Post-Career Planning in Professional Sport

The Importance of Financial Management and Post-Career Planning in Professional Sport
 The Importance of Financial Management & Post-Career Planning in Professional Sport
 

 
I recently read a statistic posted by one of my LinkedIn connections, stating how 1 in 3 footballers go bankrupt, despite players benefitting from a 16% pay increase per annum. I was absolutely perplexed by this comment, and it made me think how players and their representatives are allowing themselves to get into these financial troubles. This article will focus more upon football, but this topic also relates to all professional sports. I am by no means an expert on wealth management, but I have recently spent some time with two personnel friends, who are working within this field. It is my ambition to one day run my own Sport Management company, so I have spent some time learning the basics of wealth management to improve my own knowledge.
To any football fan or neutral sports fan, footballers in particular are tremendously overpaid. How can someone possible warrant £250,000 a week? Well, it is something we are just going to have to get used to. With the rapid increase in broadcasting rights and the added commercial activities, player wages and transfer fees are going to continue to rise until any mechanisms are integrated otherwise. So, how on earth are 33% of professional footballers getting themselves into such financial difficulties? The obvious answer is lifestyle. Players get accustomed with a luxury lifestyle and continue to live the life of riley even though the money isn’t at the level it once was. This alarming statistic places even more importance on the role of advisors, intermediaries and representatives to bring this statistic down.

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Whilst at University, I focused my undergraduate dissertation on the role of football agents, in which a large emphasis was placed on the typology of services these personnel offer. One specific piece of data really caught my eye, so I decided to pay a lot of attention to this throughout the thesis. The table I came across whilst researching around the topic has been included below.
The statistics that really stood out are the post career planning and financial planning figures. As previously mentioned, the severe increase in player salaries requires these two topics to be planned and managed efficiently. In the modern game, the figures that have been presented in the table need to increase significantly, in light of the startling statistic of 1 in 3 footballers becoming bankrupt. There is no denying that the involvement of financial advisers and wealth managers within professional sport has enlarged, but the importance of these individuals cannot be overlooked.

It is my opinion that it is of paramount importance for management companies and representatives to place a much larger emphasis on post career planning and financial management. The aim for every client should be to have a strategy in place for post-retirement, at the end of the day a professional sportsperson’s career could end at any time. In previous years, intermediaries would have looked after all the individual’s services, but with the additional finances in sport overall, qualified, industry professionals are now becoming more and more necessary. 
 
Due to the radical changes in agent regulations in football, a host of law and wealth management firms are diversifying their business operations, allowing them to represent sports professionals. It is my personal opinion that this isn’t particularly a bad move. It is certainly a positive move regarding financial aid, the only issue is that these personnel perhaps do not have the experience in contract negotiations and endorsement opportunities.
As someone who is passionate about sports management and the importance of client management, I feel every sport management company should have an individual professionally qualified to oversee financial planning, or develop a partnership with a reputable firm to outsource the service. Now, I am sure the majority of management companies do this, but I feel more time should be placed on the planning of these processes. A sports professional should be able to retire with financial stability, and have a strategy in place to lead them into the next chapter of their life. 
 
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We are seeing far too many cases of stress related illnesses and financial struggles, something which can be easily maintained with the right due care and attention. Having financial management and post-career planning below 50% is not acceptable, and I certainly expect these figures to increase significantly in the future.
The Author: Luke Whitworth

                                               Luke Whitworth
About:
A hard-working and ambitious individual, who has developed a broad understanding of the sports industry and High Performance through the achievement of a Masters of Science degree (MScR) in Applied Management & Strategy and a First Class (Hons) degree in Sport Marketing.  Currently focusing on developing the Leaders Performance Institute product as we look to draw together performance practitioners from all corners of the world.

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