By: Todd Burach, Ruling Sports Contributor (Twitter: @ToddBurach)
For college football players with dreams of a pro career, now is the time to interview and select representation in preparation for the next level. Agent services leading up to the draft include pre-draft training, draft promotion, and contract negotiation, all vital towards securing a coveted potential first contract. The decision on which agency to go with will be a game-changer for most, and having spent a lifetime preparing for this opportunity, prospective draftees ought to work with the best agents available.
In addition to selecting an agent when forming a support team, professional athletes will have to think about the many other business aspects that come with earning a living from pro sports. For one, players will need to establish a strategy for managing their new personal wealth. Immediate decisions about budgeting, saving, and investing will be made, all with fundamental implications towards securing long-term financial stability. Additionally, such a unique and fragmented income stream requires diligent, expert accounting work. Players pay taxes to essentially every city and state in which they play, road games included. “NFL players typically file in 10 to 12 jurisdictions. The NBA is somewhere between 16 and 20.”
Independent of whom an athlete chooses to represent them in these professional matters, and why they may decide to go in one direction or another, one thing is undoubtedly certain: selecting independent professionals to manage each aspect of business matters, rather than one to control multiple functions, is prudent. Professional athletes should avoid entrusting too much responsibility to any one advisor.
Here are two reasons why this tactic is important and can go a long way towards protecting a player’s well-being.
Work with Specialists
The unique scenarios that encompass the business needs of professional athletes require expert attention. Athletes have complicated tax responsibilities, with multi-state filings and profits coming from different avenues including, but not limited to, endorsements and appearances. Additionally, athletes have a distinctive career income stream, with the vast majority of wealth earned in an early, condensed period. Spending and saving decisions will have to account for this salary plateau. To complicate matters further, athletes are high profile individuals. Thus, mistakes are magnified publicly and can influence marketability, a vital aspect of post-playing income potential. Successfully navigating these waters demands expert attention. You would not be a professional athlete and a lawyer at the same time. The fact of the matter is to be the best at a profession requires 100% of an individual’s time and effort. For that reason, athletes should hire focused, subject matter experts for each position on their professional advisor team.
Checks & Balances
One reason many athletes have run into financial problems in the past has been entrusting too much power to any one person. By employing a team of independent advisors who oversee and review the work of other team members, an athlete can reduce the likelihood of an advisor abusing delegated powers. This system of checks and balances is even at the heart of the United States Constitution. “It is a system that allows each branch of a government to amend or veto acts of another branch so as to prevent any one branch from exerting too much power.” For instance, the Supreme Court has the opportunity to declare a law unconstitutional through a judicial review process. For an athlete, an independent accountant, in addition to filing income taxes, will provide services such as investment due diligence, cash transaction audits, and verification of portfolio valuation. Having a financial advisor perform these activities would be akin to a student grading his or her own test. The expert focus of each advisor coupled with this overlap of responsibilities provides a safety net for players. And, as Marc Isenberg notes in his book“Money Players”, ‘competent professionals who act in their clients’ best interest should not have a problem when questioned by fellow team members.’
While pro athletes are teammates for their respective ball clubs, they are the de facto general managers for their individual professional advisor teams. There is no salary cap and there are no limits on roster spots. There is only an objective: formulate a team to protect, nurture, and advance the athlete’s well-being. When drafting this team, athletes should demand to work with the best at each position, while establishing accountability and control through checks and balances.
Todd Burach works in wealth management in New York City. He specializes in asset allocation and investment strategy for upper high net worth clients, including corporate executives, professional athletes and entrepreneurs. He is a 2007 graduate of Syracuse University where he was a member of Coach Boeheim’s back-to-back Big East championship teams. In 2012, Todd completed his MBA at New York University with concentrations in Finance and Economics.
 “Money Players: A Guide to Success in Sports, Business & Life for Current and Future Pro Athletes.” Marc Isenberg. Page 69.