We often hear stories of professional athletes struggling financially regardless of the million dollar earnings in their career. This dialogue was recently renewed when news broke on NHL player, Jack Johnson. Aaron Portzline, a writer for the Columbus Dispatch, reported the story of Jack, a 27-year-old defenseman for the Columbus Blue Jackets, who filed for bankruptcy after earning more than $18M during his nine-year professional career.
While many stories in the news regarding players and their financial distress have focused on the NBA and NFL, this current situation illustrates that all professional athletes share common struggles when it comes to protecting what they have earned.
While reading this most recent story, it is important to understand the deeper issues that impact all professional athletes and ultimately, the circumstances that cause a situation like this to happen. This is not a story about Jack Johnson, this is a story that happens to numerous athletes across the nation regardless of sport, location or background.
There are three main reasons why this dialogue of financial distress continues: lack of education, advice and protection. This three-part series will shed some light on these three commonalities among professional athletes facing financial challenges.
Education: Lack of Ownership
When it comes to professional athletes, many are unsure where to begin in terms of understanding their financial or legal picture. Growing up with a hyper-focus on training and preparation for a career in professional sports, many athletes are not prepared for the responsibility that comes with maintaining a multi-million dollar entity.
This is not to say an athlete needs to immerse him/herself in an academic curriculum focused on financial management, however, it is critical for an athlete to be aware of how his/her financial situation is being managed. It's simply not enough to assume the person managing your finances has it under control. The athlete needs to develop a relationship with a team of advisors who will educate and provide detailed insights on the fundamentals of financial management: budgeting, cash flow, savings, etc. A great starting point for all athletes is to request bank or investment statements in order to understand where their money is located and how it is being spent.
The bottom line is that professional athletes must take ownership of their financial management and reporting process, or it can lead to financial disaster.