From Riches to Rags

NAVIGATING FINANCIAL PITFALLS IN PROFESSIONAL FOOTBALL

The life of a professional footballer is often viewed through a lens of glamour, fame, and immense wealth. High-profile transfers, endorsement deals, and lucrative contracts paint a picture of prosperity. Yet, the reality is starkly different for many players once their careers on the pitch come to an end. Patrick Foley of Sonar Financial Services sheds light on the financial pitfalls faced by professional footballers and underlines the importance of engaging with a financial planner to secure their financial future. It also highlights areas that players should be focusing on when choosing the right planner to work with.

THE SHORT-LIVED CAREER AND EARNINGS DISPARITY

One of the most crucial aspects to understand about professional football is the brevity of a player’s career. While the top tier of footballers may enjoy relatively longer careers, the average career span is a mere 8 to 10 years. During this time, they accumulate the lion’s share of their lifetime earnings. The temptation to overspend and engage in lifestyle inflation can be overpowering when the income is flowing in, but what happens when the final whistle blows?

Financial Mismanagement: A Real Threat. The statistics are alarming. A significant number of former players, who once lived in the lap of luxury, find themselves in financial ruin soon after retirement. Some of the notable recent examples which have been reported in the news include Jermaine Pennant, Wes Brown and Craig Bellamy. The reasons for this financial mismanagement are varied, but they all too often culminate in the same result: bankruptcy.

Lifestyle Inflation: Footballers often experience rapid increases in income as they climb the ranks or sign more substantial contracts. This can lead to an inflated lifestyle, where expenses grow to match, or even exceed, their earnings. When the income stream dries up postretirement, the burden of maintaining this lifestyle becomes unsustainable.

Investment Pitfalls: Many footballers, enticed by financial opportunities outside of the sport, invest their earnings in ventures that may not be well-researched or sustainable. These investments can quickly turn sour, resulting in significant financial losses. Often, these types of high-risk, high-reward investments are not covered by the Financial Ombudsman Service, leaving the individual without any recourse for compensation.

Legal Troubles and Debt: Some players face legal issues, including lawsuits or divorces, that lead to substantial financial burdens. These legal troubles can erode a player’s wealth at an alarming rate.

Lack of Financial Education: Historically, professional footballers have not received adequate financial education, leaving them ill-equipped to make informed decisions about their wealth.

THE SOLUTION: ENGAGING WITH A FINANCIAL PLANNER

While the pitfalls are evident, there is a beacon of hope for current and aspiring footballers – the financial planner. These qualified and regulated professionals specialise in managing wealth, investments, and financial planning. It is important when selecting a planner that players do their due diligence.

TOP TIPS FOR PLAYERS WHEN CHOOSING A FINANCIAL PLANNER:

ENSURE THE PLANNER IS REGULATED

The football world is littered with individuals with investment ideas for players but careful who the source is! It is vital that players engage with a planner who is regulated by the Financial Conduct Authority, and this can be verified via the FCA Register (register.fca.org.uk)

SPECIALISATION IN SPORTS AND ENTERTAINMENT

Seek a professional planner who specialises in working with athletes and entertainers. They are more likely to understand the unique financial challenges and opportunities that come with a career in professional sports.

EXPERIENCE AND TRACK RECORD

Review the planner’s professional history and track record. Consider how long they have been in the industry and the types of clients they have worked with, especially if they have experience working with footballers. Google the adviser and check out their LinkedIn profile but also seek testimonials or permission to speak to other athletes they have worked with.

INDEPENDENCE

Independent financial planners have access to the whole of the market when it comes to investments. Seek out an adviser that isn’t tied to a particular firm as this would mean they are limited to that firm’s product selection. Ask them whether they are independent or tied.

COMPATIBILITY AND TRUST

Building trust and a strong working relationship with your planner is crucial. Choose someone you feel comfortable with and who listens to your financial aspirations and concerns and can also engage with other individuals in your team such as your agent, accountant or lawyer. A good planner will help you avoid costly mistakes and challenge you in a healthy way when it comes to investment decisions.

WATCH OUT FOR RED FLAGS

Be cautious of financial planners who promise unrealistic returns, pressure you into quick decisions, or do not fully disclose their services and fees. Selecting the right financial planner is a critical step in managing wealth and avoiding financial pitfalls. Careful consideration of these factors can help footballers make an informed decision and ensure that their financial planner is a trusted partner in their journey towards long-term financial security.

The short-lived career of a footballer can be transformed into a stepping stone toward lifelong prosperity with the right financial guidance. So, for all the aspiring and current footballers out there, remember that while you may have risen from rags to riches, it’s equally essential to protect your wealth and avoid the descent from riches to rags.