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You’ve probably heard a number of children respond to the question—what do you want to be when you grow up? And the answers vary, if only slightly. Many children want to be firefighters or doctors—and still more want to be...
You’ve probably heard a number of children respond to the question—what do you want to be when you grow up? And the answers vary, if only slightly. Many children want to be firefighters or doctors—and still more want to be professional athletes. Whether they’re gunning to drive a racecar or dribble down the court, from an early age, kids want to be professional athletes.
As children, we’re probably more into it because of the cool factor—the very idea that a person could play a sport for a career is astounding (and still is). As adults, the paychecks associated with such a career may make the idea even more appealing. Professional athletes make a ton of money, though they don’t always know what to do with it.
So what athletes are the highest paid in the world?
Floyd Mayweather is the top earner, and he’s been making significant money for over a decade. His fights are among the most popular in history, and he earns as much as $32 million for only one fight. He’s widely considered the most popular boxer in the world and he promotes fights, further driving up his paycheck.
Cristiano Ronaldo is a soccer player and he ranks second overall for athletic earners. He’s pulling in $80 million and is often paid for endorsement deals with major companies—think Samsung and Toyota. Combine that with his soccer salary and he’s making almost as many dollars as he has social media fans (83 million on Facebook).
LeBron James unsurprisingly comes in at number three, earning $72.3 million. His endorsement deals include Nike and McDonalds and his shoe and jerseys sales reflect this popularity. He’s also making a ton of money through Beats by Dre, which he outfitted the entire 2008 US Olympic basketball team in.
Next is Lionel Messi, a soccer player who earns $64.7 million. He’s the face of a franchise, and his paycheck certainly shows it. He’s on his seventh contract in 11 years and is the beneficiary of a lot of sponsor dollars. He’s doing his fair share of endorsements too, which include companies like Adidas and Gillette.
And finally, Kobe Bryant comes in fifth with a casual $61.5 million. He, like Jason Hartman, is an investor, though his product of choice is sports drink BodyArmour. He’s got a super high salary and is working with companies like Nike and Turkish Air. Overall, his jersey is the third best selling in the NBA and he’s raking in the cash.
Of course, these represent extremes. Many and most athletes fall somewhere in the middle.
And what is it they’re doing with their money?
As you might have guessed, the money of the rich and famous is passed through a lot of hands. They’ve got someone to invest it, someone responsible for paying the bills, an accountant monitoring everything, and perhaps a secondary accountant for just in case. Oh, and there’s at least one lawyer to make sure everything is on the level. The money of famous athletes is juggled between a lot of people and places, to say the least. That is, if they’re smart, they are enlisting the help of financial professionals. But that isn’t always the case.
For many athletes, particularly the young and reckless, this sudden wealth can be a bit of a burden. There’s so much money to be had, which is a lot of pressure for someone young and newly wealthy. Some money goes to bad investments or perhaps worse, casual and excessive spending.
It is a shame—those with access to a lot of easy money squander it so quickly, leaving themselves penniless for later years. Estimates indicate that as many as 35% of professional athletes end up penniless as the result of poor money management. And, while some of the spending is undoubtedly related to ego, a lot of the poor decisions can be linked to a simple lack of financial education.
Part of the problem is in the way professional athletes are asked to view the world. They’re required to focus on the immediate future, the task in front of them at this moment. As they sacrifice their bodies on the playing field, they sacrifice their bank accounts in much the same way.
While some organizations have put forth efforts to increase the financial literacy of their players, the struggle is ongoing. Classes and seminars are certainly a step in the right direction, though the solution isn’t a quick one.
If you’re curious about what it is these athletes are spending all of their money on, we’ve got a list. First, vehicles. Fancy cars that cost upwards of $80,000 portray the image athletes hope to relay to their fans. They’re also big, luxurious cars meant to accommodate the tall and muscly.
They’re also buying stereo equipment for both their homes and cars, satellite dishes, and—you guessed it—clothes. Professional sports have also become more fashionable, and all of those fancy clothes come at a high cost. From sweat suits to ties, athletes make up a large portion of the clientele at high-end clothing stores.
They’re also, if they’re recently out of college, looking to buy at least one home, and then they’ve got to furnish it.
So it is easy to see where a financial professional might come in handy, if only to act as a keeper and distributor of money. Because many athletes come from lower or middle class backgrounds, this type of assistance can be so vital. We are all pretty good about living within our means—some of our means are just more significant than others.
The average salary for MLB, NFL, and NBA players is $507,600, but that takes into account extreme highs and mediocre salaries. About 30% will go to income tax and the rest will go to a variety of other expenses—hopefully, they are the right ones.
How would you spend all of that professional athlete money? We’d recommend some smart investments in something like real estate!
photo credit: Artur Potosi via photopin cc
