Being realistic with clients is a vital quality for successful attorneys. This should be routine for attorneys working with any type of client, but many athlete attorneys turn into ego inflators for their athlete clients rather than being the levelheaded voice of reason.
A realistic approach is critical for an athlete attorney when considering the client’s financial situation now and in the future. While some practitioners consider this “estate planning” I consider these conversations “life planning” for my athlete clients. Professional athletes face different dynamics than professionals in other careers. Some attorneys believe they understand the lifestyle and how much money is involved because athletes’ salaries are reported and public knowledge. But most attorneys do not understand the reality of their athlete client’s life and career.
The average professional athletic career is 4 years. That’s it, 4. The average annual salary for a professional athlete in the ‘big 4′ (NFL, NBA, MLB, NHL) is $1.6 million. So, before taxes, the average athlete generates $6.4 million over their career.
That is before taxes, agent fees (calculated by the gross, not the net), relocation expenses, and other deductions from their salaries. Realistically, athletes may take home 40% of their reported salary. That is $2.56 million for their entire playing career. Consider athletes purchase homes for an average of $1.3 million every 22 months, and now you can begin to understand how 60% of professional athletes go broke within 5 years of their career ending. It isn’t just the purchasing of new properties that burn through their finances, alongside will be the relocation costs of bringing their belongings, family, friends, pets, etc. More often than not professional athletes also have many different expensive vehicles that they’ll want moving to their new home or state as well, the use of services like Cars Relo and others for the transportation of vehicles along long distances can also add to the total expenditure of these high-earning athletes.
However, good athlete lawyers, help their clients avoid becoming another statistic. How? By working on a “Life Plan” before the client’s on-field career ends. Working closely with qualified financial advisors, athlete attorneys can develop a Life Plan for athletes easing the financial stress and help them avoid financial trouble later in life. Here are some key things to consider when drafting a Life Plan for your clients:
- The clock is ticking. Part of being a good athlete lawyer is being a scout. Understanding the landscape of your client’s sport will help you figure out what a likely career timeframe is for your client, even if your client believes he/she can play much longer than you do. You should draft the plan based on your estimations for your client. The worst-case scenario is your client out performs your expectations and gives themselves more money to manage. It is much easier to adjust the Life Plan for more money.
- The nest egg. Being an athlete is an expensive profession. Most players will play for multiple teams. This means multiple relocation expenses (apartments, movers, cars, furniture, etc.) and regular expenses most other professions do not typically have (additional trainers, coaches, security, etc.). It is important to understand the actual amount of money your client will likely have when he/she ends the career so you can develop a Life Plan using the actual numbers.
- Location. Location. The cost of living difference between Manhattan and Mobile, Alabama will make a drastic difference for the Life Plan. If your athlete wants to have multiple residences, the locations of each are also vital for preparing a proper plan rather than delegating a set amount for each residence regardless of the location or type of residence.
- From basketball to boardroom. Did your athlete finish college? Which college? What was his/her degree? Does your client have plans for a certain type of career? Is your athlete qualified for a desired career? If not, can they gain the skills to become qualified? Does your client want to open a business? These and many more questions will help you determine how and where to allocate funds to keep them generating income in the future. The average American salary is around $45,000. A drastic difference than the average athlete salary. Does your client have enough notoriety to supplement income with television gigs, autograph shows, or camps/clinics? Understanding the likely future income for your client can help you put a proper Life Plan in place.
- A free-agent family. Around 75% of professional athletes will get divorced during their lifetime. While developing a life plan for athlete clients, it is important to understand the relationship your client has with his/her spouse, kids, child support payments, family obligations, etc.
At the end of the day, an athlete can go to any practitioner to get an estate plan. Not many will actually have understand that an athlete first needs a Life Plan and what considerations should go into developing one. Being an athlete lawyer requires more than just sports knowledge. It requires a deep understanding of the lifestyle and career of your clients. Providing this value will help you change from being a lawyer who works with athletes, to an athlete lawyer.