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The Financial ABCs for Post-Draft Picks

The 2016 NFL draft is quickly approaching and collegiate athletes, who are enthusiastic about finally getting paid to play, will be facing new challenges and demands as they become instant celebrities and instant CEOs. These rookie players will suddenly have to make financial decisions that, let's face it, college has not fully prepared them for, which in turn leaves them vulnerable to fiscal consequences they may not recover from.


What should the new CEO/athlete think about as he embarks on his new professional career? It is as simple as ABC!
  • Accounting
  • Budgeting
  • Cash Flow

When it comes to Accounting, the athlete's financial stability is dependent on a number of factors—such as tax compliance and personal credit. Therefore, he needs to understand the complexity of multiple state filings, discerning a deductible expense—unique to a professional athlete—accurate reporting of appearance and endorsement fees, the difference between the W-2 and 1099 income, and how to choose the right banking relationship.


Given the limited number of paychecks the professional athlete receives throughout the season, and the overall short lifespan of an NFL player, it is essential to Budget ones income.  It is imperative to monitor and review monthly income, track in-season/off-season expenses, and luxury item transactions such as purchase and sale of homes and other real property, jewelry, and vehicles.   

Understanding the financial impact of the new contract, and how it will affect long-term finances to provide adequate liquidity and Cash Flow, empowers the athlete to support a lifestyle beyond his playing days.   Forecasting cash flow and looking at expenses enables him the successful exploration of investment, new business ventures and the ability to form charitable foundations and— many players' favorite—establish youth football camps back in their hometown community.


As with any successful CEO, the professional athlete needs to build a winning game plan off the field.  It takes preparation, expansive thinking, and ultimately, a solid strategy to ensure that one builds a brand to grow his finances.

Hiring a team of experts to help achieve this level of sustainable success is the first step among many.

For more information, contact Steven Goldstein, Partner, Sports & Entertainment Practice Leader of Grassi & Co., at sgoldstein@grassicpas.com
 
 
 
 

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