The landscape of amateur athletics underwent a significant shift with the implementation of the Name, Image, and Likeness (NIL) policy, which has allowed college athletes to monetize their personal brands for the first time. Very quickly over the past few years, young athletes have been able to create substantial followings resulting in fame and significant wealth; however, the transition to professional sports requires planning and strategy to ensure they avoid financial missteps.
Similar to a business owner selling their company or an executive retiring after decades of commitment to their career, financial dynamics change substantially for athletes moving from college to professional sports. While NIL deals provide a foundation in financial literacy and brand management, the scale and structure of professional contracts are on another level. Here are some key considerations for athletes during this transition:
- Long-Term Financial Planning: Professional athletes often face the challenge of managing sizable sums of money at a young age. Comprehensive financial planning becomes crucial. This includes investment strategies, retirement planning, and understanding the implications of wealth, such as taxes and wealth preservation.
- Brand Development: Maintaining and growing a personal brand beyond college sports is critical. This can involve strategic partnerships, continuous engagement with fans, and professional public relations management. Athletes should aim to leverage their reputation to secure endorsements and other business opportunities that align with their long-term career goals.
- Legal and Financial Advisory: Professional athletes should assemble a trusted team of advisors, including financial planners, accountants, and legal experts. These professionals can help navigate contracts, secure favorable terms in deals, and protect against common financial pitfalls faced by athletes.
- Adjusting to New Financial Realities: Athletes must adapt to the increased attention and expectations that come with higher earnings. Budgeting becomes more complex, and lifestyle inflation can pose a significant risk if not managed properly. Developing disciplined spending habits early on, even when financial resources seem abundant, is key.
- Continued Education: Ongoing education on financial matters and personal development should not be overlooked. Many professional sports organizations offer resources and training for new athletes, which can be instrumental in easing the transition.
This year, we’ve seen a major increase in digital and social media ventures. Athletes are not only endorsing products but are also becoming content creators and influencers in their own right. Platforms like TikTok and Instagram are common, but there’s a growing use of newer platforms that offer more direct monetization routes, such as exclusive content streaming and fan interaction apps. There’s also an emerging trend of athletes using NIL deals to promote social causes or businesses they’re passionate about, adding a layer of personal fulfillment to their endeavors.
Group licensing deals are another aspect that has become more common, especially in team sports, where athletes collaborate to sell merchandise or video game rights, providing a more stable income source compared to individual endorsements. These group initiatives often offer a robust entry point for younger athletes into the complexities of financial dealings.
As NIL policies continue to evolve and expand, they offer a solid start for college athletes to understand and engage with the financial aspects of their careers. Transitioning to professional sports amplifies these complexities but also opens up new avenues for income and personal brand development. With the right guidance and strategies, athletes can navigate this transition successfully, ensuring financial stability and capitalizing on the opportunities that come with their professional careers.
Wealthspire is proud to represent many amateur and professional athletes throughout their financial lives – contact us to learn how we can help you.
