It happens every year. The big money that powers professional football comes out with its game face on, as TV commercials and nationwide promotions that swirl throughout Super Bowl week. In the end, only one team wins Vince Lombardi Trophy. But the Super Bowl casts hundreds if not thousands of financial winners from the owners suite on down.
The NFL postseason is especially lucrative for players. According to rules set by the NFL Players Association’s collective bargaining agreement and the league, bonuses are awarded for each playoff berth and win, with the winnings increasing each week an NFL team and its players continue to win. Members of the Super Bowl LV champion Tampa Bay Buccaneers will receive $130,000 for their Super Bowl win alone, while the runner-up Kansas City Chiefs players will get half that amount.
But what do players do with their bonus checks? It’s safe to say that the smart ones seek advice before spending.
One professional who works with NFL players to keep them on-track financially is Justin McCarthy, a New York City-based Certified Financial Planner. McCarthy says he and his team at Mariner Wealth Advisors has well over a hundred clients who play the the NFL, and he says that the process always starts with dialog.
“I work with about 115 individuals, and that spans almost every team,” McCarthy says of his client list. He says that the large sums that come from playoff bonuses are indeed a topic of conversation. “The biggest thing we end up talking about is the lump sums that materialize, what to do with it, and how it fits into the overall plan.”
Starting with a game plan
For perennial Super Bowl contenders like Tom Brady, as well newer superstars like Patrick Mahomes, the bonus money that comes with multiple playoff appearances creates a lot of opportunity to save and invest. But for these players—and the less famous ones who will see less money over their careers—how that check lands into their bank account may be a big reckoning.
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First thing, McCarthy says, is that the amount a Super Bowl winner receives lessened by Uncle Sam. With most NFL players comfortably within the top tax brackets, any winnings from postseason play will be cut nearly in half. As such, Bucs players should plan for their bonus, after taxes, to be much closer to $70,000 of take-home pay.
“The conversation with someone in their early twenties is different than experienced players, and may start with how to avoid pitfalls of poor decision making,” McCarthy said. “Yet, some guys get so paralyzed that they don’t do anything. The important thing is showing an individual, this is what you have, and this is what it can do for you.”
Football fans are often led to believe that those with high incomes filter their first paychecks into expensive sports cars or the big house with a lavish swimming pool. This beckons the question, “Is it really like that?”
“Sometimes it is like that,” McCarthy says. “But I don’t think it’s unique to athletes, per se.” McCarthy says that individuals with high incomes, whether in sports and entertainment or even more staid and traditional occupations, tend to think big. He points to the fact that once a college player makes it into the pros, they can accumulate a very high income and wealth much faster than the founder of a fledgling internet startup.
“With NFL athletes, you can have this very zero-to-sixty situation and there can be a lot of stress involved. But, we do the same things for athletes that we do with executives. There’s always that conversation about opportunities and risk.”
Tackling the long game
Most if not all of McCarthy’s clients have, as a result of their NFL careers, more money than they’ve ever had. He adds that it is critical for such quick earners to separate funds for daily living so that spending doesn’t get out of hand. But setting aside money is just one consideration.
“Whether it’s the bonuses or the taxes related to those bonuses, or playoff checks that increase with each playoff win, or even performance-based checks—it’s about showing what it means for the financial picture. It’s both short-term, meaning six to 12 months, as well as longer term, five to ten years—and beyond.”
McCarthy also says that one part of his job is to point out the elephant in the room.
“An athlete’s top-earning years are front-loaded. Surgeons or bankers will earn more money over longer years, but with athletes that high income can abruptly end.” He thinks having very direct talk with athletes always highlights the great opportunity and challenges they face. McCarthy says it’s asa important to talk about basics.
“We talk about how an in-flow of cash translates into something beyond just getting and spending the big checks. We talk about spending decisions or goals, they might have, college planning and what to do after football. We look at the cash flow, how it maps out, good bad or indifferent.”
I asked McCarthy specifically if being a financial advisor to pro football players necessitates a coaching style of approach. He said yes, but with a caveat.
“As an advisor, I can do the best possible things imaginable on tax, investments and planning. But (it doesn’t work) if I’m not connected and communicating real-time, with them feeling like they’re connected and comfortable.” As such, talking up high-level concepts or even stocks and real estate investments isn’t necessarily what professional athletes buy into most. It’s the relationship that matters most. “Unless you have that coach and teacher relatability, a lot of the nuts and bolts can be fruitless.”
McCarthy emphasizes too that planning from a player’s first NFL season onward is important. He says that when an adviser can work with an athlete early in their career the results are better.
“Whether it’s GameStop, bitcoin or whatever it is—how do I keep the integrity of the long-term plan, while allowing that individual to have input? I can do that. It’s not a one shoe fits all approach,” McCarthy says. “With most clients I can keep that plan 99% intact while letting the client incorporate some of those interests and desires into the over all plan.”