This is the last blog in our focus on the leisure industry and this week we are looking at the cost of ‘turning pro’. The giant leap from the stressful lifestyle of an amateur athlete to that of paid professional.
You’re already starting to think, why wouldn’t you turn professional, think of all that money! But it’s not necessarily the case. Think of Evander Holyfield and Mike Tyson who both earned vast amount of money but ended up declaring bankruptcy. And it’s not just boxing; former England goalkeeper Peter Shilton (once the highest-earning footballer in the country) also suffered the same fate. Golfer John Daly, snooker’s Alex Higgins and basketballs Dennis Rodman have also all declared bankruptcy.
Most are due to failed investments, lavish spending or the pitfalls of success; usually gambling and drug addiction. More often than not it’s a complete lack of understanding of money and what their tax obligations are.
The high profile tax case against some footballers like Argentinian and Barcelona player Lionel Messi, who was charged for tax avoidance just show how prevalent the issue is. It sparked us to ask a number of questions, mostly based around who was to blame for sports stars going bankrupt?
When David Beckham joined French club PSG he could see a financial storm brewing due to the complex local tax law, and agreed with the club that he would donate his £170,000 weekly wage to a Parisian children’s charity, avoiding the higher rate tax of 75%. A decision that became an instant hit with the fans!
We don’t see any reason why professional athletes that are earning vast sums of money should be allowed to go bankrupt or fall foul of the tax inspector. We suggest they seek expert advice in the form of a professional accountant. Hopefully then, these issues will be avoidable. As we’ve always said; good accounting is good business. We hope you agree.