John Arne Riise was a joy to watch during his time at Anfield. With a bullet of a shot, the left back endeared himself to the Liverpool faithful with dazzling performances and earned himself a Champions League medal in 2005. For all the success that the Norwegian has got in his playing career from 1996 to 2017, few know that he filed for bankruptcy when he was just 26 years old in 2005. So how can a soccer star earning 50 000 pounds per week get in the hole by 100 000 pounds and get declared bankrupt? Let us examine what sportspersons need to do to avoid this scenario.
It is a fact that highly paid sportspersons are getting younger and younger and ultimately not ready to manage the financial status that comes with it. Robert Kiyosaki of the Rich Dad, Poor Dad fame says that it comes down to what people think are assets and liabilities. Rob contends that what we have been taught growing up , most of us at least, in terms of what are assets are really liabilities. Assets are those items that bring cash into your pocket and liabilities take it out.So when a sports star spends USD1 million on a private jet when he remains grounded most of the time with playing duties that is no asset. Its actually a liability that costs him cash in terms of hangar fees and pilot salaries.
Denis Rodman who made his name as the rebound king of the NBA during his stint with the Detroit Pistons and Chicago Bulls made over USD28 million over the course of his career but in 2020 was reportedly worth USD500 000. So why the dismal decline. T Harv Eker contends that what we see and hear growing up about money is what we are most likely doomed to repeat when we are adults. In his book the secrets of the Millionaire Mind, he says that when we see Mom spend every single penny of her wages on jewelry and Houte Couture , we are bound to repeat it when we are a super athlete earning millions a year but this time blowing it on women and mansions we barely can make payments on. Eker says what is needed is reconditioning of the mind.
Who is managing your finances? Have you hired an accountant who advertised on the front page of the first newspaper that you bought on Sunday morning?Did he or she come highly recommended? What other athletes is your finance guy managing? Common mistake most athletes make is assume an agent can manage your finances as well.Ask Riise who accused his former agent Einar Bardsen with his money only for the agent to invest it in a crocked fraudulent 3 million pound investment in Norway.I hear you, you can never be sure if this highly recommended money guy is doing a good job either, ask the many a finger burnt by Madoff and Ken Lay. There is something called due diligence. It is much better to get burnt knowing that you did everything you could to make sure you are safe. When you don’t even ask for a Income Statement or a Balance sheet from the company you are investing in, then my dear you are like a race car driver looking to win a million dollar race without a functioning breaking system. You aint finishing that race that’s for damn sure.
Just to clarify, we aint advocating for living off a few pennies like a hobo. Millionaire Fast lane author MJ Dermarco says part of being rich is being rich when you are young but making sure you earn more , so that your income is always above your expenses.