Blog: A Dose of Financial Reality

  • By winpoint admin

    During my travels and meetings with Winpoint client, Mark Teixeira, we often find ourselves getting into long conversations about finances and financial situations. You’re probably saying to yourself, well yes, our team should be having financial conversations with Mark since we serve as his financial advisor. But the conversations I’m referencing are not about Mark’s personal finances. These conversations are much broader. We always come back to one conclusion on the topic of money management: many people, athletes included, simply do not understand the basics of spending, investing and what your money is worth.

    invest-word-jumble

    Mark is a unique client in that he has a strong interest in his financial investments, and is already thinking about life after baseball. I bring this up for a reason. At Winpoint, it is our responsibility to take the leadership role in an athlete’s financial landscape. Simply put, we help the athlete focus on his job on the field. If we do our job well, we alleviate the stress that comes with finances and living responsibilities so he can perform. But with Mark, his focus on finances is just a part of who he is, and he wants to help other athletes understand the basics of financial responsibility.

    One of our recent conversations led to the creation of a financial cheat sheet, or play book, detailing common player salaries and what an affordable lifestyle looks like at various salary levels. And most importantly, how much money one must have in the bank to maintain a certain lifestyle after an athlete retires from baseball.

    As you’ll read, the assumption made in this model is that an athlete must have at least $1M in the bank collecting 5% to live a middle class life forever ($50K / year) with no additional income

    Drafted Player with a $2M signing bonus
    Assuming $1M is in the bank

    • After-tax Living Cash: $50K
    • House: Townhouse
    • Car: Toyota Camry
    • Flying: Commercial Coach
    • Vacation: Marriott at Disney World
    • Kids School: Public

    Drafted Player with a $4M signing bonus
    Assuming $2M is in the bank

    • After-tax Living Cash: $100K
    • House: 4 Bedroom House with a yard
    • Car: Cadillac ATS
    • Flying: Commercial Coach
    • Vacation: Hilton Head
    • Kids School: Public School & College

    MLB Player with $10M career earnings
    Assuming $5M is in the bank

    • After-tax Living Cash: $250K
    • House: 5 Bedroom House with a Pool
    • Car: BMW
    • Flying: Commercial First Class
    • Vacation: Four Seasons in Hawaii
    • Kids School: Private + College

    MLB Player with $20M career earnings
    Assuming $10M is in the bank

    • After-tax Living Cash: $500K
    • House: Gated Golf Course Community
    • Car: Mercedes
    • Flying: Commercial First Class
    • Vacation: Rented House in the Caribbean
    • Kids School: Private + College

    MLB Player with $40M career earnings
    Assuming $20M is in the bank

    • After-tax Living Cash: $1M
    • House: Primary + Vacation Home
    • Car: Bentley
    • Flying: Commercial First Class
    • Vacation: Home on beach
    • Kids School: Private + College + Grad School

    MLB Player with $80M career earnings
    Assuming $40M is in the bank

    • After-tax Living Cash: $2M
    • House: Primary + Vacation Home
    • Car: Rolls Royce
    • Flying: Private Jet
    • Vacation: Home + Boat
    • Kids School: Private + College for your kids and others in the family

    We hear countless stories of athletes going bankrupt and we have seen through our clients that this can be avoided. The point that Mark and I want to hit home is that professional athletes of all levels have the opportunity to live comfortably well past their playing days.

    So while Winpoint helps athletes manage assets during their career, our sight is always set on the future. The collective goal is to put our athletes in the best possible situation for transition to life after baseball through strategic financial planning.

    – Nick

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