Professional athletes in the United States are some of the highest-paid workers in the country. Their salaries are often multi-million dollar contracts, and they often receive endorsement deals and other forms of compensation that can add up to even more money.
In addition to their high salaries, professional athletes also enjoy several perks and benefits that most other workers do not. For example, they often have access to exclusive training facilities and equipment. In addition, they may be able to travel first-class or stay in luxury accommodations when they are on the road for competitions or games.
An example of a high-paid athlete is Stephen Curry in the NBA, who recently signed a $200 million contract with the Golden State Warriors team. Although these athletes can make a lot of money, most of them are likely to be bankrupt in the future. Athlete-owned businesses are twice expected to fail as typical small businesses, despite the funding. Here are some of the main reasons why athlete-owned companies fail.
One of the main reasons athlete-owned businesses fail is that the athletes themselves often have lavish lifestyles that they are accustomed to. This can make it difficult for them to save money or invest in their business, and they may end up spending more than they can afford.
Some athletes tend to go on hundred thousand shopping sprees—some like throwing luxurious parties for their peers. The lavish lifestyle and high pay can certainly drain the money from some athlete-owned businesses, and some managers from these companies have found that difficult to control.
Lack of Business Experience
Another reason why athlete-owned businesses fail is that the athletes themselves often lack business experience. This can make it difficult for them to understand the ins and outs of running a business, and they may not be able to make sound decisions when it comes to investments or expansion.
Some athlete-owned companies have failed because the athletes did not properly research the market or understand their target audience. Others have made poor decisions about hiring staff or managing finances. Without good business experience, it can be challenging for an athlete to run a business successfully.
Poor Financial Literacy
Another reason why athlete-owned businesses fail is that many of these athletes do not have a good understanding of personal finance or business. This can lead to them making poor decisions when managing their money, and they may also be taken advantage of by financial advisors.
Some of these advisors are likely to ‘ride the lightning’ until it has lost its spark. Essentially, they drain the athlete’s earnings through the business they are running until they retire and leave the athlete with a business deep in debt.
Lack of Focus
Many athletes also fail to focus on their business once they retire from their sport. As a result, they may not have the same drive and motivation to succeed, and they may not be willing to put in the work required to make their business a success.
Some athletes may also find it challenging to transition from being an athlete to business owners. They may not be used to working long hours or dealing with the day-to-day operations of a business.
Blake Griffin, an NBA superstar, paid around $35 million annually, has to pay $3 million of his earnings for child support every year. That’s a decent chunk of his pay, and it’s one of the main reasons so many super athletes can’t sustain their businesses.
Many athletes end up in divorce, and these cases usually drain millions of dollars from athletes. Shockingly enough, some of these athletes get married months after their divorce. Many counselors suggest some athletes who own businesses utilize good divorce attorneys. The best attorneys are capable of stopping a divorce from happening. Moreover, they can help the athlete keep more money in their business.
No Backup Plan
Lastly, most athletes don’t have a backup plan for their business. They may not have any other source of income, and they may not have the skills or experience to fall back on if their business fails.
This can make it very difficult for athletes to recover from a failed business, and many of them end up bankrupt. It’s important for athletes to have a backup plan in place, so they can still support themselves and their families if their business doesn’t work out. This is even more essential for athletes that have retired.
As you can see, there are a number of reasons why athlete-owned businesses fail. However, this does not mean that all athlete-owned businesses are doomed to fail. With proper planning and management, these businesses can be successful.