RISK AND REWARD

Posted by Andrew Mortimer

Citius – Altius – Fortius

The 33rd Olympiad in Paris has just concluded, bringing together the world’s best athletes to compete for glory and records. The Olympics captivate us with events that are often unfamiliar yet fascinating. The games take me back to when, as an 18-year-old, I watched the Sydney Olympics and moments, including Cathy Freeman’s 400m victory and the men’s 100m freestyle team triumph, smashing the Yanks like guitars. These moments are filled with tears of joy and relief from athletes and their families, the culmination of years of hard work without guaranteed success and no direct income to sustain their pursuit of greatness.

After the magical two weeks of the Olympics, our attention shifts back to sports like the NRL and AFL. Unlike Olympic athletes, these players are often well-paid, though the perception of them being overpaid isn’t accurate for most. While top players earn substantial incomes, the average player faces a career that is both short and financially uncertain.

RUGBY LEAGUE PLAYERS – THE FACTS

In recent years, Blue Wealth has presented our Wealth Through Property session to several NRL squads, highlighting the potential to leverage their income for wealth creation and their elevated risks of not having financial strategies.

Here are some key NRL Statistics since the inception of the game in 1908

9,753 players have played first grade.
1,001 (10%) played only one game.
3,914 (40%) played 10 or fewer games.
385 (4%) played 200 games or more (8-10 seasons).
The average NRL career lasts 44 games (2-3 seasons).

A professional rugby league career is brief, averaging only three seasons. Let’s examine the income from such a career:

Average income for an NRL player (Top 30 squad): $313,000 per year.
Total earnings for three seasons: $939,000.

This income is significant for a 25-year-old (the average age of an NRL player), providing an opportunity to save and invest in property. However, their income often drops once their career ends, lagging behind peers who are progressing in other careers. An NRL player’s lifetime earnings peak early, highlighting the need for long-term financial planning.

A DANGEROUS COMBINATION

Young NRL players face a mix of high-risk factors threatening their financial future, including high income, limited financial literacy, and youth. When their earnings drop, this often leads to an unsustainable lifestyle. Many players purchase expensive homes, leading to large mortgage repayments they cannot sustain on their post-career income.

High income brings high risk, a pattern seen in other well-paid professions like medicine and law. Without an investment strategy, many struggle to maintain their expensive lifestyle in retirement.

THE SOLUTION – BUILD YOUR OWN TEAM

NRL Players are part of a team and know their role on the field. Achieving our wealth creation goals also requires a team that knows their roles and works seamlessly. So, who should be on this team?

Accountant: Someone who can help you with a budget to control spending. Listen to our podcast for practical tips.
Mortgage Broker: A great broker will discuss more than just loans, stress testing scenarios, and offering solutions. Mortgage brokers hold the key to your financial opportunity.
Financial Planner: Don’t go it alone. Find experienced advisors who can build a plan suited to your situation, whether it’s investing in shares, property, or niche markets like wine.
Blue Wealth Property: Blue Wealth has helped many athletes and professionals use their lucrative but short-lived earning capacity to invest in long-term assets that maximise their wealth creation.

Budget, Save, Invest

Everyone should budget, save, and invest.

While NRL players have the chance to supercharge their financial growth early, non-athletes like most of us, build our portfolios over time. By building the right team, having a budget in place, a savings goal and an investment plan, we can then focus on our career aspirations be they on the footy field or off.

Posted by Andrew Mortimer, on 13th Aug 2024