TOP MONEY LESSONS FROM MICHAEL THOMAS
Barry Parker • October 8, 2019
TOP TIPS FROM EX-PRO AND PHOENIX'S CO-FOUNDER
Michael Thomas, Phoenix Co-Founder and Ambassador, ARSENAL AND LIVERPOOL LEGEND passes on his top money lessons for young footballers.
During my 20-year professional football career, I’ve seen too many talented former footballers and close teammates lose everything to financial schemes and scams, unscrupulous advisors, costly divorces and over-spending.
Bankruptcy amongst retired players, who have earned small fortunes during their careers, is sadly at an all-time high.
It’s no exaggeration to say it’s a silent epidemic right now amongst my generation. I've seen it happen again and again — with top international players, as well as at the lower levels. Sadly, it can happen to any of us. The reality is, young footballers are targets from the day they sign their first professional contract.
I completely get that it’s hard to understand how a Premier League footballer, earning more money in one week than some people earn in a lifetime, can end up in this position.
It’s easy to blame the player. But, the reality is that this a problem amongst professional footballers and other sportsmen and women throughout the world that needs to be addressed. Players need more advice and guidance at a young age if we are going to prevent this cycle from repeating itself again and again.
Think it can’t happen to you? You’d be surprised.
So, what lessons can I pass on from my experiences?
Here’s a few words of advice from me and the Phoenix team for young players:-
1. Watch the people around you
Shady advisors are a real problem in our industry. They can rob players of their entire earnings through financial mismanagement or worse, through mis-selling and fraud. Most footballers only find out this has happened in retirement when it’s too late and the advisers are long gone.
My advice is to realise how vulnerable you are as a footballer. Even if you think you have good advisors in place and good people around you, do you have complete control and knowledge of what they are doing with your money? If not, get it.
Take responsibility for your own money, get second opinions, understand where it’s going and make it your mission to understand everything going on around you.
2. Plan for retirement at the earliest opportunity you can.
Young footballers need to be aware that what they earn as a footballer over a 10-15 year period needs to last for 50-60 years into the future.
So, it’s vital you invest sensibly and wisely and plan ahead. Work on a solid and secure plan for preserving your money for when you’ve hung up your boots from the earliest moment you can. Think about your life beyond sport and get prepared.
3. If it’s too good to be true - it probably is.
If I’ve learned one thing, it’s that risk and reward go together. There are constant pitches at young footballers for “no brainer” opportunities coming at you from trusted people in your inner circle. If you are being pitched a big return then understand that the risk will probably be high too.
Anything that sounds too good to be true, probably is. Don’t be afraid to say no, or get a second opinion from an independent professional such as a lawyer or a Chartered Financial Planner.
4. Control your spending
Overspending can turn wealthy footballers into bankrupt footballers overnight.
Invest in assets that grow your money and provide a passive income, such as property. Watch what you are spending on depreciating assets. Luxury cars, watches and clothes generally lose value and will be worth nowhere near what you paid.
Get the balance right. Enjoy your success but balance it out with assets that will grow your wealth and set you up for the future.
5. Ignore the dressing room
Dressing rooms are where the most damage is often done. It’s only when you retire that you realise how much peer pressure you were under.
Pressure to sign up to the latest dressing room deal however is a particularly serious problem and this can lead to financial disaster. Entire dressing rooms can go bankrupt overnight from one bad scheme that spreads throughout the team like wild-fire.
I’d always recommend that before you enter any investment, get it checked out by an independent advisor. And by independent - I mean not one connected to your agent, the investment itself or the advisor recommending it.
6. Know the fees you are paying.
Make sure you demand to see all the fees and commissions that are being made by your advisors and agents. Secret commissions are illegal and are rife in the football industry and believe me it can all add up. I’ve seen investments fail purely based on the huge commissions being taken out at the front to pay agents, advisers and so on.
Speak with your advisors and read the small print in your contracts. Small fees can easily be ignored in the moment but can make a big difference over time. Break down exactly what your advisor is charging and why. A good advisor will insist you understand this and have no problem with you asking to see the detail.
7. Divorce and bad relationships will cost you
Child support from failed relationships can be far more costly for players than the average person. Football players pay hundreds of thousands of pounds a year in annual child support. Multiple children by different women can mean millions of pounds to be paid in child support payments for years.
The payments might be affordable while playing but they can become unsustainable in retirement.
Get a pre-nuptial agreement if you want to avoid being wiped out by a costly divorce. Think before you act where children are concerned. Children are an absolute gift but make sure you can afford them.
8. Get Protected
Careers in sport are unpredictable. A sudden injury or change of manager can see you experience a change of fortunes overnight.
Prepare for this. Don’t let an injury on the pitch result in a serious off-pitch financial disaster.
A good regulated independent financial adviser can ensure that you have robust insurance and arrangements in place to protect you and your family in the unfortunate event of injury or illness.
9. Budget and Plan carefully
Football careers are short by normal standards and you need to put some serious priority into planning your money and spending properly so you can safeguard your future.
You need to think about budgeting. Think about the essentials that you want to live with on a day-to-day basis and work with an advisor to calculate how much this will cost you each month. Put aside some money for fun and lifestyle purchases and then save the remaining income for your future.
All footballers need a solid financial plan and to keep to a budget that helps them prepare well for the future and life’s twists and turns. There is all sorts of sophisticated software that can help you meet your financial goals. Only use a professional advisor who insists on doing proper planning with proper software.
10. Stay away from complicated tax schemes
Something that has absolutely devastated my generation is tax schemes, sometimes known as “film schemes”. The big problem with these kind of schemes is that investigations can come several years later when you are at the end of your career. These schemes are so complex and appear to be so attractive that it’s easy to be fooled into thinking they are something that they are not.
Demands can come at you in retirement for something that happened years ago that you can’t really remember about and your advisor may be long gone, leaving you to sort out the mess on your own.
My most important tip is to listen to the stories from my generation and the devastation it has caused football families throughout the country, and avoid any kind of complicated tax scheme like the plague.
Stick to the basics and do these properly. Look at ISA’s and low risk funds that will help you grow your money in a safe and measured way. Work with advisors who help you stay tax compliant. Don’t be tempted into any complicated tax scheme. It could cost you your life’s earnings.
So these are my top tips. You have a short career as a footballer and you are more vulnerable to financial exploitation than you realise. It’s time to change the financial futures of young players and to see the next generation safeguard their earnings and enjoy peaceful and comfortable futures with their families.
Phoenix isn’t just a business for me. It’s also an opportunity for me to make a difference and to try to change things for the better for the next generation. If my experiences help prevent one young player from making the same mistakes that I and my generation weren’t prepared for, then I will be a proud man.
Michael is a co-founder and ambassador for Phoenix Sport & Media Group and is passionate about helping the next generation secure their futures.
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