Olympic swimmer Ryan Lochte’s parents are facing foreclosure.
Gymnast Gabby Douglas’ mother just filed for Chapter 13 bankruptcy protection, claiming that she’s spent more than $150,000 out of pocket on her daughter’s gymnastics with no idea whether or not she’d ever see a return on her investment.
Missy Franklin’s parents are biting their nails to see if their daughter will change her mind about going pro, so that they can begin to see some financial returns for her gold-medal swimming career.
Not only are these parents, who often sacrifice everything they have for their kids’ athletic careers, stuck high up in the cheap seats in whatever Olympic venue their offspring happen to be competing in, but at the end of the Olympics — and the nationals and worlds that got the kids to the medal stand in the first place — there’s certainly no guarantee that all of those life sacrifices will pay off.
As the 2012 London Games draw to a close, and the last of the gold medals and confetti rain down, as the world’s newest sports heroes pause to catch their breaths between sponsor-house visits and “Today” appearances, they would be well-served to spend more than a record time thinking about their financial futures.
When Douglas, America’s newest Olympic darling, won the US a gold medal for the women’s gymnastics individual all-around event last week, she received much more than the approximately $650 worth of gold actually in the medal: Try millions of dollars of endorsement deals from Procter & Gamble, Kellogg’s and others in the wings.
But how does Douglas’ earnings potential stack up against such other famous athletes as Michael Phelps, Usain Bolt and the newly minted British heroine, heptathlete Jessica Ennis, who could net an estimated $4.67 million annually in sponsorship contracts? (Ennis already has endorsement deals with British Airways, Jaguar, Powerade, Aviva, and P&G’s Olay brand.)
For financial role models, these new Olympic millionaires could look no further than savvy NFL players taking advantage of the NFLPA’s vetted financial advisor program, rather than relying on the often-sketchy advice of family and friends. The 400 advisers and accountants in the NFLPA’s program must have clean regulatory records, a minimum of five years’ experience and a degree from an accredited university.
It’s a commonly cited statistic that three-quarters of all NFL players, whose careers last on average three years, are in serious financial trouble within two years of leaving the field. So clearly, more NFL players need to get with the program. For Olympic athletes, the window can be much shorter. "Athletes need to strike quickly or they’re going to disappear,” MediaCom global head of sports Marcus John told the Arizona Republic.
And even if the athletes win gold, there’s no guarantee that window will be open at all.
“There’s no way all the gold-medal American swimmers will wind up in the mainstream market," points out Octagon managing director of Olympic & action sports Peter Carlisle, who represents Phelps.
The poster child for Olympic athletes gone bust is Marion Jones, the track and field star who went to prison for lying to a federal grand jury about her use of performance-enhancing drugs and for her involvement in an illegal check-cashing scheme.
Jones, one of track and field’s first female millionaires, at the height of her career typically earned $70,000-$80,000 per race, plus an estimated $1 million annually in endorsement income from Nike, Gatorade and others. Six years later, she was heavily in debt, facing foreclosure on her $2.5 million North Carolina dream home, and fighting a bevy of lawsuits.
When asked in a deposition where all her money had gone, Jones admitted to having no bankruptcy recovery plan, believing instead “that God will bless me and my needs will be taken care of.” In a later court appearance, she blamed “bills, attorney bills, a lot of different things to maintain the lifestyle” on the disappearance of her fortune.
As a result of the federal conviction, Jones forfeited all five medals she had won at the 2000 Games in Sydney, went to prison, and more recently, was waived by the WNBA Tulsa Shock a year into a futile attempt to revive her sports career.
Right now, it’s nearly impossible to imagine Douglas having a similar fate. Douglas is obviously at the top of shortlists for brands looking to capitalize on the London Olympics, especially ones targeting a younger female demographic. And based on what previous gymnastics all-around winners earned, sports marketers posit that she could make $8-12 million between now and the 2016 Rio de Janeiro Games.
Here’s hoping when Gabby takes the next step toward her future, she’ll work with a qualified financial coach alongside of the gymnastics one who will help propel her to Rio.